Instacart's Pricing Puzzle: Why Are Groceries Costing Different People Different Amounts?

Instacart, a major player in grocery delivery, has been found using a deceptive pricing strategy. The company is charging different prices for identical groceries in the same stores without informing customers. This practice has been observed in Target and Safeway stores across four cities. For instance, in Ohio, one customer paid $2.99 for a jar of peanut butter, while another paid $3.59 for the same item from the same store on the same day.

Dynamic Pricing: A Familiar Trick

This tactic, known as "dynamic pricing," is not new. Companies like Uber, Lyft, and airlines use it to adjust prices based on demand. Even fast-food chains are adopting it by changing prices on digital menus.

A recent study revealed that nearly three-quarters of grocery items on Instacart had varying prices for different customers. This could mean shoppers are paying an extra $1,200 a year on groceries—a significant amount, especially with already high food prices.

Instacart's Stance

Instacart claims it does not use personal data to set prices. However, the study suggests that Instacart and other retailers could use factors like age, income, or customer loyalty to determine pricing. Instacart also argues that its pricing tests help retailers understand customer preferences. But not everyone is convinced.

Grocery Stores React

Some stores, like Stew Leonard's, have taken a firm stance against dynamic pricing, stating they would never price items differently for different customers. They emphasize fairness and transparency in pricing. Meanwhile, Target has distanced itself from Instacart's practices, claiming it is not responsible for Instacart's pricing.

Why Is This Happening?

The answer lies in data and algorithms. Instacart uses a system called Eversight to adjust prices based on what it predicts customers will pay. But is this fair? And should we accept it?