Report finds Instacart algorithm inflates prices
Consumer Reports and the Groundwork Collaborative say Instacart has run AI-driven pricing experiments since 2022 that can make identical grocery items cost up to 23% more for some U.S. shoppers than others, based on testing with 437 volunteers at chains including Safeway and Target. Instacart told CBS News that 10 retail partners who already apply markups are conducting limited, randomized price tests, while the investigation also flagged "fictitious pricing" where different "original" prices were shown to shoppers.
📌 Key Facts
- 437 volunteers shopped identical Instacart baskets; all encountered algorithmic price experiments.
- Per-item variations ranged from $0.07 to $2.56; a Safeway Seattle test saw up to 23% differences on Wheat Thins.
- Estimated average annual swing of about $1,200 at the Seattle Safeway location, based on Instacart’s typical household spend.
- Evidence of experiments at Albertsons, Costco, Kroger, and Sprouts; Instacart says 10 retail partners use pricing tests.
- Investigators also observed differing displayed "original" prices, suggesting potential "fictitious pricing" effects.
📊 Relevant Data
In 2022 and 2023, non-Hispanic White grocery shoppers (approximately 59% of the US population) had a 21% likelihood of buying groceries online in the past 30 days, compared to 17% for Hispanic shoppers (19% of population), 18% for non-Hispanic Black shoppers (13% of population), and 16% for shoppers from other non-Hispanic racial backgrounds (about 9% of population including Asian, Native American, and multiracial).
Online Grocery Shopping Participation Varied by Sociodemographic Group in 2022 and 2023 — USDA Economic Research Service
In 2022 and 2023, SNAP participants (low-income households) and income-ineligible nonparticipants (higher-income, above 200% of federal poverty line) both had a 20% likelihood of online grocery shopping, while income-eligible nonparticipants had a 16% likelihood.
Online Grocery Shopping Participation Varied by Sociodemographic Group in 2022 and 2023 — USDA Economic Research Service
In 2022 and 2023, women had a 22% likelihood of online grocery shopping, compared to 16% for men.
Online Grocery Shopping Participation Varied by Sociodemographic Group in 2022 and 2023 — USDA Economic Research Service
E-commerce companies that implemented dynamic pricing strategies saw a 5-15% lift in conversion rates, according to a 2023 McKinsey report.
Dynamic Pricing in Ecommerce: How to Price Smarter — Omniconvert