FALMOUTH, MA – APRIL 8: Instacart shopper Loralyn Geggatt makes a delivery to a customer’s home during the COVID-19 pandemic in Falmouth, MA on April 7, 2020. Some Amazon, Instacart and other workers protested for better wages, hazard pay and sick time. (Photo by David L. Ryan/The Boston Globe via Getty Images)
Boston Globe
Grocery delivery app Instacart uses artificial intelligence pricing tools that have caused many U.S. shoppers to pay higher or lower prices for identical products from the same store, according to a new study.
The study, released Tuesday by Groundwork Collaborative, a progressive advocacy group, Consumer Reports and news organization More Perfect Union, enlisted 437 shoppers across four cities to add the same items to their carts within the Instacart app from the same store.
The researchers ran the experiment at a number of popular grocery retailers that partner with Instacart, including Target, Costco, Albertsons, Kroger and Safeway.
Almost 75% of the items tested were offered at different prices to shoppers, the organizations found. In one case, users observed that a carton of a dozen Lucerne eggs was listed at five different price points at a Safeway in Washington, D.C.
The total cost for the same basket of goods at a single store varied by about 7%, which could amount to a “cost swing of about $1,200 per year,” Groundwork said.
Instacart said in a blog post following the report that a “small subset” of its retail partners run limited online pricing tests. The tests don’t use personal, demographic or individual-level behavioral data, Instacart said, adding that prices “never change in real-time, including in response to supply and demand.”
“These short-term, randomized tests help retail partners understand category-level price sensitivity so they can sustainably invest in lower prices where consumers care most,” the company wrote.
An Instacart spokesperson said in a statement that the company is focused on affordability and that retailers “control their prices” on the platform.
Instacart, in 2022, acquired Eversight, an AI-powered pricing and promotions platform, for an undisclosed amount.
The study comes as regulators, politicians and advocacy groups have zeroed in on the use of AI-driven pricing tools, arguing that it leads to discrepancies in what consumers pay, often without their knowledge.
Lawmakers have specifically called out airlines and ride-hailing companies’ use of AI to set prices.
Last month, New York State enacted a first-of-its-kind law requiring businesses to disclose if they use customers’ personal data to algorithmically set prices. The Federal Trade Commission is also examining the issue, initiating a study last year to better understand surveilling pricing tactics used by companies.
Senator Ruben Gallego, D-Ariz., introduced new legislation on Tuesday that seeks to ban companies from charging different prices to consumers for the same product or service using their personal data.
