• Young Turks

Betting big on tier II and tier III retail markets, Agarwal caters to over 4,000 customers daily, retailing more than 2 lakh products over 500 brands. After weighing the pros and cons of starting up an e-commerce business, Agarwal decided to launch Naaptol.com in 2008. A home shopping venture, Naaptol connects buyers and sellers online, through print and TV ads and the mobile phone.

This virtual marketplace is buzzing today, but Agarwal admits that he did not get it right the first time. Originally launched as a price comparison engine for electronic products and gadgets, Agarwal soon realized the big bucks lie not just in telling audiences where to get the best deals but bringing them to the platform and helping them transact online!

“We’ve become what Google is like in the product search area. However, Google has a way to monetize its visitors which is through Ad Words, so we had to discover our own Ad Words, which we realized was via ‘Hot Deals’. We thought that if people are visiting the site, looking for a mobile phone and we have a great deal on a mobile phone which you showcase to them, then there is a reasonable probability that they would buy it. So, that’s how the Hot Deals concept started,” explains Agarwal.

His company was one of the early e-commerce businesses in the country but today the space is quite congested. Agarwal starts off by saying: “I don’t like to use that word e-commerce. We are more of a virtual shopping or a home shopping business. We reach out to consumers on Hot Deals through different mediums like print publications. Today, there are over 50 print publications which we work with. We are there on multiple TV channels, onto their commercial airtimes where we again publicize our Hot Deals. We’re there on the internet; we’re there on our mobile applications.”

As a home shopping venture, Agarwal’s venture has been able to achieve good traction. It consistently does about 5,000 transactions a day, thereby becoming the largest home shopping player in India. Almost 60 percent of his business comes from reaching out to consumers through print ads, 30 percent from TV ads and about 10 percent comes from the digital space.

But how has he been able to convince the Indian consumer to buy right out of home or online? “Virtual shopping today is not only about convenience. It is largely to do with availability. India is a big geography, so as you go beyond tier II and tier III cities, many products are just not available. If you are able to service a customer remotely and he’s able to reach out remotely to you to place and order a product, that is his key demand,” explains Agarwal.

He goes on to add: “There is some apprehension. However, when a consumer calls us up, the agent spends quite a bit of time with that customer to take him through his questions and make sure that we answer all of them for him to be able to take a purchase decision.”

With more than 60 percent e-mail transactions in India done over the phone, Agarwal has set up four call centers with 650 employees to facilitate transactions on the Naaptol platform.Reaching out to more than 3,000 cities across the country, Naaptol today powers over 4,000 sales everyday; grossing revenues of Rs.1.5 crore. But with products on its portal often unbranded, convincing the Indian consumer about value-for-money has not been easy.

While researching for Naaptol, Young Turks found that every fifth link led to an aggrieved customer. “We run a 100-member cell only to make sure that any customer who has a complaint can report it back to us. Our logistics partner can pick up the goods. We have a warehouse only for reverse logistics. We don’t have a warehouse for dispatch, for which we use supply warehouses. So, it comes to our reverse logistics warehouse where we can decide how a refund needs to be given or a replacement needs to be given,” explains Agarwal.

Coming to revenue figures, Agarwal says he moves parcels worth about Rs.1.5 crore everyday. A lot of growth is coming from the TV area. And, depending on the category, the margin on his sector is between 15 percent to 30 percent.
In terms of a ballpark, he is looking at expanding at least three times in the coming 12 months. Agarwal also wants to launch a private sales section on the website and eventually a home shop TV channel.

Raising its first round of funding from Canaan Partners in 2010, Agarwal is looking to consolidate his business and is investing in essential elements like payment gateways, logistics and warehousing.

Along the way, Agarwal has faced and overcome a number of challenges. Does he feel that e-commerce in India has created enough traction to compete with traditional retails or traditional shopping? “Traditional retail is close to Rs.22.5 lakh crore. E-commerce, if you leave the travel apart, is probably less than Rs.4,500 crore. So, the two are a long way apart. E-commerce or virtual commerce have the advantage of being able to go to every corner of the country. So I see traditional retail succeeding in near term in the larger cities. However, as you go to tier II cities and beyond, virtual retail will have an edge,” explains Agarwal.

Talking about future plans, the young entrepreneur says, “Even at our current level we are a small speck in the retail world. So, to grow from here 10 times will not be a challenge at all. I’m looking at doing 50,000 transactions a day in the next couple of years, which will really give traditional retail a run for its money.”

And is he looking at a second round of funding now? “Not actively looking but we have been in discussions with a few players,” he explains.

Agarwal, who has been a serial entrepreneur before, had launched Design Expo in 1998, in 2003 he had launched ANM Soft which was a software company, and in 2008 Naaptol. So, is he again at the cusp of another big opportunity? “No. Many people tell me that you have got lucky the third time. I had not really succeeded in my past two attempts, though the ventures were reasonably successful. But Naaptol is the big idea I’m working on. Everyday when I see what we’re doing and how much we can grow, it actually gives me goosebumps,” he signs off.

©Entrepreneur June 2011

Tags:
ad words, ANM soft, Canaan Partners, channel, design expo, E-Commerce, Google, hot deals, logistics, Manu Agarwal, Naaptol, retail, shopping, transactions, Young Turks