Instacart’s AI pricing experiment drives up costs for some shoppers, study says

Instacart is using AI-enabled pricing experiments that are substantially raising the prices of identical products for different customers, according to an investigation by Consumer Reports and Groundwork Collaborative. 

By comparing shopping carts of consumers who were instructed to buy the same products on the platform at the same time, researchers found that in some cases the price difference was as high as 23%.

Lindsay Owens, the executive director of Groundwork Collaborative, told FOX Business that because of these discrepancies, a family could unknowingly be paying an extra $1,200 extra a year for food. 

"It's costing families dearly at a time when the grocery affordability crisis is worse than it's been in over a generation," Owens said.  

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Owens said the nonprofit think tank had long been studying Instacart in a number of contexts, including its acquisition of Eversight, which she said powers these pricing experiments. 

As part of its monthslong investigation, Owens said the groups orchestrated simultaneous online shopping sessions with hundreds of volunteers shopping at some of the nation’s biggest grocery retailers, such as Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market and Target.  

"We set up Zoom calls and asked people to use their phones to find the same 18 to 20 grocery items on Instacart at the same time," Owens said. "They added the items to their carts, took screenshots of the prices, and sent them to us. We then entered the prices, analyzed the data and calculated the average differences across all the tests."

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An Instacart spokesperson didn't deny the claims made by the report. The spokesperson said that 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 goal of helping retail partners understand consumer preferences and identify categories where they should invest in lower prices." The company said this only occurs with the subset of its 10 retail partners. 

Target said it isn’t affiliated with Instacart and is not responsible for prices on the Instacart platform.

When FOX Business followed up with Instacart, the company said it uses publicly available Target prices as a starting point, then adds an extra amount to cover Instacart’s operating and technology costs when consumers shop at Target through the platform.

Instacart also said that during the period reviewed by Consumer Reports, it was testing different ways of applying those cost offsets. It said the pricing tests on the Target storefront have now ended.

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Instacart said these experiments are similar to when retailers test "prices in their physical stores to better understand consumer preferences."

For instance, an Instacart spokesperson said a customer may see slightly lower prices on everyday essentials, such as milk or bread, but slightly higher prices on less price-sensitive products, like craft beverages or specialty snacks. 

The company reiterated that these experiments are completely randomized and not based on personal or behavioral characteristics as well as supply and demand. 

Instacart said it will continue working with retailers to ensure that online grocery shopping is as transparent, but Owens said that consumers had no knowledge that these tests were even occurring. 

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FOX Business reached out to Albertsons, Costco, Kroger, Safeway and Sprouts Farmers Market.