Job Interview Prompt:
Suppose you’re the PM at Amazon, and you’ve found that total money spent has decreased by 10% in the past week. How would you go about finding the root cause? Be specific based on the Amazon business.
If I were the PM at Amazon and noticed a 10% decrease in total money spent over the past week, I would approach the problem as follows:
1. Data Validation and Initial Analysis
- Verify Data Accuracy: First, ensure the decrease is not due to a data error. Check for any issues in the analytics pipeline, such as bugs in data collection, reporting errors, or inconsistencies across data sources.
- Segment the Data:
- Geographical Segmentation: Break down the decrease by region or country to identify if the drop is localized or global.
- Category Analysis: Analyze spending across different product categories (e.g., electronics, clothing, groceries) to see if the decrease is concentrated in specific areas.
- Customer Segment: Examine the spending behavior of different customer segments, such as Prime vs. non-Prime members, frequent vs. infrequent buyers, or high-value vs. low-value customers.
- Device and Platform: Investigate if the decrease is specific to certain devices (e.g., mobile vs. desktop) or platforms (e.g., Amazon app vs. website).
2. External Factors
- Economic Environment: Review macroeconomic factors that could influence consumer spending, such as inflation, changes in consumer confidence, or significant economic events.
- Competitor Activity: Analyze if there were major promotions, discounts, or product launches by competitors like Walmart, Target, or other e-commerce platforms that might have drawn customers away from Amazon.
- Seasonality: Compare the current data with historical trends to see if there’s a seasonal effect. For example, post-holiday periods often see a natural decline in spending.
- Local Events or Regulations: Consider whether there were any local events, regulations, or disruptions (e.g., tax changes, natural disasters) that might have affected spending in specific regions.
3. Internal Product and Platform Analysis
- Recent Changes or Updates: Review any recent changes to the Amazon platform, such as UI/UX updates, changes to the checkout process, adjustments in shipping policies, or alterations to Prime membership benefits, which could have impacted purchasing behavior.
- Inventory and Pricing: Check for any significant changes in inventory levels, stock-outs of popular items, or price increases that might have deterred customers from making purchases.
- Promotion and Marketing: Evaluate recent marketing campaigns, discounts, and promotions. If a major promotion ended, it might explain the drop. Conversely, check if ongoing promotions underperformed or if communication was ineffective.
4. User Behavior and Experience
- Customer Feedback: Analyze customer feedback from reviews, surveys, and social media to identify any recent dissatisfaction or issues that might have caused a reduction in spending.
- Shopping Cart Abandonment: Investigate whether there has been an increase in cart abandonment rates, which might indicate issues in the checkout process or with pricing.
- Site Performance: Assess whether there have been any technical issues with the site, such as slow loading times, crashes, or errors during checkout, which could have negatively impacted user experience and spending.
5. Logistics and Fulfillment
- Shipping and Delivery Issues: Analyze whether there have been delays or issues with shipping and delivery that might have led to customer dissatisfaction and reduced spending. Check for any disruptions in Amazon’s logistics network.
- Prime Benefits: Evaluate whether there have been changes in Prime delivery speed, availability, or other benefits that could have influenced spending by Prime members.
6. Vendor and Supply Chain Factors
- Vendor Issues: Check if any key vendors or third-party sellers faced issues with inventory, pricing, or delivery that could have impacted the availability or attractiveness of products on the platform.
- Supply Chain Disruptions: Investigate if there were any disruptions in the supply chain that led to stock-outs or delays in restocking popular items, which could have reduced spending.
7. Customer Engagement and Loyalty
- Prime Membership Trends: Analyze any changes in Prime membership trends, such as cancellations or lower engagement, which might have influenced overall spending. Prime members typically spend more, so a decline in their activity could be significant.
- Loyalty Programs: Review the performance of loyalty programs like Amazon Rewards. A drop in engagement with these programs might indicate issues that are affecting customer spending.
8. Hypothesis Testing and A/B Testing
- Identify Potential Causes: Based on the data and insights gathered, formulate hypotheses about the potential causes of the decrease in spending.
- Run Experiments: If possible, run A/B tests or other experiments to validate these hypotheses. For example, if you suspect a recent UI change is causing issues, test a rollback or an alternative design to see if spending improves.
9. Collaboration with Cross-Functional Teams
- Operations and Logistics: Work with the operations and logistics teams to understand if there were any internal issues, such as warehouse bottlenecks or delivery delays, that could have affected spending.
- Marketing and Promotions: Collaborate with the marketing team to assess recent campaigns, promotions, and customer outreach efforts to determine if they were effective or if adjustments are needed.
- Customer Support: Engage with the customer support team to identify any uptick in complaints or issues reported by customers that could be related to the drop in spending.
10. Communication and Reporting
- Prepare a Comprehensive Report: Summarize the findings, potential causes, and recommended actions in a detailed report for key stakeholders.
- Stakeholder Alignment: Ensure alignment with relevant teams, including marketing, operations, logistics, and senior management, on the next steps to address the issue.
11. Long-Term Monitoring and Prevention
- Real-Time Monitoring: Set up alerts and dashboards to monitor key metrics in real-time, enabling quicker detection of similar issues in the future.
- Post-Mortem Analysis: Conduct a post-mortem analysis after implementing corrective actions to understand what worked and what didn’t, and apply these learnings to future strategies.
By following this detailed, Amazon-specific approach, I would systematically identify the root cause of the decline in spending and take the necessary steps to address it effectively.
