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An investigation by Consumer Reports and the Groundwork Collaborative found that Instacart is conducting AI-powered pricing experiments that dramatically increase the price of the same product for different customers.
Researchers compared the shopping carts of consumers who were instructed to buy the same items at the same time on the platform and found that in some cases, the price difference was as much as 23%.
Lindsey Owens, executive director of the Groundwork Collaborative, told FOX Business that these discrepancies could mean families are unknowingly paying an extra $1,200 a year on food.
“At a time when the food affordability crisis is at its worst in a generation, families are making huge sacrifices,” Owens said.
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Owens said the nonprofit think tank has long studied Instacart in a variety of contexts, including the acquisition of Eversight, and that Instacart has been the driving force behind these pricing experiments.
As part of a months-long investigation, the group organized simultaneous online shopping sessions with hundreds of volunteers shopping at some of the nation's largest grocery retailers, including Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market and Target, Owens said.
A split-screen comparison lists flour and saltine crackers at various selling prices. (Foundation construction cooperation)
“We set up a Zoom call 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 item to their cart, took a screenshot of the price, and sent it to us. We then entered the price, analyzed the data, and calculated the average difference across all tests.”
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An Instacart spokesperson did not deny the claims in the report. A spokesperson said these tests are “short-term, randomized, and designed so that some people see slightly lower prices and some people see slightly higher prices, with the aim of helping our retail partners understand consumer preferences and identify categories to invest in at lower prices.” The company says this only happens with some of its 10 retail partners.
A split-screen comparison shows online prices for Cheerios cereal and Lucerne eggs. (Foundation construction cooperation)
Target said it is not affiliated with Instacart and is not responsible for prices on the Instacart platform.
When FOX Business followed up with Instacart, the company said it would use publicly available Target prices as a starting point and add an additional amount to cover Instacart's operational and technology costs when consumers shop at Target through the platform.
Instacart also said it was testing different ways to apply these cost offsets during the period Consumer Reports investigated. Target said in-store pricing testing has ended.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| ACI | Albertsons COS INC | 17.28 | +0.22 |
+1.29% |
| Fee | Costco Wholesale Co., Ltd. | 884.48 | +10.07 |
+1.15% |
| TGT | Target Co., Ltd. | 96.97 | +2.35 |
+2.48% |
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Instacart said such experiments are similar to when retailers test “in-store pricing to better understand consumer preferences.”
For example, an Instacart spokesperson said customers may see slightly lower prices for everyday items like milk and bread, but slightly higher prices for less price-sensitive items like craft drinks and specialty snacks.
The company reiterated that these experiments are completely randomized and are not based on individual or behavioral characteristics or supply and demand.
People shopping at a grocery store in New York City. (Spencer Pratt/Getty Images)
Instacart said it would continue to work with retailers to ensure transparency in online grocery shopping, but Owens said consumers didn't even know these checks were happening.
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FOX Business reached out to Albertsons, Costco, Kroger, Safeway and Sprouts Farmers Market.
