Instacart’s Pricing Practices Under Fire
Instacart has come under scrutiny for its pricing algorithms, which reportedly charge different customers varying amounts for the same grocery items at identical stores. A recent study indicates that these undisclosed price differences can be significant.
For example, at a Target in North Canton, Ohio, one customer was charged $2.99 for Skippy Creamy Peanut Butter, while others reported paying as much as $3.59 for the identical product at the same location on the same day.
Similarly, at a Safeway in Seattle, prices for Oscar Mayer Deli Turkey fluctuated between $3.99 and $4.89, reflecting a notable 23% disparity from the lowest to highest price observed.
This trend persisted at Target and Safeway locations across four cities, as noted in a survey conducted by Groundwork Collaborative and Consumer Reports, which interviewed 437 shoppers who used the Instacart app for grocery pickups.
This situation is part of a growing concern regarding “dynamic pricing,” a controversial practice popularized by ride-hailing apps like Uber and Lyft, where prices surge during high-demand periods. Now, many consumers are facing increased prices, particularly as inflation continues to take a toll.
Airlines are notorious for inflating prices based on customer traffic, a tactic referred to as “surveillance pricing.” Even fast-food chains have purportedly shown price variations on their menus, especially those displayed digitally.
According to Groundwork, Instacart’s pricing model could lead shoppers to spend over $1,200 more each year on groceries, which is concerning since food inflation has exceeded general price increases since the pandemic began.
The research found that nearly 75% of groceries sold on Instacart had different price points, a notable statistic for one of the largest grocery shopping platforms in the U.S.
In response to inquiries, Instacart stated that its pricing “tests” do not consider individual shoppers’ personal data or behaviors. They clarified that while prices fluctuate, they’re not “dynamic” in real-time but rather vary for customers accessing the app.
The investigation did reveal that while there’s no clear evidence of personal data usage, Instacart could potentially adjust prices based on demographic factors like age, household income, or whether a shopper is new or returning.
Instacart maintained that its testing methods aim to help retailers understand consumer preferences better. They pointed out that while some items—like craft beverages—may see price hikes, essentials like milk and bread can actually drop in price.
A spokesperson for Target remarked that the retailer is not affiliated with Instacart and bears no responsibility for pricing on the platform. They did not specify if they were reassessing their partnership with Instacart.
Albertsons, the parent company of Safeway, has not responded to requests for comment regarding the situation.
The issue has gained political attention as well, with President Trump ordering an investigation into claims of food price manipulation, especially as grocery prices have increased by 25% since the pandemic. Many Democratic lawmakers have accused large food corporations of price gouging.
At a Safeway in D.C., price variations were evident: while some customers paid $3.99 for 12 Lucerne eggs, others were charged $4.79 for the same pack. Similarly, at another store, the price for Signature Select Cornflakes varied from $2.99 to $3.69.
At the Target in North Canton, Ohio, a box of Saltine Crackers ranged from $3.99 to $4.69 for different customers. Prices for flour varied at a Seattle Safeway: $3.99 to $4.89.
A retail industry executive remarked that Instacart has complicated the relationship between retailers and their customers. He noted that many retailers joined Instacart for its online visibility, only to later realize they had lost track of their customer interactions.
The changes in pricing strategies are being implemented by Eversight, a software company acquired by Instacart in 2022. In a previous investor call, Instacart’s CEO indicated that new AI technology would enable retailers to adjust pricing based on customer sensitivity to different product categories.
