SAN FRANCISCO (KRON) — Instacart is hitting at reports it charged some customers more than others for the exact same items as part of an artificial intelligence-enabled experiment. A report from Consumer Reports alleges the grocery delivery app priced identical products differently from one customer to the next by as much as 23%.
Instacart was founded in 2012 and is based in San Francisco.
The report was produced in collaboration with Groundwork Collaborative, which alleges that Instacart and companies like it “are developing, acquiring, and perfecting technology to experiment with pricing, at scale.”
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“Two shoppers walk into the exact same grocery store, at the exact same time, and pick up the exact same box of Cheerios. Then, they head to the cash register to check out. This sounds like the opening line to one of those ‘three guys walk into a bar’ jokes,” the report stated, “but there’s nothing funny about it.”
According to Consumer Reports, Instacart’s experiment revolved around using AI-generated pricing algorithms price groceries to individual shoppers. The report found that Instacart’s algorithmic pricing experiment was being implemented at several of the biggest grocery chains in the nation, including Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market, and Target.
Research for the report was conducted through an experiment involving 437 shoppers in live tests across four cities. Researchers helped shoppers in simultaneously adding items from a specific store to their Instacart carts, without making the purchases.
Researchers then measured the prices displayed to each shopper how those prices varied from one to the next. The report determined that there was an average of about a 7% difference in basket totals, which could translate into an annual cost swing of about $1,200.
Calling the price differences “negligible,” Instacart has hit back at allegations while stopping short of denying the reports’ findings outright.
In a company blog post, Instacart said it was “doubling down on affordability” and “partnering with retailers to lower prices and make services like Instacart accessible to customers.” The company also appeared to push some of the responsibility for the variation in prices onto the retailers.
“While we have made real progress working with our retail partners to drive affordability through loyalty integrations, same-as-in-store pricing, and more — retail partners on our platform control their pricing strategies,” the company wrote. “Some choose to apply online markups to help offset the cost of providing same-day delivery to customers.”
Alex Baker
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