"Instacart's artificial intelligence-enabled pricing may be increasing the cost of your groceries by as much as $1,200 a year, according to a new study published on Monday. Instacart is an online grocery delivery and pickup service that allows customers to order groceries from local stores by using its technology platform, via app or its website, and then fulfills those orders through a personal shopper."
"Instacart, which previously disclosed its pricing experiments in corporate marketing and investor materials, said its shoppers are not aware that they're involved in an experiment, but said the resulting price differences are small and "negligible." "These tests are not dynamic pricing-prices never change in real time, including in response to supply and demand," an Instagram spokesperson told Fast Company. "The tests are never based on personal or behavioral characteristics-they are completely randomized.""
AI-driven pricing experiments on Instacart produced different online prices for identical products across customers, with variations up to 23% and per-item differences from $0.07 to $2.56. Data from 200 volunteers checking 20 items in four cities found price variation for about 75% of items at retailers including Costco, Kroger, Safeway, Sprouts Farmers Market, Albertsons, and Target. An internal email reportedly labeled the tactic as "smart rounding." Instacart stated shoppers do not know they are part of experiments, called differences negligible, and said tests are randomized and not real-time dynamic pricing.
Read at Fast Company
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