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Instacart uses AI-driven pricing experiments that significantly increase prices of identical products for different customers, according to a survey by Consumer Reports and Groundwork Collaborative.
By comparing the baskets of consumers invited to purchase the same products simultaneously on the platform, the researchers found that in some cases the price difference reached 23%.
Lindsay Owens, executive director of Groundwork Collaborative, told FOX Business that because of these discrepancies, a family could unknowingly pay $1,200 more per year for food.
“This is costing families at a time when the food affordability crisis is worse than it has been in more than a generation,” Owens said.
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Owens said the nonprofit think tank has long studied Instacart in a number of contexts, including its acquisition of Eversight, which she said fuels these pricing experiments.
As part of his months-long investigation, Owens said the groups orchestrated simultaneous online shopping sessions with hundreds of volunteers shopping at some of the nation’s largest grocery retailers, such as Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market and Target.
A split-screen comparison shows Wheat Thins and saltine crackers listed at varying sale prices. (Basic collaborative work)
“We held Zoom calls and asked people to use their phones to find the same 18 to 20 groceries on Instacart at the same time,” Owens said. “They added the items to their cart, took screenshots of the prices and sent them to us. We then entered the prices, analyzed the data and calculated the average differences between all tests.”
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An Instacart spokesperson did not deny the report’s claims. The spokesperson said these tests are “short-term, randomized and designed so that people may see slightly lower prices and some may see slightly higher prices, with the aim of helping business partners understand consumer preferences and identify categories where they should invest in lower prices.” The company said this only happens with a subset of its 10 retail partners.
A split-screen comparison displays online prices for Cheerios cereal and Lucerne eggs. (Basic collaborative work)
Target said it is not affiliated with Instacart and is not responsible for pricing on the Instacart platform.
When FOX Business tracked Instacart, the company said it used publicly available Target prices as a starting point, then added an additional amount to cover Instacart’s operations and technology costs when consumers shopped at Target through the platform.
Instacart also said that during the period reviewed by Consumer Reports, it was testing different ways to apply these cost offsets. He said price testing on the Target storefront is now complete.
| Teleprinter | Security | Last | Change | Change % |
|---|---|---|---|---|
| ACI | ALBERTSONS COS INC. | 17.28 | +0.22 |
+1.29% |
| COST | COSTCO GROSS CORP. | 884.48 | +10.07 |
+1.15% |
| TGT | TARGET CORP. | 96.97 | +2.35 |
+2.48% |
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Instacart said these experiments are similar to those where retailers test “prices in their physical stores to better understand consumer preferences.”
For example, an Instacart spokesperson said a shopper may see slightly lower prices on everyday essentials, such as milk or bread, but slightly higher prices on less price-sensitive products, like craft drinks or specialty snacks.
The company reiterated that these experiments are completely randomized and are not based on personal or behavioral characteristics as well as supply and demand.
People shop at a grocery store in New York. (Spencer Platt/Getty Images)
Instacart said it would continue to work with retailers to ensure online grocery shopping is as seamless, but Owens said consumers don’t even know these tests are happening.
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FOX Business contacted Albertsons, Costco, Kroger, Safeway and Sprouts Farmers Market.
