"Instacart tried to replace "Yesterday's price is not today's price" with "Today's price might not be the same price for everyone." The online grocery giant is experimenting with algorithmic pricing that can cost shoppers an extra $1,200 per year, a study released yesterday found. The methodology: In September, Consumer Reports and the progressive think tank Groundwork Collaborative used ~200 volunteers to check prices on 20 items in four cities."
"Instacart uses pricing tools from Eversight, an AI company it purchased in 2022, that can create as much as a 23% increase in prices for customers and 2%-5% jump in profit for stores, according to CR. Experts told CR that Instacart was testing customers' price sensitivity. This was confirmed when an email between Instacart and Costco that called the practice "smart rounding" was accidentally sent to CR by Costco."
"This type of dynamic pricing, which has proliferated in the age of AI, can contribute to steeper costs, according to an academic paper released this year. And Instacart is all in on AI: The company and OpenAI just announced a partnership that will allow customers to cook up recipes in ChatGPT and pay for groceries without leaving the chat interface."
Instacart implemented algorithmic pricing that can increase costs for shoppers by up to $1,200 per year. A September test had 200 volunteers check prices on 20 items across four cities and found price differences for 75% of items when identical products were selected simultaneously from the same stores. Retailers in the test included Costco, Kroger, Safeway, and Target. Instacart relied on pricing tools from Eversight, which can generate up to a 23% price increase for customers and a 2%-5% profit boost for stores. An internal email described the practice as "smart rounding." Instacart and OpenAI announced a partnership to integrate recipe planning and checkout through ChatGPT.
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]