Banwari Lal Sharma, CEO of India’s largest online automobile portal CarWale, talks to Research NXT about his journey, from a software engineer to a marketer, to now leading CarWale as chief executive. He explains why CarWale is a company built on technology, and how marketing technology has helped them stay lean and improved performance, both on the supply side and the demand side. Banwari shares how AI-driven marketing has led to significant success stories for CarWale and also gives his views on digital transformation, the state of the auto sector, and the post-pandemic scenario.
I would like to start with your journey: you started as a software engineer at CarWale, and today as the CEO, that’s an amazing journey of 16 years. I’d like you to walk us through your journey into the organization – what you’ve done so far, and what your current role involves.
Banwari: I am an engineer from a private college in Bhopal. CarWale back then used to be a software development company. I got an opportunity for a project here during my seventh semester, the final year of my engineering. The entire exposure since that day, including the kind of people we worked with, the challenges we have faced, have all been a great learning experience.
It was a small organization, but the learning was tremendous. Somehow, I got lucky that the entire learning perspective, putting knowledge before everything else, actually worked for me. I keep telling my team: What worked in my favor was sticking around with the right kind of folks and putting learning before growth. Ultimately, if you’re learning, you’re enjoying, and growth will come eventually.
A couple of years into the job, we founded CarWale and we realized that someone needed to do content. At CarWale, we give a lot of gyaan (information) on which car to buy, how to buy, and so on – so a high amount of content focus was needed. I had some inclination towards automobiles, so I started working on content.
Then in 2008, when we had worked with an agency for an SEM account and they faltered big time. I was offered a small trial role saying – let’s try for a couple of months and see what works. So we tried it, and I got that opportunity, so marketing got added to my profile, and it became more like a product and marketing kind of role.
Back then, product management was not even a phenomenon in this country. The product manager was not a role per-se, but you’re doing what is supposed to be done, i.e., putting up a page online quickly and understanding what consumers want. Understanding how it can be grown, managing SEO / SEM, cost optimization, and all of that.
Then eventually, there were structural changes in the organization when we merged with CarTrade. The then CEO of CarWale moved on, the position was vacant, and I was given the opportunity. Today, as CEO, my role is to ensure that the organization grows, the people are happy, and we continue to build our culture, the way we always did.
What’s the role of technology in driving the growth of CarWale, and how important is the deployment of marketing technology at your end?
Banwari: The first part of the question is straightforward: In my view, we are built on technology as a company. Out of the 500 employees in the company, there would be about 170-180 folks on product development or some part of the technology side, be it machine learning, or content building, data science, and so on. That says it all. This is predominantly our core strength. The majority of the management team has a fair amount of exposure to technology, so it comes naturally to us. To us everything is a technology first.
The world is struggling with COVID-19 right now, and everybody’s cutting costs, figuring out how to survive. But we’re not an organization that is going through any kind of churn. We haven’t issued a single pick slip. This all comes from a simple fact that we’ve been an organization that always put technology first, and that has helped us in a way.
We have always tried to be frugal. Whenever there is an opportunity to see where people or technology can solve a problem, we put technology first. Thus we have stayed very lean, and this lean organizational approach combined with a technology-first approach has helped us sail through this, or any other problems. We’ve been profitable for more than two years. We are one of the few companies in the country in the online-automobile sector making real profits, month on month.
The second thing which you asked about is, how does marketing technology help. I’ll talk about our traffic here. See, our business is publishing, as well as generating leads. So, it’s very important that when we create traffic and generate leads and the more organic traffic we get, the lower are our costs.
CarWale traffic is getting about 30-33 million sessions every month and out of that, 70-75% on any given day is organic – either direct or Google search/research, or referral, but we don’t pay for it. We pay for the remaining 30% through Google search marketing or Facebook Ads, and few other meaningful marketing channels, and I’ll talk about that later.
But as I said, the cost is extremely important. Through our in-house tools, approaches, measurability, the use of the right KPIs, we would be one of the cheapest search marketing accounts in the country of our size. This means we are generating traffic from search marketing at a very nominal cost, which again helps us keeps costs down. It doesn’t happen in a day, but for sure marketing technology has helped us over a period of time.
But I can tell you that we don’t do too much marketing. If you’re not a car buyer, we will probably not try to lure you into our ecosystem. Keeping that in mind, when you are looking at 30-33 million visitor sessions every month, and considering we sell about three lakh cars in our country, I think the majority of all India d even marketing, which predominantly for us is search marketing. To optimize costs and stay frugal – we use tons of in-house tools. n car buyers are on our portal at some point in their car-buying journey.
So, yes, technology plays a big role in general, and even marketing, which predominantly for us is search marketing. To optimize costs and stay frugal – we use tons of in-house tools.
You mentioned how you want to focus only on the intent base. So, how are you utilizing personalization? Is there any AI-driven marketing, considering you are operating on a very large scale?
Banwari: While the traffic is substantial, we are not a company like Amazon or Facebook, where you need to have some kind of stickiness, and people hang around with you for a long time. From the 30-33 million visits that we get every month, typically a user visits the site 2.2 times.
You can create a cohort, and you’ll know that there are a certain number of people who come to you every day – maybe three times a day – but they’re not the majority. When you have 2.2 visits to a user, it means that people come to you once, they come the second time, and they’re kind of done. They’ve taken a decision; they’ve understood what they want to buy.
However, we’ve had successes around AI-led personalization, which I can tell you about. We have a team in-house doing machine learning and using AI kind of approach for about four years now. There is lots of investment we have done there, and I’ll tell you a couple of use cases that were successful.
One of our small success stories is called similar cars. Let’s say, Santosh comes to CarWale, and he’s looking at a Toyota Fortuner. When he’s done seeing a Toyota Fortuner, he would want to have a look at some options to make a thorough decision. Typically people look at 2-3 cars before they leave CarWale and we wanted to make this discovery experience smoother.
Earlier our approach was: “people who saw a Fortuner also saw” – and then you show a few similar cars to the user. Most of it was done very mechanically, using some kind of simple algorithms based on simple categories. Then we changed that to AI-based personalization. Our click-through rate on that particular section went up by 70 percent!
So we decided to put all this information into a machine learning algorithm. And we said, let’s not decide – not put any kind of hard algorithm – but let the system determine what people love. When they’re looking at a Fortuner, do they actually look at another SUV, an Endeavor or Hector alongside, or would they rather consider a sedan, Skoda Superb? And let it evolve, because users could have a view today and tomorrow that would change.
For example, I remember in 2011/12, India was going through a churn where almost everybody wanted to buy a diesel car. And today Petrol is the flavor of the day. The same goes for when SUV sales started rising in the country. Say somebody’s looking at a Honda City in 15 lakh rupees, it does not mean he’s only looking at sedans. If you show him an SUV alongside – could be a Creta or an EcoSport – they could be equally open to it.
So, this is one of the examples that did very well on the consumer side.
I’ll give you an example from the business point of view, how AI has helped us. We’ve been getting in any given month, about anywhere between four to five lakh leads, that we go out and further sell to dealers, or manufacturers. Now we had a challenge, with the quantum of leads going up, the manufacturers and dealers started asking for some level of prioritization/grading. So, we put in a lead scoring engine, again using machine learning. Wherein we wanted to understand very clearly, was how these consumers who convert into leads are coming on different user journeys. And if we put all of this into this engine, what came out was phenomenal. We could successfully predict who were the guys who were more likely to buy in the immediate future.
It helped us cut down on our workforce for our calling operations. Our calling operations team, despite us delivering such a large number of leads, has only 50 people. Secondly, even for our dealers, we are building the technology to grade leads. Not just grading of – who is likely to buy or who will not buy. But also, you can tell a dealer for example: “Santosh was looking for a Fortuner, and by the way, he also looked at a very similar car in a similar price range.”
Now, this helps the dealer put things into perspective. He can plan his sales pitch better and customize the customer experience accordingly.
These are some small examples, how we have successfully implemented AI-led personalization.
With the auto industry in a recession, do you feel the shift to digital will increase pace? Will there be a fundamental change in the auto ecosystem?
Banwari: Unfortunately, the recession is true for most sectors out there, including automobiles. Our Industry specifically went through some structural reforms in the last couple of years that caused some confusion. BS4 going out and BS6 coming in took a hefty toll on this industry. BS6 cars are more expensive to produce vs. the BS4 equivalents. For the consumer, there is no substantial, or let’s say upfront benefit, except my car, is now cleaner and greener. Luckily most manufacturers and dealers could come out of it and were about to witness some growth. Just then the pandemic happened.
However, if I talk about digital adoption or their willingness, I think it has gone significantly up. Of course, digital marketing in the auto space was already prevalent. To give our example, I don’t remember any marketer in the auto space, who doesn’t advertise on CarWale – most of them do it all the time now.
Today, all automakers are talking about how to create virtual showrooms with an online booking engine. They are preparing themselves to provide a complete digital experience for the customers. Dealers are saying – if I am not getting any kind of walk-ins, how do I make use of whatever is available? If somebody is interested in a vehicle that I sell, how can I get to them? So, there’s tons of change happening, and we are a beneficiary of that.
I’m not saying that I wanted it to happen, the pandemic. I wish it never happened, but in general, if you see the digital Industry, it can come out of this sooner than let’s say a physical sector. We are a platform where people are already there, even though we stopped some of the marketing we usually do.
The moment the country went into lockdown, we stopped some of the marketing because that was more demand-based, and the demand dried up. So, there was no point to continue to run the campaigns, but primarily if you look at traffic – it has stayed up there. People are still visiting the site and the content consumption of the portal has gone up; people are spending more time because they have undivided attention to do what they want to do.
But this is something which I believe in – when the costs usually are high, digital typically help them curtail those costs because you have measurability. When you run a print ad or show a car in the mall, measurability is all guesswork beyond a point. Digital is a lot easier – from the source until the sale, you can track everything mapping the journey and funnel, and know what worked for you and what didn’t work. So you know what my cost per sale was, what exactly I made on this car, or if I lost money on this particular source.
So I think people are realizing that. Some are thinking short term – that maybe that I should not lose out in the current scenario; but a lot of these would realize it works and continue in the long term.
What’s your observation on electric vehicles? Is India ready for it? Where are we right now, and with the pandemic, are things changing?
Banwari: I think the entire EV market will take a back seat post-pandemic. Of course, my views, and I wish I’m wrong here. But I’ll tell you a couple of things. Let’s divide the entire EV category into three buckets. Let’s say commercial vehicles, then bikes, and finally cars. Commercial vehicles would see a surge because of the pandemic.
If you do the calculation, you would realize an electric vehicle that does not run at least 3000-4000 km per month would be loss-making. It could be a 100% premium over an internal combustion engine vehicle. The main advantage of EV is cheaper fuel per unit wise. The second advantage is that I am reducing my carbon footprint, though this phenomenon is only applicable to a certain niche segment of buyers.
Passenger cars, I think we are more like 8 to 10 years away. It needs battery prices to come down significantly, and we would need the infrastructure to be set up on a large scale. And then, if it is a 30% premium over a regular car, I’ll take it. Until then, it’s not going anywhere. Pushing the industry to build electric vehicles is not a good idea because the sales are not there. You would be sabotaging the Industry. That’s why the production of EV passenger cars is low today.
So, I think passenger vehicles, especially cars, will take a lot more time. Now bikes could adopt a little sooner, and it could be very fast with commercial vehicles. The buses, e-rickshaws, Ola/Uber, and other taxi aggregators could quickly adapt to this. Because of their high daily run, they could justify the premium.
I think the industry has seen tons of challenges in the past already, and they will not want any kind of disruption for now, once things come back to normal. They would want to sell as many cars as they can to bring things back on track.