Instacart's Dynamic Pricing Exposed: AI-Driven Price Hikes Hit Shoppers

A recent study published by Consumer Reports (CR) has alleged that Instacart, a leading grocery delivery app, has been conducting AI-led dynamic pricing experiments that result in some shoppers paying 20% more for the same product. The study, conducted in collaboration with Groundwork Collaborative, found that Instacart was conducting these experiments at retail partner locations, including Kroger, Albertsons, Costco, and Safeway. In some cases, consumers were paying as much as 23% more than other shoppers for the exact same product, according to the report. The software involved in the experiments, Eversight, is a SaaS product that offers grocers a retail pricing suite designed to unlock revenue growth and capitalize on pricing solutions that scale pricing strategies and uncover optimal prices customers expect. Instacart discloses on its Eversight page that some shoppers may see slightly higher prices than others, but the study suggests that the price hikes in some cases are significantly higher than that. A 23% price hike, as noted by CR, is not "chump change." When reached for comment, Instacart referred TechCrunch to a previously released statement in which the company noted that just as retailers have long used various pricing strategies to manage inventory and maximize revenue, Instacart's dynamic pricing experiments are designed to help retailers optimize their pricing and better meet customer demand. However, the study's findings have raised concerns among consumer advocates and regulators about the potential for price gouging and unfair business practices. The study's findings are not entirely surprising, given the growing use of AI and machine learning in retail pricing strategies. Many retailers have begun to adopt dynamic pricing models that adjust prices in real-time based on factors such as demand, supply, and competition. However, the study suggests that Instacart's use of Eversight may be taking this approach to an extreme, resulting in significant price disparities between shoppers. Industry experts say that the study's findings highlight the need for greater transparency and accountability in the use of AI and machine learning in retail pricing. "Consumers have a right to know how prices are being set and why they are being charged more or less than others," said a spokesperson for the National Consumers League. "We urge Instacart and other retailers to be more transparent about their pricing practices and to take steps to ensure that prices are fair and equitable for all consumers." The study's findings have also sparked calls for regulatory action to address the potential for price gouging and unfair business practices in the grocery delivery market. "We are concerned about the potential for Instacart's dynamic pricing experiments to harm consumers and undermine trust in the grocery delivery market," said a spokesperson for the Federal Trade Commission. "We will be reviewing the study's findings and considering potential next steps to address these concerns." As the study's findings continue to generate attention and controversy, Instacart and other retailers are likely to face increased scrutiny over their pricing practices and use of AI and machine learning in retail pricing. The study's authors say that they will continue to monitor the situation and advocate for greater transparency and accountability in the grocery delivery market.