Position DT Ecommerce Data Champion Task1: Viability Analysis

Required mindset Deep-thinking, joy of learning You will be asked to analyze viability of campaigns
This introduces you to the idea of business modeling

Behavioral Intelligence, Task2: Model Design

Execution, BizTech Acumen,
DT Areas of Work This would help you in building models to analyze viability
Values driven decision making,
Learnability You will key in values and the model will help you visualize
the viability of TACOS in different scenarios

Why these tasks

Blend of business analytics, data
If you're hired as a Data Champion, you would be looking at a lot of real
science and data engineering.
About DT Data world problems, you'd have to design and implement solutions. Task1
Solves real world problems, gets
Champion Role evaluates your problem solving capabilities while Task2 evaluates your
buyin of cross functional teams,
technical execution of the solution
takes ownership of the outcome

If hired, what would you be taught

Ability to switch between abstract
and concrete ideas, to spot core You would learn Quartile.ai, AI Prompt Workflows, Business Analytics,
DeepTech Mindset
insights, to extrrapolate textual Ecommerce Data Science
ideas to real world situations

The tasks are quite easy, provided you follow the Pareto's
law: spend 80% of the time reading and understanding, 20%
time executing the task
 Basic Guidelines
Please go through all the subsheets carefully
Please don't take the shortcut of jumping into the task
Once you read the context subsheets you'd understand the task better

Expectations
We don't expect you to completely solve the task
We would like to evaluate how you approach it
It is okay if you submit a partial solution to the problem

Context Some Guidance for you

You have one subsheet explaining the concepts needed to solve this problem Please read every subsheet two to three times. You will eventually understand
You have a subsheet which shows a sample view It would initially be intimidating since ecommerce, advertising can be new to you
You have a subsheet which talks of automations that you could do in Task2 Once you understand the domain, the actual problem solving becomes easier

Tech glitches
If the images do not load, please try a different browser
You have view only access, you can make a copy of the sheet

Submission
You can enter your responses to Task One and Task Two in a Google Doc,
you can set the permissions to "anyone with the link can view".

Submission Link
https://forms.gle/zDgUWy2GsmyoooQXA
Introduction Story:
Understanding the Economics Behind Business Decisions

Imagine you’ve just been hired as a Growth Data Champion for a rising brand selling organic skincare products on Amazon. Your boss gives you
access to the company’s data and says,
“We’re doing okay, but we need to do better. Can you tell me how much we can spend on acquiring customers, how pricing or costs impact
profitability, and what it takes to stay competitive? We need to scale, and we need your help to figure this out.”

This is where your role becomes critical. Businesses don’t operate on gut feelings—they need clear answers backed by data. Every decision, whether
it’s spending more on ads, changing the price of a product, or cutting costs, can make or break the bottom line. That’s why companies rely on people
like you to build models that simulate different scenarios and find actionable insights.

Why This Activity?

This exercise is your first step into the world of business modeling and decision-making. You’re not just crunching numbers—you’re learning to ask
the right questions, analyze the right data, and find solutions that could directly impact a company’s growth.

Here’s what you’ll explore:

Break-Even Analysis:
How much can we spend on acquiring customers without losing money?
This helps you understand the delicate balance between spending to grow and staying profitable.

Volume Sensitivity:
What happens if sales don’t go as planned?
Businesses often face unpredictable drops in demand. Your job is to ensure they know how to stay profitable even in tough times.

Cost Sensitivity:
What if rent goes up or other costs increase?
You’ll learn how fixed costs impact the bottom line and how businesses need to adjust to maintain profitability.

Price Optimization:
What happens if we increase the selling price?
Pricing decisions can boost profits or scare away customers. Your analysis will reveal the sweet spot.

Tax Impact:
What happens when tax policies change?
Taxes are unavoidable, and businesses need to plan for them. You’ll learn how taxes influence overall profitability.

The Big Picture

By the end of this exercise, you’ll have built a simple but powerful model that answers questions every CEO, marketer, and investor asks daily.

How much can we spend?

What happens if things don’t go as planned?
How can we make the most money while staying competitive?

You’ll not only understand these trends but also see how your analysis could help brands make smarter decisions to grow sustainably.

This isn’t just an exercise—it’s a peek into the real-world challenges of scaling a brand. Ready to solve problems that matter? Let’s dive in!
Relatable Example: Running a Juice Stand

Let’s say you start a juice stand:

Each juice bottle costs $15 to make (COGS).

You sell it for $30 (SP).
You spend $5 on ads (CAC) to get each customer.
The shopping mall takes 15% of your price as rent (Amazon Fee).
At the end of the month, you calculate how much profit you make after subtracting fixed costs (e.g.,
stall rent, $10,000) and loan interest ($1,500).

Key Terms and Their Meaning

1. Cost of Goods Sold (COGS)

This is how much it costs to make one unit of your product.
Example: If you’re selling a water bottle, the cost of the materials (plastic, cap, etc.) and manufacturing it adds up to $15 per bottle.

2. Selling Price (SP)

This is the price at which you sell your product to customers.
Example: You sell the water bottle for $30.

3. Gross Margin per Unit

This is the profit you make on each unit before paying any other expenses.
Formula: Gross Margin = SP - COGS
Example: You sell the water bottle for $30 (SP), and it costs $15 to make (COGS). So, your Gross Margin = $30 - $15 = $15.

4. Amazon Fee
If you sell on Amazon, they take a percentage of your selling price as a fee.
Formula: Amazon Fee = SP * 15%
Example: If your water bottle sells for $30, Amazon takes $30 * 15% = $4.50 as their fee.

5. Customer Acquisition Cost (CAC)

This is how much it costs you to get one customer to buy your product. It could include advertising, discounts, or marketing expenses.
Example: You spend $5 on ads to convince one customer to buy your water bottle, so your CAC is $5.

6. Net Margin per Unit

This is the final profit you make on each unit after subtracting all variable costs like Amazon fees and CAC.
Formula: Net Margin = Gross Margin - Amazon Fee - CAC
Example:
Gross Margin = $15
Amazon Fee = $4.50
CAC = $5
Net Margin = $15 - $4.50 - $5 = $5.50

Monthly Calculations

7. Monthly Profit Before Tax

This is the total profit your business makes before paying taxes.
Formula: Profit Before Tax = (Net Margin * Units Sold) - Fixed Costs - Interest
Example:
Net Margin = $5.50
Units Sold = 5,000
Fixed Costs = $10,000
Loan Interest = $1,500
Profit Before Tax = ($5.50 * 5,000) - $10,000 - $1,500 = $27,000

8. Profit After Tax

This is the profit left after paying taxes.
Formula: Profit After Tax = Profit Before Tax * (1 - Tax Rate)
Example:
Profit Before Tax = $27,000
Tax Rate = 20% (or 0.2)
Profit After Tax = $27,000 * (1 - 0.2) = $21,600

Target TACOS (Total Advertising Cost of Sale)

TACOS is a percentage of your total sales revenue spent on advertising. To ensure you’re not losing money, you want your
Profit After Tax to be at least $0.
Example: If your TACOS is too high (e.g., 50%), you’re spending too much on ads and won’t be profitable. Lowering it to 10-
20% might make you profitable.
Activity1: Profitability Analysis for a Hypothetical Brand

You are managing campaigns for a fictional brand, "HealthCare Boost," that sells a health supplement product on
Amazon. The product costs $15 to produce and is sold for $30 on Amazon. Your client wants to determine the
maximum CAC they can afford while ensuring overall profitability.

Guidelines

Open a Google Sheet:

Create a structured table with the following fields:
Cost of Goods Sold (COGS): $15 per unit.
Selling Price (SP): $30 per unit.
Gross Margin (GM): SP - COGS.
Amazon Fee (%): 15% of SP.
Campaign Cost (CAC): To be calculated.
Net Profit (NP): GM - (Amazon Fee + CAC).

Company Details:
Fixed Corporate Costs (monthly): $10,000.
Bank Loan Interest (monthly): $1,500.
Tax Rate: 20% of profit.

Target Volumes:
The company aims to sell 5,000 units per month.

Questions to Solve:
What is the maximum CAC that ensures the company is profitable?
What happens to profitability if volumes drop to 4,000 units?
How much additional margin or volume is needed if fixed costs increase by $5,000?

Google Sheet Setup:

Step 1: Input Fields
We will initially get the inputs sorted

Unit-Level Analysis:
Selling Price: $30
COGS: $15
Amazon Fee (%): 15% of SP
CAC: Variable (calculate based on constraints)

Monthly Analysis:
Units Sold: 5,000 (changeable to explore scenarios)
Fixed Costs: $10,000
Interest: $1,500
Tax Rate: 20%

Step 2: Calculations
We are now ready to start calculating the metrics

Gross Margin per Unit: GM = SP - COGS

Amazon Fee: Amazon Fee = SP * 15%
Net Margin per Unit: Net Margin = GM - Amazon Fee - CAC
Total Profit Before Tax: Profit = Net Margin * Units Sold - Fixed Costs - Interest
Profit After Tax: Profit After Tax = Profit * (1 - Tax Rate)
Target TACOS Calculation: Solve for TACOS where Profit After Tax ≥ 0.

Step 3: Tasks for Participants

Determine Target TACOS for 5,000 Units:
Calculate the maximum TACOS that ensures profitability.

Scenario Analysis:
Reduce sales to 4,000 units and determine the new maximum TACOS
Increase fixed costs by $5,000 and analyze the impact on TACOS

Actionable Insights:
What steps can the company take if the current TACOS is higher than the target?
Activity1: Profitability Analysis for a Hypothetical Brand

You are managing campaigns for a fictional brand, "HealthCare Boost," that sells a health supplement product on
Amazon. The product costs $15 to produce and is sold for $30 on Amazon. Your client wants to determine the
maximum CAC they can afford while ensuring overall profitability.

Google Sheet Setup:

Step 1: Create a Template with Adjustable Inputs
Input Fields: to punch in assumptions such as selling price, costs, taxes, and volumes.
Dynamic Outputs: Automatically calculate profitability and other metrics based on inputs.
Scenario Questions: Ask targeted questions to guide their exploration of the model.

Step 2: Template Structure

1. Input Section (Editable Cells):

Include these inputs with clear labels and sample default values:

Product Costs:
Cost of Goods Sold (COGS): $15
Amazon Fee (% of SP): 15%
Corporate Fixed Costs (monthly): $10,000
Bank Loan Interest (monthly): $1,500
Revenue:
Selling Price (SP): $30
Units Sold: 5,000 (default)
Tax Rate: 20% (editable)
Customer Acquisition Cost (CAC): Variable (editable).

2. Output Section (Auto-Calculated):

Use formulas to calculate:

Gross Margin per Unit: =SP - COGS

Amazon Fee per Unit: =SP * Amazon Fee %
Net Margin per Unit: =Gross Margin - Amazon Fee - CAC

Monthly Profit Before Tax: =Net Margin * Units Sold - Fixed Costs - Interest
Profit After Tax: =Profit Before Tax * (1 - Tax Rate)

3. Visual Dashboard:
Use conditional formatting to flag when profit turns negative.
Include a chart to show how changing assumptions (e.g., CAC or volume) affects profitability.

Step 3: Questions to Explore the Model

1. Break-Even Analysis
Question: What is the maximum CAC we can afford while selling 5,000 units?
Instruction: Adjust the CAC until Profit After Tax equals $0.

2. Volume Sensitivity
Question: If sales drop to 4,000 units, what happens to profitability? How does the target CAC change?
Instruction: Change the "Units Sold" field and observe the impact.
3. Cost Sensitivity
Question: If corporate fixed costs increase by $5,000, how much volume is needed to stay profitable?
Instruction: Adjust the "Fixed Costs" and "Units Sold" fields to calculate the required volume.

4. Price Optimization
Question: If the selling price increases to $35, how does that impact the target CAC and profitability?
Instruction: Change the "Selling Price" field and observe the results.

5. Tax Impact
Question: What happens to profit after tax if the tax rate changes to 25%?