According to Fast Company, a new study published on Monday from Consumer Reports and the Groundwork Collaborative found that Instacart’s AI-powered pricing could be inflating customer grocery bills by as much as $1,200 annually. The investigation, which used data from 200 volunteers checking prices on 20 items in four cities, found price differences on about 75% of items at major retailers like Costco, Kroger, and Target. These differences weren’t small—identical products were priced up to 23% differently from one customer to the next, with variations ranging from 7 cents to $2.56 per item. The report cites an email, inadvertently sent by Costco to Consumer Reports, where an Instacart executive reportedly referred to the tactic as “smart rounding.” This practice directly impacts the online grocery delivery service’s core promise of convenience.
How the sausage gets made
Here’s the thing: dynamic pricing isn’t new. Airlines and ride-shares have done it for years. But applying it to staple groceries like milk and eggs feels different, right? It hits closer to home. The technical mechanism, as detailed in guides on how Instacart works, relies on a vast amount of data. The AI likely considers your location, your ordering history, the time of day, demand for specific items, and even what the algorithm thinks you’re willing to pay. It’s a classic yield optimization model, just applied to your pantry. The “smart rounding” email is the real tell—it suggests these aren’t random glitches but a deliberate strategy to nudge prices up in tiny, often imperceptible, increments across millions of transactions.
The convenience tax gets smarter
We all accepted there was a “convenience tax” for delivery. That’s the marked-up item price and the service fee. But this is a hidden, personalized convenience tax. And that’s where the ethical line gets blurry. Is it fair that your neighbor pays $4.89 for the same carton of eggs you see at $5.29 simply because their shopping profile looks different? The study suggests these algorithms might be exacerbating inequities, potentially charging more in areas with fewer grocery options or to users who appear less price-sensitive. It turns the digital grocery aisle into a hall of mirrors where you can’t trust the price tag you see.
What can you do?
So, what’s a shopper to do? The full Consumer Reports findings are a wake-up call. First, be aware the price isn’t static. It might help to occasionally check prices in a private/incognito browser window or on a different device to see if you get a different quote. Basically, introduce a little chaos into the data set. But let’s be real—that undermines the whole “convenience” sell. The bigger pressure point is transparency. Calls for clearer disclosure about how these prices are set are growing. Because when the algorithm decides your milk is worth more than someone else’s, you have a right to know why.
