A comparative analysis of online grocery pricing in Singapore

Authors:
Lydia Gan;Shujia He;Tingli Huang;Jiebin Tan
Affiliations:
Department of Economics, Finance, and Decision Sciences, School of Business, University of North Carolina at Pembroke, P.O. Box 1510, One University Drive, Pembroke, NC 28372-1510, U.S.A;Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Nanyang Avenue, Singapore 639798, Singapore;Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Nanyang Avenue, Singapore 639798, Singapore;Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Nanyang Avenue, Singapore 639798, Singapore
Venue:
Electronic Commerce Research and Applications
Year:
2007

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Abstract

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.