Instacart Halts Algorithmic Price Testing Following Consumer Reports Study

Instacart is suspending its price testing practice on its grocery delivery platform, according to a Monday (Dec. 22) company blog post.

The announcement followed the Dec. 9 publication of an investigation by Consumer Reports in partnership with advocacy groups Groundwork Collaborative and More Perfect Union into Instacart’s pricing practices.

While Instacart said in the post that some news coverage included misconceptions and misinformation about its pricing, the company fell short of customer expectations.

“We’ve listened carefully to feedback from our customers,” the posts said. “And we understand that the tests we ran with a small number of retail partners that resulted in different prices for the same item at the same store missed the mark for some customers. At a time when families are working exceptionally hard to stretch every grocery dollar, those tests raised concerns, leaving some people questioning the prices they see on Instacart.”

Instacart has ceased item price tests on its platform, meaning retailers will no longer be able to use the company’s Eversight technology to run item price tests on its platform, according to the post.

“Now, if two families are shopping for the same items, at the same time, from the same store location on Instacart, they see the same prices—period,” the post said.

Retailers can continue to set their own prices and choose to vary the prices of products on a store-by-store basis on Instacart, according to the post.

The Consumer Reports study involved 437 shoppers in four cities, who saw different prices on the same groceries from the same stores.

Although the practice of charging different amounts to different consumers is not illegal, Consumer Reports warned Dec. 9 that it could lead to a “more pernicious pricing strategy called ‘surveillance pricing.’”

Instacart said in its Dec. 22 blog post that its practices do not constitute surveillance pricing or dynamic pricing.

The news came days after Instacart agreed to pay $60 million to settle a Federal Trade Commission (FTC) lawsuit that accused the company of false advertising practices.

Instacart denied the FTC’s allegations of wrongdoing and said the foundation of the commission’s inquiry was “fundamentally flawed.”