Illustration by Tag Hartman-Simkins/Futurism. Source: Getty Images
Does your online grocery ordering ever seem messed up, like the prices just aren’t adding up? It turns out you were right to suspect – and now we have solid evidence.
The evidence is found in new research conducted by a consortium of groups including Groundwork Collaborative, Consumer Reports and More Perfect Union huge experiment The grocery delivery company Instacart is being pushed to consumers.
The researchers’ experiments found evidence that Instacart — which bills itself as “North America’s largest online grocery marketplace” — was charging some customers 23 percent more than others for the same product at the same location.
To gather the information, three groups compiled data from 437 Instacart shoppers browsing stores in several US cities. Overall, the price of the exact same item at the exact same time and in the exact same place fluctuated an average of seven percent.
At Safeway stores in Seattle, the same cart of groceries cost some shoppers as much as $123.93, while others had to pay $114.34 or $119.85. While investigating a Target in Minnesota, researchers found that Instacart divided customers into seven different “price groups,” ranging from a low of $81.24 to a high of $86.78 for the same groceries.
While in the best case scenario the difference in cost is only a few dollars, the algorithmic-tax can add up quickly.
“If faced with the average fluctuations in total basket prices observed in this study, a family of four would spend approximately $1,200 extra per year for groceries on Instacart,” the researchers wrote.
This whole thing started in 2022, when Instacart acquired an AI company eversightThe researchers noted that that acquisition allowed Instacart to begin “experimenting with pricing” by using dynamic algorithms to increase profits from each sale by two to five percent,
In a 2024 call with investors and analysts, Instacart’s CEO said AI pricing algorithms are helping the company “really figure out which categories of products our customers are most sensitive to,” and set prices “based on that information.”
What is worrying is that the companies whose stores were involved in the scheme told researchers that they had no knowledge that the tests were being run. For example, Target said it has no relationship with Instacart, adding that it “does not directly share any pricing information with Instacart or dictate what Instacart prices appear on their platform.”
In its defense, Instacart told the consortium that it undercuts Target’s prices and takes the extra amount to cover its “operating and technology costs.” However, the company claims that the price fluctuations were a test to see how much extra they needed to charge, and “the tests have now ended.”
Although that particular research mostly involved online shoppers, companies like Walmart, Kroger and Whole Foods have moved to implement dynamic pricing for in-store shoppers as well. For example, Kroger has been experimenting with these systems since 2018, according to forbesAnd it has since been rolled out to hundreds of brick and mortar locations.
reinforces all this previous research Which shows that by far the biggest driver of inflation is corporate profits. With new dynamic pricing algorithms that can change costs airline ticket, insurance coverage And now with groceries, profits are reaching new heights.
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