2020 was a curious year. Liverpool won the Premier League for the first time in forever. Donald Trump was voted out of office, a result bemoaned by those who seek the destruction of America or just a few memes to pass the time. Wait, I’m forgetting something… that’s right, the awful pandemic that crippled our healthcare system, flattened our economy and made face masks more essential than underwear.
But I digress. There are people solving those big problems. Thus, I thought it would be fitting that we at Blinkit (formerly Grofers) address one of our own — building a monetization solution that would scale to meet the rapid growth of Blinkit and weave a dream for a Blinkit self-sufficient in EBITDA.
But Why Invest in Building A Platform?
Every business, at some point, needs to be profitable. Especially since the money invested is not infinite though sometimes it might appear that way. All organizations need to dip their toe in the Ads business. Just ask Amazon — They make up to 7% of their revenue simply through Ads on their platform. Thus we felt that we could emulate that.
But the question was never whether to sell Ads. The question was whether we needed to build a tech-driven ecosystem. We do have a great sales team, and there was no guarantee that sinking millions into building a new product would scale the business enough to justify the investment. That is also why many companies hesitate to go in this direction — the pivot from a relationship-led business to a market-led one is a significant change to make.
However, at some point, you have to bet on yourself. That is what we did…
The Opportunity
Time for some facts:
55% of e-commerce users shop via Search
Search provides the best conversion tracking data for product purchase
Amazon has done the hard work. Brands believe in Search. Build it well, and they will come.
Time to get to work
We had the template of ‘what to build’ in front of us. But we wanted to put our own stamp on it. We took a few product calls that would make us unique in our proposition yet risk backlash of being inconsistent.
Cost per Impression (CPI) over Cost per Click (CPC)
Probably as big a risk as any. With a market conditioned to bid on CPC, we took the less followed path of going CPI. Our rationale was simple. The way our app is structured, a Click is equivalent to an Add-to-Cart while an Impression is just a Product Seen. By keeping the model on Cost per Impression, rather than fix a return for the brand with fixed revenue for Blinkit, we instead allowed the brand to bet on its own potential. A small example of how it works:
Let’s say a brand pays ₹20 for a click for a product of ₹100. The ROI is 5. It will always be 5.
Let’s say a brand pays ₹1 per impression and gets 20 impressions. The brand pays ₹20. But in those 20 impressions, the brand could sell two products for instance and get an ROI of 10. But it could also get an ROI of 0 by selling nothing.
It is in this unknown that the window of opportunity lies for both Blinkit and the other brands.
Opting for the ability to edit bids over normalization
The most standard way of bidding is as follows:
Say A bids 5, B bids 3 →The winner A will end up paying 3.01
But at Blinkit,
Say A bids 5, B bids 3 →The winner A will end up paying 5
To compensate for this, we allow brands to edit their bids till the last second of the option. This element can sometimes make more prominent players reluctant to overbid, thus creating an opportunity for challenger brands and encouraging healthy competition.
Making the platform in-house
There are a thousand Ad-tech platforms out there, several of which are world-class. So why did we make it in-house? We wanted to innovate and customize constantly — No one could give us that. The only challenge remaining was to race to market at a similar clip as we would get with third-party integration.
Thus this journey began. On May 1st, 2020, the SearchSenze platform was born. The battle was over. But the war was yet to come.
Climbing Out of the Valley of Disappointment
We often expect progress to be linear. At the very least, we hope it will come quickly. In reality, the results of our efforts are often delayed. It is not until months or years later that we realize the true value of the previous work we have done. This can result in a “valley of disappointment” where people feel discouraged after putting in weeks or months of hard work without experiencing any results. However, this work was not wasted. It was simply being stored. It is not until much later that the full value of previous efforts is revealed.
To summarize, you don’t succeed immediately for those too lazy to read all that. That’s frustrating. But you have to keep working and believe. Everything you learn and invest in will lead to the final payoff. Or it might not, but at least then you know you’d given it a try.
For us, it was the same story—a slow start. Let’s look at some numbers.
May 2020 to October 2020 was a trying time. What looked like a sure winner was limping along. Growth was slow, and progress was uninspiring. But as my (now former) boss says, there’s no failure — Only knowledge acquisition.
The key learning was to treat our partners as users. Talk to them. Ask what they want. Infer what they need. Our conversations led us to the following answers:
Reduce prices. Optimize engagement over revenue in the short term. Return on Investment matters more to brands than anything else. The CPI model we went for is a double-edged sword cutting us deeply. Brands were paying for impressions for which they weren’t getting enough sales. ROI was suffering, and we had to lower prices in the short term.
Improve the rate of serving Ads. Search Ads suffer from product availability issues. When products are not in inventory, the Ads don’t show up, which defeats the purpose of having them in the first place. You also have to remember that we were in the middle of the first COVID wave, so inventory was far from reliable. Thus we developed options where brands could specify multiple products to display, such that if one were out of stock, they could still show Ads with other products
UX improvements on the platform to improve usability such as search filters and real-time spend predictions.
Thus began the climb out of the valley. We improved slowly, but something special was always bubbling under the surface. Finally came Diwali, where the spark would ignite, and we would finally announce to the company that Search Monetization was a serious business.
The Only Way is Up
Every Batsman can make it to 30. Even after a poor start. A couple of sixes and some luck. But the great ones convert those starts into hundreds. Thus, we funneled resources to building what I’d now describe as a legacy.
A small brain’s trust and skeletal engineering team paved the way to a fully-functional team of twenty with diverse skillsets with a unified goal of creating lasting value.
Over the next few months, we built features to bring our service on par with the best:
City-level targeting to give opportunities to the smallest of brands.
Huge strides in quality, quantity, and frequency of information relayed to brands to help them make better decisions.
A radical overhaul of the platform to incorporate aesthetic upgrades and improve usability.
Rapid rollout of three additional assets on Search. We scaled from having just a single Sponsored Product to selling Sponsored Display Banners and Sponsored Brand assets on our search page.
TL;DR Just Show Me The Results
Our partners saw benefits with Return on Investmentincreased from less than 1 to more than 10 (industry benchmark is 5). A win-win for all.
10X growth in company revenue (pure profit) contribution. That mythical number is a reality for our product.
Scaled number of manufacturers from less than 5 to more than 100.
Increased number of bids 80x.
How it’s going…
But We’re Just Getting Started
At Blinkit, we deliver miracles. So being great is not good enough. We already have opened our Ads-service to every regional manufacturer. What if we were to open it to every Kirana store, every paan shop, and every roadside stall? Only the future will tell. But I, for one, look forward to that journey. Until next time!
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