A recent study has found that Instacart, the largest grocery delivery platform in the United States, is using artificial intelligence (AI) dynamic pricing tools, leading to different users being charged different prices for the same items when purchasing from the same store.
According to reports from the New York Post, the study results were jointly released on Tuesday (December 10th) by progressive advocacy group Groundwork Collaborative, consumer advocacy group Consumer Reports, and news outlet More Perfect Union.
The study revealed that approximately 75% of items in the same store exhibit “same item different price” scenarios, with price discrepancies of up to 23% for the same items viewed by different people.
It is estimated that this pricing strategy could increase American households’ grocery expenses by about $1200 annually.
Researchers recruited 437 shoppers in four cities, requiring them to use the Instacart app to purchase identical items from Target, Safeway, Costco, Kroger, and Albertsons stores.
The results showed that nearly 75% of the test items had multiple different prices. For example, a Safeway store in Washington DC had five different prices for a 12-pack of Lucerne eggs; a Safeway store in Seattle had five different prices ranging from $3.99 to $4.89 for Oscar Mayer Deli Turkey slices, a 23% price difference; and a Target store in North Canton, Ohio had multiple prices ranging from $2.99 to $3.59 for Skippy Creamy Peanut Butter on the same day.
Instacart responded quickly, stating that only 10 retail partners conducted “limited, short-term, random” pricing tests on its platform, and these retailers were raising prices in their physical stores. They emphasized that the tests did not use any personal, demographic, or individual behavior data and that prices would not change in real-time or fluctuate based on supply and demand.
Instacart highlighted that these pricing tests aimed to help retailers understand which product categories consumers are more sensitive to, allowing them to continually lower prices on essential items.
A spokesperson for Instacart informed the media that the prices displayed on the platform are controlled by retailers, and the pricing tests on Target orders were halted after the research was completed.
However, a Target spokesperson stated that Target “is not affiliated with Instacart and is not responsible for pricing on the Instacart platform.”
The dynamic pricing technology disclosed in the study originated from Eversight, an AI company acquired by Instacart in 2022. Instacart’s CEO, Fidji Simo, had previously mentioned in an investor call that this technology could help retailers “dynamically optimize their pricing online and offline” based on consumer sensitivity to price in different product categories.
The release of this study comes at a time when U.S. regulatory agencies and Congress are closely monitoring “surveillance pricing.” The Federal Trade Commission initiated relevant research last year.
In the past month, New York passed the country’s first law requiring companies to disclose if they use algorithms on customer data for dynamic pricing.
Democratic Senator Ruben Gallego of Arizona introduced a bill on Tuesday (December 10th) aiming to prohibit companies from implementing differentiated pricing on the same product or service using consumer personal data.
Meanwhile, grocery prices have increased by 25% since the pandemic began. President Trump recently ordered a comprehensive investigation into allegations of price manipulation in the food industry, with several Democratic lawmakers accusing food giants of price gouging.
Some retailers have explicitly refused to implement differentiated pricing. Tammy Berentson, Chief Marketing Officer of New York chain supermarket Stew Leonard’s, stated that Instacart has never proposed differential pricing to them, and they would never agree to it. She emphasized the importance of fairness and trust towards all customers.
As one of the largest grocery delivery platforms in the United States, Instacart currently partners with over 1500 retailers, covering tens of thousands of stores nationwide. The developments in this matter are closely monitored by the public and policymakers alike.