Instacart’s AI Experiment Allegedly Charges Customers Varied Prices
The grocery delivery service Instacart is under scrutiny for allegedly charging varied prices to customers for the same items using artificial intelligence. A recent study conducted by Groundwork Collaborative and Consumer Reports examined the pricing practices of Instacart by analyzing more than 400 shoppers across four cities.
Key Findings from the Study
The investigation revealed that Instacart offered up to five different sales prices for identical items in the same store on the same day. The average price difference on these items was approximately 13%, with some shoppers encountering prices as much as 23% higher than others.
- The study assessed 437 shoppers in:
- North Canton, Ohio
- Saint Paul, Minnesota
- Washington, D.C.
- Seattle, Washington
- Individual shoppers could potentially spend an additional $1,200 annually due to these pricing discrepancies.
Specific Examples of Price Variability
At a Safeway in Washington, D.C., Lucerne eggs had the following prices:
| Price Variation |
|---|
| $3.99 |
| $4.28 |
| $4.59 |
| $4.69 |
| $4.79 |
In Seattle, the prices for a box of 10 Clif Chocolate Chip Energy bars ranged from:
- $19.43
- $19.99
- $21.99
Consumer Concerns and Reactions
Lindsey Owens, the executive director of Groundwork Collaborative, criticized Instacart’s pricing strategies. She emphasized that grocery shoppers should not be treated as test subjects in pricing experiments.
Instacart asserts that their price variations are not a form of dynamic pricing and do not change in real-time. A spokesperson mentioned that the adjustments are part of limited tests aimed at improving store revenues while keeping essential items affordable for consumers.
Instacart’s Use of Artificial Intelligence
The company began implementing these pricing experiments after acquiring the AI firm Eversight in 2022. Instacart now promotes Eversight’s software to retail partners, claiming it can enhance revenue by up to 3% without significantly affecting consumers.
Despite these reassurances, the study found that nearly 75% of grocery items experienced price variations, ultimately increasing the annual grocery bills for consumers.
As a result of these findings, Instacart’s stock saw a decline of more than 5% during midday trading on Wednesday, though it has increased by 1% throughout the year.
