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Estimate the total dollar amount of online sales for fruits and vegetables per year in US.

  • Related to Estimation
  • For Data and AI PM
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Answers (2)

Questions:

  • Online includes web/mobile? Assume both web and mobile

  • Do we need to include tax? I will assume no

  • Is it for consumer or also commercial use? Just consumer

  • Pure fruit and vegetables? Or also including ingredients to products? Eg) fruit in yogurt Wholesale Fruits & Veggies

 

Assumption:

  • Within the US, not import or export

  • Goods sold to consumers, whole fruit and veggies

  • Each person would eat 3 servings of fruits and vegetables a day – as per the food guide recommendation is 3 but in my experience, most people ate less than that

  • People would eat the same thing every day- we are creatures of habit, and personally, I end up buying a lot of the same food each week.

  • Food eaten:

    •  1 med banana ~ 150 g, a lb of bananas is ~ 0.30/lb

    •  1 serving salad -0.5/serving

    •  1 orange – $0.25 per orange

  • Population in the US is ~ 330 million people

  • Online shopping – given the situation with COVID, more people are doing their shopping online, in fact, I would assume 30% of the US are doing groceries online due to COVID.

 

Math Equation

 

Cost per person:

Banana = 150g /550 g/lb * $0.3/lb = $0.08

Salad = $0.50

Orange = $0.25

 

Total cost per person = $0.83 / person/day

 

Total cost per person per year  = $0.83/person / day * 365 per year = $303.6 / person

 

Cost of fruits and veggies bought online = $303.6/person * 0.3 = $91.08

 

Total cost of fruits and veggies bought in the US, online = $91.08 * 330 million = $ 30.05 billion dollars

Before we get started with the estimation, I have a few points I would like to clarify:

  • By “per year” is it an average over a certain time period? Or last year (2019) works? Let’s assume it’s for 2019.
  • By “online sales of fruits and vegetables” are we referring to whole vegatebles and fruits, or do we also include meals that include those foods? Let’s assume it’s only fruits and vegetables, not meals prepared with those vegatebles.
  • Are we including only B2C or also B2B e.g. sales from suppliers to restaurants? Only B2C.
  • Delivery costs included? No.
  • Sales tax included? Yes.
Ok, then I would like to learn about the following:
  • How many households purchased fruits or vegetables online in 2019
  • How many times on average they purchased those in 2019
  • What was the average sales price of those orders
Total dollar amount of online sales of fruits and vegetables in 2019 = # of households purchasing fruits or vegetables online in 2019 * Average # of orders in 2019 * Average sales price of those orders.
# of households purchasing fruits or vegetables (F+V) online in 2019 Average # of orders in 2019 Average sales price of those orders (only fruits and vegetables)
~300M people in US / Avg 3 people per household = ~100M households

# of households * % of households purchasing F+V online in 2019 =
# of households * % of households purchasing F+V in 2019 * % of households purchasing those online =
# of households * % of households purchasing F+V in 2019 * (% of households purchasing those online via subscriptions e.g. Fruit Guys weekly deliveries + % of those
purchasing those online on ad-hoc groceries e.g. target or whole foods orders.)
= 100M * ~100% * (1% + 10%) = 11M

 Subscriptions: Avg monthly cadence * 12 = 4*12 = 48

Ad-hoc groceries: Avg monthly cadence * 12 = 2 *12 = 24

 Subscriptions: higher intent and consumption of F+V
# of days per week *# of pieces of F+V per day per person * people per household * Avg price per F+V piece = # of pieces of F+V per day per person * people per household * Avg pounds per piece * Avg $/pound = 7 * 2 * 3 * .25 * $2 = $21

Ad-hoc groceries:
# of days per week *# of pieces of F+V per day per person * people per household * Avg price per F+V piece = # of pieces of F+V per day per person * people per household * Avg pounds per piece * Avg $/pound = 7 * 1 * 3 * .1 * $2 = $4.2

Total dollar amount of online sales of fruits and vegetables in 2019:

Subscriptions: 1M*48*$21 = $1B

Ad-hoc groceries: 10M*24*$4 = $1B

Total = $2B

 

This number seems high to me. I would deep dive into two areas to refute/validate my assumptions:

  1. % of households purchasing those online in 2019. Before COVID I believe the % of people buying those online was probably lower than 10%.
  2. # of pieces per day from online sales. Not all consumption of F+V is done from online purchases. I would reduce my estimaion by the % of purchases done online.