A comparative analysis of online grocery pricing in Singapore

Our study of the pricing strategies of the dot-bams (brick-and-mortars) and dot-coms of the grocery trade in Singapore differs from other empirical studies. Dot-coms were found to exhibit higher price dispersion than the dot-bams which can be explained by the different marketing strategies of the two types of retailers. We also found that dot-bams change their prices more frequently than the dot-coms, thus implying that online markets will not always have lower menu costs. Moreover, we found no statistically significant difference between the average price level of dot-bams and that of the dot-coms, suggesting that price convergence occurs due to reduced search costs among consumers and thus lower information asymmetries in the grocery market.