Manu Agarwal got into the business of e-commerce in 2008. He launched Naaptol, which is essentially a price comparison engine. But, a lot has changed since then. Today, Naaptol is virtually an online market place with the company facilitating transactions worth Rs 1.5 crore every single day. CNBC-TV8’s Saugat Saha hits the road to find out more about Naaptol and the road ahead.

Manu Agarwal is giving traditional retail a run for money with his venture Naaptol. Betting big on Tier 2 and Tier 3 retail markets, Manu caters to over 4,000 customers daily, e-tailing about 2 lakh products across 500 brands. CNBC-TV18 caught up with Manu to see how he naaptols his venture and the billion dollar e-commerce business in India.

After weighing the pros and cons of starting up an e-commerce business, Manu Agarwal decided to launch Naaptol.com in 2008. A home shopping venture Naaptol connects buyers and sellers print and TV ads and even on the mobile. This virtual market place today ventures 2 lakh products and 500 brands on its portal, but Manu admits he did not get it right at the first time. Originally launched as the price comparison for electronic products and gadgets, Manu soon realised that the big bucks lie not just in telling audiences where the best deals are, but bringing them onto the platform and helping them transact.

Below is a verbatim transcript. Also watch the accompanying video.

A: We started thinking as to what is that which we need to do to start monetising. We realised that what we have become, we have become like what the Google is for search in normal sense, and we have become something for product search. However, Google has a way to monetise its visitors through the adverts. So, we had to discuss something with our adverts, which we realised it was hot deals. So, the thought process was that if people are visiting the site and they are say looking for a mobile phone, and you have a great deal on mobile phone, which you showcase to them, then there is a reasonable probability that they would buy it. So, that is how the hot deal concept started.

Q: You were one of the early e-commerce businesses in the country. Today e-commerce is a hotspot for entrepreneurs, how have you positioned yourself in the pack?

A: 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 medium. We use print publications. Today, there are over 50 print publications which we work with. We are there on different TV channels, or to their commercial airtimes where we again publicise our hot deals. We are they are on the internet, on mobile application.

Q: As a home shopping venture, what is the kind of traction you have been able to create?

A: We consistently do about 5,000 transactions a day. So, we have become pretty much a largest shopping player in India. Sixty percent of our business today comes from reaching out to the consumers, through the print advertisements. Thirty percent of our business comes in from reaching out to consumers through TV advertisements. And about 10% of our business comes from the retail space.

Q: The Indian consumer very often is said to be very experiential in nature. How are you able to convince them by right out of home or online?

A: Virtual shopping today in our opinion is not only about convenience. It is largely to do with availability. India is a big geography also, so as you go beyond Tier 2 and Tier 3, a lot of these products are just not available. So, if you are able to service a customer remotely and he is able to reach to you to place an order on you, that is his key demand.

Q: Don’t you feel that they are also apprehensive in making that first purchase without having to touch and feel that product?

A: That apprehension is there, and will always remain. However, when a consumer calls us up, agent spends quite a bit of time with that customer to take him through his questions and makes sure that we answer all of them for him to be able to make that purchase decision.

With over 60% e-tail transactions in India done over the phone, Manu has set up four call centres with 650 employees to facilitate transactions on the Naaptol.com. Reaching to more than 30,000 cities in the country, Naaptol today powers 4,000 sales everyday grossing revenues of Rs 1.5 crore. But with products on its portal often unbranded, convincing the value for money the Indian consumer, has not been easy.

Having a Chinese product per se is not a bad thing. But not ensuring it is quality and it is working fine is a bad thing. So that is where we need to ensure and which is what we do.

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Q: In fact researching for Naaptol, every fifth link led to an aggrieved customer. What are you really doing to manage that part of the business?

A: Today, we run like a 100 member cell, only to address, to be able 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 only have a warehouse only for the reverse logistics. We don't have a warehouse for dispatch which we use to supply warehouses. So, it comes to our reverse logistics warehouse where we can decide whether now a refund needs to be given or our replacement needs to be given. So, the focus is there.

Q: So what are the kind of revenues that you have been able to manage at Naaptol?

A: We move parcels worth about Rs 1.5 crore everyday. A lot of growth for us is coming from the TV area because we would cut across all the media and grow.

Q: What margins do you operate on with the dealers?

A: Depending on the category, the margins on our sector is between 15% to 30%.

Q: So in terms of a ballpark what is the kind of turnover you are looking at for the year to come?

A: I think we would be expanding at least three times in next 12 months.

With plans to triple Naaptol's turnover this year, Manu Agarwal next wants to launch a private sales section on the website and eventually a home shop TV channel. Raising its first round of funding in 2010, Manu Agarwal is looking to consolidate his business and he is investing in essential elements like payment gateways, logistics and warehousing.

Q: Sanjeev Bikhchandani was on our show a few weeks back and he was talking about how e-commerce has got very little to do with "e" and it is all about commerce. It is all about logistics, stock management and the entire backend. How have you been able to manage all of that at Naaptol? What are the kind of challenges in a business like this?

A: One is your warehousing, which is accessibility of inventory which is readily available, which is quality checked and can be dispatched faster. The second area is the logistics. The third area is the customer service. Today, we work with seven different logistic players. Again for customer service, for a resolving side, getting that reversed logistics in place, giving customer multiple options. You are right. e-commerce is not about “e”. It is actually about that commerce. It is about being able to manage all of these things at a scale.

Q: Do really feel that e-commerce in India today has created enough traction to compete with traditional retail or traditional shopping?

A: Today, traditional retail is close to USD 500 billion. e-commerce, if you leave travel apart, it’s probably less than a billion dollars. So, it is way apart. e-commerce or the virtual commerce also has an advantage to be able to go to every nook and corner of the country. So, I see traditional retail succeeding in near-term onto the larger cities. However, as you go tier two and beyond, the virtual retail will have an edge.

Q: So what are your future plans? What are your next growth targets?

A: Today, I am very clear that even at current levels we are just a small speck in the whole world of retail. So, today for us to grow from here ten times would not be a challenge at all. So, I am looking at doing 50,000 transactions a day in next couple of years to come, which is really giving the traditional retail a run for their money.

Q: So are you looking at a second round of funding now?

A: We are not actively looking at a round. But we have been in discussion with few players. People are seeing us as a very mature virtual shopping player and a company at our scale also ramping up very fast. So, there is lot of action in the market as to say into that space.

Q: You have been a serial entrepreneur. In 1998, you launched Design Expo. In 2003, it was ANMSoft which is a software company. 2008 was Naaptol. Are you again at the cusp of another big opportunity?

A: Not at all. A lot of people tell me that Manu you have got lucky the third time. So, I have not really succeeded the past two attempts, though all of them in their own ways were reasonably successful. But I think Naaptol is the big idea I am working on. Everyday as I start to see as to what we are doing and how much we can grow, it actually gives me goosebumps.