If you pay to have your groceries delivered, you already know you’re paying a premium for the convenience. But a recent investigation reveals the price you pay may be far different than what Instacart charges someone else for the same item from the same store.
2 Investigates Amy Davis explains why this is happening.
Consumer Reports’ investigation found Instacart using AI to display different prices to different customers... as part of pricing experiments at several big chain stores.
The investigation found that Instacart uses artificial intelligence to conduct widespread pricing experiments at major retailers including Albertsons, Costco, Kroger, Sprouts Farmers Market, and Target.
Hidden price variations
The investigation discovered significant price differences across common household items:
- Skippy peanut butter: $2.99 to $3.69
- Wheat Thins: $3.99 to $4.89
- Cheerios cereal: $7.34 to $7.99
Based on typical household spending patterns, these price variations could result in additional costs of approximately $1,200 per year for a family of four.
AI-Driven price testing
Consumer Reports shows: Instacart acquired AI company Eversight in 2022 and now offers pricing software to retailers as an optimization tool. The company claims this technology can increase grocery store sales by 1-3% and boost profit margins by 2-5%.
The investigation revealed that Instacart systematically tests different price points across large groups of customers, typically adjusting prices in 10-cent increments.
Company response
Instacart told Consumer Reports only 10 retail partners use its Eversight pricing tools, though the company declined to name them.
The company insists that customers in pricing experiments don’t pay more on average, stating that “some consumers may see slightly higher prices for certain items and lower prices for others”.
However, Consumer Reports’ findings challenge this assertion, showing consistent price variations averaging 7% across multiple test baskets.
Consumer impact
While Instacart denies using personal data for price setting, experts warn that the technology could evolve into “surveillance pricing” - using customer data and shopping history to set individualized prices.
What Consumers Can Do
Experts recommend:
- Compare prices across different platforms
- Check in-store prices against delivery service prices
- Be aware that convenience may come with hidden costs
- Consider alternative delivery services or in-store shopping when possible
The Federal Trade Commission is monitoring these pricing practices as concerns grow about algorithmic pricing in essential goods and services.