Dilution of microfluidic droplets where the concentration of a reagent is incrementally varied is a key operation in drop-based biological analysis. Here, we present an electrocoalescence based dilution scheme for droplets based on merging between moving and parked drops. We study the effects of fluidic and electrical parameters on the dilution process. Highly consistent coalescence and fine resolution in dilution factor are achieved with an AC signal as low as 10 V even though the electrodes are separated from the fluidic channel by insulator. We find that the amount of material exchange between the droplets per coalescence event is high for low capillary number. We also observe different types of coalescence depending on the flow and electrical parameters and discuss their influence on the rate of dilution. Overall, we find the key parameter governing the rate of dilution is the duration of coalescence between the moving and parked drop. The proposed design is simple incorporating the channel electrodes in the same layer as that of the fluidic channels. Our approach allows on-demand and controlled dilution of droplets and is simple enough to be useful for assays that require serial dilutions. The approach can also be useful for applications where there is a need to replace or wash fluid from stored drops.