Retail Marketing in India: Trends and Future Insights pp. 1–15 © Ambedkar University Competing with Virtual Entities: IT Product Purchases in India Debdatta Saha 1* , Ram Narayan Shrestha 2 , T M Vasuprada 3 1 Assistant Professor, Faculty of Economics, South Asian University, New Delhi 2,3 Research Scholar, Faculty of Economics, South Asian University, New Delhi Abstract This paper investigates the impact of recent price discounts offered by e-commerce entities such as Flipkart on consumer preferences and on wholesale brick-and-mortar sellers for Information and Technology (IT) products, speciically computers, laptops and related accessories. Our results are based on a consumer survey in Delhi and a supply-side survey of sellers at Asia’s largest electronic and IT goods market for this product category (Nehru Place market, New Delhi). The Chi-square Automatic Interaction Detection (CHAID) decision tree analysis is used to understand the determinants of consumers’ preferred shopping destination. We ind evidence of a signiicant shift away from brick-and-mortar shops in favor of online purchases with high price-choice sensitivity among consumers. Business strategies that traditional shops are following to counter the online price challenge are investigated. It is found that diversiication of the product basket and price risk, rather than seller experience, is a robust strategy to counter Bertrand price competition in retail. Keywords Bertrand Price Competition in Retail, Consumer Decision-making process, Chi-square Automatic Interaction Detection (CHAID), Seller’s Risk Perception, Durable Goods Purchase 1. Introduction and Objectives In recent times, the biggest Schumpetarian upheaval in the Indian retail space has been the explosion of e-commerce, with tempting choices and unbelievable prices across an unimaginably large spectrum of consumer products (groceries, baby diapers, computers, laptops, mobile phones, etc.). Although the present volume of e-commerce is miniscule relative to total retail sales in India, the recent growth surge of e-commerce is impressive with Credit Rating and Information Services of India Limited (CRISIL), estimating a Compound Annual Growth Rate (CAGR) of 50–55% for the next three years. In this paper, we study the effect on consumer preferences and ofline business strategies due to competition by e-commerce in the sales of computers, laptops and accessories. The choice of the ofline market place in this paper, namely Nehru Place, is driven by the fact that it is Asia’s largest electronic goods market a . The product category of IT goods is durable in nature, which is the desired product attribute for which we intended our study. * Corresponding Author: Debdatta Saha (debdatta@sau.ac.in) a This is mentioned in Sundaram (2004) as well as e-resources such as http://india24.xyz/ nehru-place-asias-biggest-computer-electronics-gadget-market/, http://www.nehruplace.net. in/articles/nehru-place-asia-biggest-it-market.htm