1. AI-Powered Price Optimization: US delivery service Instacart manipulates prices

• 92 percent of Safeway customers paid more
• Price manipulation as a service
• Self-invented prices are manipulated

Those who order groceries online may end up paying more, even if they pick up the goods themselves in the store. This is shown by an independent test of the grocery delivery and pickup service Instacart in the USA. Test shoppers placed the same goods in their shopping carts at the same time – for later self-pickup in the same store, to rule out the factor of potentially different delivery costs. Nevertheless, Instacart charged different prices.

The differences are significant, as the test of purchasing everyday groceries, conducted jointly by Consumer Reports, Groundwork Collaborative, and More Perfect Union, shows: for three-quarters of the products, the eCommerce price fluctuated. The highest price was on average 13 percent higher than the lowest, but the range of fluctuation extended up to 23 percent, for example, for a specific pack of cornflakes.

The goal is apparently to guess how much a customer is willing to pay and to charge them as much as possible. For the same product at the same time in the same store, the test found up to seven different prices on Instacart.

92 percent of Safeway customers paid more

For the entire shopping cart, prices increased by up to seven percent for some test shoppers compared to other test shoppers who put together the same shopping cart for self-pickup in the same stores. In September, supermarkets in Seattle, Washington, D.C., Saint Paul, and North Canton, two Safeway branches, and three Targets were tested. In a Safeway store in Seattle, 92 percent of all test shoppers were affected by higher total prices.

At Target in North Canton, it was 37 percent, while at another Target branch in Saint Paul, it was three-quarters. 193 individual tests could be evaluated. A smaller follow-up test in November with Instacart pickup orders from the chains Albertsons, Costco, Kroger, and Sprouts Farmers Market showed similar price experiments.

"Instacart is always transparent about pricing," the company said when asked about the practices, shifting the blame to the stores: "Retail partners set and determine their prices on Instacart, and we work closely with them to align online and in-store prices wherever possible."

Only one of the retail chains was willing to comment: Target denied having a business relationship with Instacart, passing on product prices directly to Instacart, "or determining which prices appear on Instacart." Instacart then had to admit to downloading Target’s public product prices and adding surcharges to cover "operational and technology costs."

Price manipulation as a service

Instacart’s transparency does not go so far as to disclose this to consumers. However, Instacart is frank with brands and retail chains: on its webpage, Instacart offers them "AI-powered price optimization." The service, called Eversight, is said to generate one to three percent more revenue and two to five percent higher margins through AI-driven experiments.

Prices are varied within defined ranges. "AI is used to conduct the experiments at scale." Instacart acquired the Eversight platform in September 2022. For consumers, this means they can no longer simply compare prices and may unknowingly pay higher prices.

Self-invented prices are manipulated

The tricks also include manipulating the notorious "was" prices. Test shoppers found that they were being misled with alleged discounts of varying amounts. Although they placed the same goods in Instacart’s online shopping cart for self-pickup from the same store at the same time and the price charged was identical, they were shown different "was" prices, i.e., different high discounts were simulated. Instacart does not disclose this to affected consumers either.

"When prices are no longer transparent, shoppers can no longer compare when shopping," criticizes the test report. "These increasingly opaque methods not only put a hole in families’ wallets. Fair and honest markets are the foundation of a healthy economy – and companies like Instacart endanger this trust."

"End consumers are not aware that they are part of an experiment," it said on the Eversight webpage. Instacart recently removed this sentence.

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This article was originally published in German. It was translated with technical assistance and editorially reviewed before publication.