Instacart ends AI pricing tests that increased costs for some shoppers
FILE PHOTO: Instacart shopper, Loralyn Geggatt makes a delivery to a customer’s home in Falmouth, MA on April 7, 2020.
David L. Ryan | Boston Globe | Getty Images
Instacart said Monday it will cease the use of artificial intelligence-driven pricing tests on its grocery delivery platform after the practice was scrutinized in a wide-ranging study and rebuked by lawmakers.
The company said in a blog post that retailers will no longer be able to use its Eversight technology to run pricing experiments on its platform, effective immediately.
“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,” the company wrote. “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. That’s not okay – especially for a company built on trust, transparency, and affordability.”
Instacart acquired Eversight for $59 million in 2022. Eversight’s software allows retailers to carry out pricing tests to gauge shoppers’ reactions to higher or lower prices on certain items.
Instacart said at the time that the technology would help retailers improve sales and growth, while “also surfacing the best deals for customers.”
Earlier this month, a study by Consumer Reports and other organizations found that Instacart’s algorithmic pricing tools caused shoppers to pay different prices for identical items from the same store.
The total cost for the same basket of goods at a single store varied by about 7%, which can result in over $1,000 in extra annual costs for customers. Instacart responded by saying that retailers determine prices listed on the app.
The company also rejected characterizations of the technology as surveillance pricing or dynamic pricing, and said the tests were never based on personal, demographic or individual-level user data.
Reuters reported last week that the Federal Trade Commission had sent a civil investigative demand to Instacart about its pricing practices.
Separately, Instacart last week was ordered to pay $60 million in refunds to customers to settle claims raised by the FTC that it used deceptive tactics in its subscription sign-up, “satisfaction guarantee” advertising and other processes.
Instacart denied any allegations of wrongdoing. The company said it answered questions from the FTC about its AI pricing tools as part of that settlement.
