Chart of the Day: Why e-tailers would not go on a price war with brick-and-mortars

Brick-and-mortar players have higher gross margins.

As e-grocery players gain steam in Singapore, some analysts believe that they wouldn't aggressively compete with brick-and-mortars in terms of prices yet.

This chart from RHB shows the higher gross margins of three of the biggest brick-and-mortar players in Singapore.

"We do not think online pure plays would go on a price war at the moment since the brick-and-mortar plays have much higher gross margins to endure price cuts," RHB said.

More so, the brokerage firm noted that brick-and-mortar supermarkets are generally still cheaper on a basket of goods basis.

"Given that chain supermarkets have a larger scale and higher gross margins, we think online players are unlikely to go on a price war at the moment. We think online players would continue to track offline prices closely and competitively in the near term as they try to scale up," RHB said.

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