ShopOn Retail
Practice this intermediate profitability case interview question from McKinsey in the Retail sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
ProHub Comment
This is a structured profitability case requiring candidates to diagnose a rising returns problem through framework building and quantitative analysis. The case tests graph reading, calculation setup, and root cause identification—showing that product mix shift (not quality issues alone) is driving returns, with apparel being the primary culprit. The brainstorming component demands cost-benefit thinking around operational levers like supplier contracts and customer accountability.
Estimated Time
26 minutes
Difficulty
Medium
Source
ROSS
40
/ 100
Our client, a US based e-commerce company, ShopOn, has seen a rise in customer returns over the last few quarters. Even though its revenue and market share have been increasing every quarter, the CEO is concerned that customer returns will start impacting the margins soon. The CEO of ShopOn wants your help to identify the reasons behind the high rate of returns and create a mitigation strategy.
Clarifying Information
- Customer returns refer to products returned by customers post-delivery and not order cancellations before delivery.
- The return period for any ShopOn product is 30 days from the day of delivery.
- Even though new competitors keep entering the market, there has been no new competitor in the last few quarters that could bring about any significant change to ShopOn. ShopOn is ranked #3 in the e-commerce space
- ShopOn holds 50% of the product inventory in its warehouses and 50% is a marketplace for sellers.
- The mitigation strategy should focus on both short-term (next 1-3 quarters) and long-term action items (next 2-3 years)
- No investment guidance has been provided.