The Truth About Pricing Tests on Instacart

Over the last week, an investigation by Consumer Reports into why people were being charged different prices for the same items on Instacart has garnered a lot of attention. Understandably so. With families everywhere trying to stretch their grocery budgets, people want to know they're being treated fairly.

But much of what’s been reported since has inaccurately blurred together fundamentally different things: A/B price tests, dynamic pricing, and surveillance pricing. Those are not the same thing — and the differences between them are important. Conflating them has resulted in headlines and claims that simply don’t reflect how pricing tests work on Instacart.

We hope this provides some clarity about what we allow — and what we don’t allow — on Instacart, and what people can expect when they shop with us.

Myth 1: “These tests are dynamic pricing.”

Fact: They’re not dynamic pricing. They’re a form of short-term, randomized A/B testing — and the difference matters. 

Dynamic prices change in real time, including in response to things like supply and demand. Think airlines or hotels charging more during the holidays, or rideshare companies turning on surge pricing during rush hour. 

A/B testing, on the other hand, is common in the grocery industry and across the entire retail sector. It’s a way for retailers to test how sensitive consumers — at a macro level — are to the price of certain items. Maybe dropping the price of a box of cereal could lead to an increase in sales. Maybe the same drop in price on a bag of frozen vegetables results in less of a change. These insights can help retailers understand where to invest in lower prices — for all customers. 

Unlike dynamic pricing, A/B price tests don’t fluctuate prices minute-to-minute. They aren’t tied to market conditions. And they don’t respond to scarcity or demand. Consumer Reports acknowledges all of that — but unfortunately, they keep referring to these tests as dynamic pricing. Others have repeated the claim. In reality, they’re completely different.

Myth 2: “Instacart is doing surveillance pricing — charging each customer based on their personal information.”

Fact: Absolutely not. We don’t use — and we don’t allow our partners to use — personal, demographic, or user-level behavioral information about individuals to set online item prices on Instacart. 

Some of the most misleading stories over the last week have claimed that Instacart uses information about your income, ZIP code, or shopping history to charge you more for items like milk, eggs, and cereal. We don’t do that. Period.

In the A/B tests that Consumer Reports wrote about, customers were randomly assigned to groups based on product category and store location. Then some customers were randomly — and temporarily — shown a slightly higher price than the pre-test price. Others were randomly — and temporarily — shown a slightly lower price than the pre-test price.

Retail partners never use personal information about individual customers to set prices on Instacart. In fact, Consumer Reports admits that they found no evidence that our retail partners did this — but they still suggested it may be happening on our platform. It’s not.

Myth 3: “Families are paying $1,200 more per year because of these tests.”

Fact: Consumer Reports’ claim that a typical family is paying $1,200 more because of these tests is flat out wrong.

Consumer Reports’ claim that a typical family is spending $1,200 more on groceries as a result of these short-term, randomized pricing tests is completely wrong and frankly outrageous.

Their claim isn’t grounded in consumer behavior. 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. That is both statistically indefensible and wildly misleading.

Myth 4: “Instacart controls the prices on its platform.”

Fact: Retail partners set their own pricing strategies on Instacart — and we work with them to align their online and in-store pricing wherever possible.

Instacart is not a retailer. We are a retail enablement company. Our vision is to build the technologies that enable every grocery transaction — that’s not just on our marketplace, but in partnership with retail partners, online and in-store.

We don’t control the base prices on Instacart. Our retail partners have full control over the base prices of items, and we work closely with them to help them reach their specific goals. And while we encourage them not to, some choose to apply markups to help cover the costs of implementing our technology and offering same-day delivery.

We provide every retailer’s pricing policy on their Instacart storefront, so customers can always see when prices may be different from what they pay in-store and can compare across retailers.

An important note on Target: Shopping from Target on Instacart is a unique case. When consumers shop Target through our platform, we use publicly available price information as the starting point, along with an additional amount to cover Instacart’s operating and technology costs. During the period reviewed by Consumer Reports, we were evaluating different approaches to offset those costs. We have ended these tests on the Target storefront.

Fact: Instacart is laser-focused on affordability and transparency.

We’ve always cared about making online grocery shopping more affordable. It’s good for our customers, good for retailers, and good for our business. That’s why, over the past few years, we’ve helped Instacart customers save more than $3 billion through deals, discounts, and loyalty programs. 

Now we’re going further — starting with price parity.

We’re always encouraging retail partners to charge customers the same prices online and in-store. And it’s working. Over the last year, retailers offering same-as-in-store pricing have on average grown more than 10 percentage points faster than those that haven’t — and they retain customers better on our platform.

Today, partners like Buy-Low Foods, Nesters Market, Save-On-Foods, Best Buy, Heritage Grocers Group, Home Depot Canada, Lowe’s Home Improvement, Schnucks, Ulta Beauty and regional grocers like Choices Market and Jerry’s are now at price parity. Other national groceries have started price parity pilots in cities like Chicago, Dallas, Nashville, Tampa, and Tucson. And national retail partners in the U.S. and Canada have lowered their online markups across the Instacart Marketplace and on their Instacart-powered websites.

We’re also giving customers even more ways to save.

• Digital Flyers & Loyalty: Loyalty integrations and Weekly Flyers bring more discounts, unique savings and other benefits online.

• $10 Minimum Basket: Instacart+ members get $0 delivery fees on grocery orders as low as $10* — the lowest minimum in the industry.

• More Payment Options: Instacart was the first online marketplace to accept EBT SNAP in all 50 states and the District of Columbia.

• More Delivery Options: No-rush and next-day delivery, as well as free pickup, give customers even more low-cost choices.

• Instacart+: Members — including those with trial memberships — enjoy $0 grocery delivery fees. Annual Instacart+ members can also access additional benefits like Peacock and a one-year subscription to New York Times Cooking at no additional cost, and can share $0 delivery fees* with up to three linked accounts.

The bottom line.

We’ll keep working to make online grocery shopping easier and more affordable for the millions of families who depend on it. In the meantime, we hope this has helped set the record straight:

• These tests are not dynamic pricing.

• We don’t use personal, demographic, or user-level behavioral data to set prices.

• The claim that these tests cost a typical family $1,200 more is completely wrong.

• Our retailer partners control their pricing strategies on Instacart, and we work with them to align online and in-store pricing wherever possible.

*Service and other fees apply. Costco orders $35+.