Instacart’s AI-Powered Pricing Tool Under Scrutiny
According to Reuters, Instacart is facing a regulatory inquiry from the FTC regarding its AI-driven pricing tool, Eversight.
The agency wants to know why some shoppers are paying substantially more for their groceries than others.
Shoppers have reported seeing prices for identical items vary by up to 23%.
Dynamic Pricing: A Double-Edged Sword
Dynamic pricing isn’t new, but it’s not necessarily popular either.
Companies argue it helps balance supply and demand, maximizes profitability, and creates win-win scenarios.
However, there’s a difference between paying surge pricing for a ride and paying extra for groceries.
Instacart’s Response
Instacart claims the market has mischaracterized its pricing initiative.
The company says its retail partners control pricing strategies, and it works with them to align online and in-store prices.
Moreover, Instacart asserts that its tests are not dynamic pricing, but rather randomized A/B testing.
FTC Investigation: A Necessary Step
The FTC investigation doesn’t prove wrongdoing, but it’s a necessary step in an economy where everyone’s feeling squeezed.
Meanwhile, Instacart’s AI-powered pricing tool has raised concerns about fairness and transparency.
Consequently, the FTC’s inquiry is a welcome development, even if it’s not a surprise.
Avoiding Mischaracterization
Instacart says it wants to avoid mischaracterization of its pricing initiative.
Therefore, the company is emphasizing the importance of understanding how pricing works on its platform.
In addition, Instacart is highlighting the differences between its pricing tests and dynamic pricing.
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