Dive Brief:
- Instacart said Monday that it’s ending a price testing program that allowed retailers to charge online shoppers different amounts for the same products.
- “We’ve listened carefully to feedback from our customers,” the company said in a statement. “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.”
- The decision to end the controversial price tests comes just weeks after Instacart landed in the hot seat following an investigation by Consumer Reports and Groundwork Collaborative that found grocery prices could differ by as much as 23% between customers on the e-commerce platform.
Dive Insight:
Instacart’s decision to pull its price experiments comes as the company looks to curb blowback from the Consumer Reports article and regain consumer trust in its ongoing affordability efforts.
“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,” the company said.
Consumer Reports noted that Instacart has publicly disclosed that it runs price experiments with pricing differences that are “small and ‘negligible,’” but the publication said that those price experiments are “far broader and more costly to some consumers than has been publicly acknowledged.”
Instacart said in a response last week that its testing is similar to price adjustments retailers make inside their stores, and has disputed Consumer Reports’ reporting that families could spend $1,200 more annually on groceries as a result of the testing, calling it “wildly misleading.”
“Consumer Reports deliberately selected a single, atypical basket, then stretched the corresponding results from short-term, randomized tests into a year-long, hypothetical, consistent-outcomes projection, and then presented that as the typical impact for a family using our platform,” Instacart said in a Thursday statement.
The report drew swift reaction, including the introduction of a Senate bill that would prevent companies from using consumers’ personal data to set pricing and a probe by the ranking member of the House Agriculture Committee into the company’s pricing practices.
Instacart said that the report, as well as those from other media outlets, misclassified its tests as dynamic or surveillance pricing that utilize consumer data to update prices. The company said it was running short-term, randomized A/B pricing experiments that “were never based on supply or demand, personal data, demographics, or individual shopping behavior.”
Retail partners can still set different prices for items on a store-by-store basis on Instacart, just as they can with their physical stores, Instacart said. The grocery technology company noted that it will continue urging retailers to more closely align online prices with those in-store.
In addition to dealing with controversy over its pricing tests, Instacart agreed last week to pay $60 million in consumer refunds as part of a settlement in a lawsuit brought by the Federal Trade Commission. That suit alleged that the company misled consumers over delivery promotion fees, made it hard to initiate refunds and did not fully disclose terms for its membership trial.
“Ending item price tests on our platform is an important step to ensure Instacart remains a place where families can shop with confidence,” Instacart said Monday.
