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InstaCart uses AI-powered pricing tests that significantly increase the prices of similar products for different customers, according to an investigation by Consumer Reports and a partnership of foundations.
By comparing the shopping habits of consumers who were instructed to buy the same products on the platform at the same time, the researchers found that in some cases the price difference was as high as 23%.
Lindsay Owens, Executive Director of Tagcwork Callorative, told FOX Business that because of this disparity, a family could unknowingly pay $1,200 more per year for food.
“It’s costing families more at a time when the food crisis is worse than it’s been in a generation,” Owens said.
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Owens said the nonprofit think tank Ansofit had been studying InstaCart in many contexts, including its acquisition of lookup, which he said shaped the strength of these price tests.
As part of its joint investigation, Oysens said that the humble groups along with hundreds of online shopping and Alberty’s largest national retailers, such as Albertsons, Castco, Kroger, sprout farmers’ market and stone.
A split screen comparison shows wheat thins and salt crackers listed at various prices. (Groundwork collaborative)
“We put phones on the zoom and asked people to use their phones to get 18 to 20 grocery items from InstaCart at a time,” the Allens said. “They added things to their databases, took screenshots of the values, sent them to us. Then we entered the values, analyzed the data and calculated the differences between all the tests.”
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A spokesperson for InstaCart did not deny the claims made in the report. The spokesperson for Ncembe, said that these tests are “short-term, random, and designed so that people see slightly lower prices and others may see slightly lower prices, and the purpose is to help sellers understand consumer preferences and identify lower prices.” The company said this only happened with a subset of its 10 partners.
A split screen comparison shows the online prices of grain eggs and lucerne. (Groundwork collaborative)
Target said it is not affiliated with InstaCart and is not responsible for prices on the InstaCart platform.
When Fox’s business followed InstaCart, the company said it used publicly available prices as a starting point, then added an additional price to cover InstaCart’s operating costs when a store made a purchase on the platform.
InstaCart also said that during the time it reviewed consumer reports, it was exploring different ways to use those costs. The price tests at Target stores are over.
| It’s teasing | Security | – Last | Answer | Change % |
|---|---|---|---|---|
| Achi | Albertsons cos inc | 17.48 | +0.20 |
+ 1.13% |
| Pay it | Costco Wholesale Corp. | 884.48 | +10.07 |
+ 1.15% |
| Tgt | Target Corp. | 96.97 | +2.35 |
+ 2.48% |
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InstaCart said the tests are similar to when retailers test “prices in their physical stores to better understand consumer preferences.”
For example, an InstaCart spokesperson said a customer may see slightly lower prices on everyday items, such as milk or bread, but slightly higher prices on non-price sensitive products, such as specialty drinks.
The company reiterated that these tests are completely unstructured and may be based on personal or behavioral factors and supply and demand.
People shop at a grocery store in New York City. (Spencer Platt/Getty Images)
InstaCart said it will continue to work with merchants to ensure that more and more apparent purchases are genuine, but what consumers are doing is that consumers have no idea these tests are happening.
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FOX Business has reached out to Albertsons, Costco, Kroger, Safeway and is branching out to the farmers market.
