If you have ever been frustrated about how much your grocery bill fluctuates each week, it’s not in your head: Your eggs might cost more than your neighbors’ if you shop for them through Instacart, according to a new report.
In a joint investigation, nonprofits Consumer Reports and More Perfect Union and progressive policy group Groundwork Collaborative teamed up with researchers to recruit 437 volunteer secret shoppers in-person and online across multiple U.S. cities. The shoppers placed an order for the exact same set of basket items at the same time and at identical stores.
The report found that Instacart shoppers could receive up to five radically different prices for the same everyday household items like Wheat Thins crackers, dairy or cereal. A dozen Lucerne eggs could either be sold for $3.99, $4.28, $4.59, $4.69 or $4.79 on Instacart at a Safeway store in Washington, D.C., for example, while a box of Good & Gather Farfalle Pasta at a North Canton, Ohio, Target store got priced at $1.19, $1.39 or $1.43.
These price differences could add up to a lot over a year of groceries. Some shoppers in the study got prices that were up to 23% higher than prices available to other shoppers for the exact same items. In total, these price swings could add up to $1,200 per year, the report found, using Instacart’s own analysis of what an average U.S. household of four spends on groceries.
“Our studies suggest that these practices are very pervasive,” said Lindsay Owens, executive director of the Groundwork Collaborative.
How Instacart Can Change What You Pay For Eggs
Instacart told HuffPost these price changes are part of a “short-term randomized” price-testing experiment with retail partners. The e-commerce giant does this through Eversight, a software company which Instacart acquired that uses artificial intelligence to set prices.
“These tests are not dynamic pricing ― prices never change in real-time, including in response to supply and demand,” Instacart told HuffPost in a statement that it has also shared online. The e-commerce giant acknowledged that 10 retail partners have conducted these price tests, but did not respond to questions about who these retailers are.
Owens said that what Instacart is doing “is arguably more deceptive than dynamic pricing.”
“Target isn’t running out of Cheerios, Safeway isn’t running out of Wheat Thins. That doesn’t mean they aren’t changing their prices dynamically,” Owens said. “This is basically high-frequency dynamic pricing, completely untethered from managing scarce resources, and instead entirely done for the purpose of extracting consumer surplus of fine-tuning and calibrating exactly how much each customer is willing to pay for an item before they take it out of their cart.”
In response to the report, Target said it has no business relationship with Instacart, and Instacart subsequently acknowledged that it scrapes Target’s publicly displayed prices, and those additional markups are meant to offset its “operating and technology costs,” according to company responses the researchers received.
Owens said the fact that these price changes happened at Target stores “suggests that this is happening not only within their retail partners, but outside their retail partners,” which underscores how pervasive this practice is.
Instacart said the price differences shoppers may see are not personalized.
“A customer may see slightly lower prices on everyday essentials, such as milk or bread ... and slightly higher prices on less price-sensitive products, like craft beverages or specialty snacks,” Instacart said in its statement. “Personal, demographic, and user-level behavioral data are never used to set online item prices on Instacart.”
How To Fight Back Against AI-Driven Pricing
Being charged wildly different prices through AI-powered algorithms is not new. Airlines and event ticketers are already accused of doing this.
But price differences for groceries are uniquely stressful. Having enough money to buy a week of groceries is not just a want, it’s an essential need that too many Americans say they cannot fulfill amid mass layoffs, rising inflation and tightening budgets. In an August poll of 1,437 adults, more than half of respondents said grocery bills were a “major” stress in their lives.
One way consumers can fight back against this unfair practice is to pressure lawmakers into doing something about it, Owens said.
This December, Sen. Ruben Gallego (D-Ariz.) introduced legislation to outlaw surveillance pricing for companies, including grocery stores. “Greedy corporations are compiling Americans’ personal data and using AI to find their ‘pain point’ ― the maximum they’re willing to pay. That’s not fair pricing, that’s predatory pricing. My bill puts an end to it,” Gallego said in a statement about the bill.
And in the meantime, consumers can make their own choices about how they shop.
“Consumers can vote with their wallets, and if they are able to procure groceries without using Instacart, that’s a great option,” Owens said.