For many, the era of grocery shopping has come to an end. The weekly drudgery of driving to the store, pushing a trolley through all the aisles while trying to remember exactly what you need – and keeping an eye out for the best deals too – are things of the past. Nowadays, one can easily enter a shopping list into their phone on a Sunday morning before even getting out of bed, and just a few hours later, the weekly shop simply appears on the doorstep. With such convenience, what on earth could drive customers away from food delivery apps? In short, the cost of these services can be prohibitive. But the true mechanisms behind why these costs are so high is probably still a sinister mystery to many consumers.
U.S. food prices have risen steadily over the past five years, leading to high prices across the board and record prices for staples like beef, eggs and dairy. Many consumers struggle to keep up with the ever-increasing cost of food, and these effects are amplified by the use of food delivery apps. There are a number of reasons behind this, but in most cases online grocery shoppers spend much more than in-store shoppers. These services come with obvious additional expenses, such as subscription fees, delivery fees and tips for shoppers and delivery drivers, but many of the increased costs for users of these apps are actually hidden from the consumer. It’s an open secret that products on these apps are often priced higher than in-store, increasing the cost for consumers at home, but it actually gets much, much worse than that.
Read more: 22 Best Trader Joe’s Frozen Foods Under $5
The ever-changing costs of online grocery shopping
Person in orange shirt delivering a bag of groceries to someone with long blonde hair – Atstock Productions/Getty Images
In October of this year, New York Governor Kathy Hochul vetoed a bill that would have required these companies to disclose when prices shown to consumers online did not match in-store prices. The governor’s argument was that stores with multiple locations would struggle to keep up with changing prices, which somehow increases costs for consumers. Her political opponents argued that this was simply her caving in to lobbyists so that these apps could continue to quietly poach their users. While it’s obvious that these hidden price increases are a boon to the companies that operate these apps, the true extent of the problem may be greater than we realize. It’s not just one standard markup that these apps generally apply, it can be much more targeted than that.
An experiment by Groundwork Collaborative, Consumer Reports and More Perfect Union found that for Instacart customers, prices for the same items from the same stores added to the cart at the same time could vary significantly in cost by user. For example, 12 Lucerne eggs cost from $3.99 to $4.79 – a 20% difference – between customers. The overall effect of this price manipulation was estimated to average around 7% for identical carts. When carried out over the course of a year, the study estimated that this could cost an individual household up to $1,200. It’s often assumed that users of these apps have cash to spare, but data shows that online shopping isn’t just used by those with surplus income. These manipulative pricing techniques hurt working families.
Watch prices come to your shopping cart
A person looks at a grocery shopping app on their phone with the fridge door open – Lajst/Getty Images
It’s no secret that grocery stores have made moves to ensure they can charge as much as possible for their products. In 2024, Walmart was met with outrage after it announced it would switch to electronic price tags on products, allowing stores to adopt dynamic pricing and, for example, instantly increase the price of ice cream and cold drinks on a hot day. But even those exploitative practices pale in comparison to the AI-based surveillance and pricing systems that could be on the way — or already here.
The heart of the Instacart pricing debacle has been attributed to an AI-powered algorithmic pricing tool. When asked, Instacart insisted that it did not use personal or demographic data in these pricing experiments, although the company said that consumer goods companies that used its product may use behavioral data to inform their decision-making. The FTC found in January of this year that price surveillance — using personal data like browser history and exact location to adjust prices for consumers — is already in place in many industries. So while Instacart’s questionable practices are on full display right now, they’re probably far from the only company in the grocery industry using such tools.
The increasing ability of megacorporations with access to your personal data to extract as much money as possible from you in every online transaction may help explain why in-store grocery shopping is on the rise. But then again, Kroger has been accused of potentially using facial recognition to adjust prices for consumers, so this problem could soon extend to in-store shopping — if it hasn’t already.
Want more food knowledge? Sign up for our free newsletter where we help thousands of foodies like you become culinary masters, one email at a time. You can also add us as a favorite search source on Google.
Read the original article on Tasting Table.