Most everyone knows that ordering your groceries online is going to cost you more than buying them yourself in the store. But how much more? You may never know. One state has decided that comparing prices is your problem.
New York’s governor has vetoed a bill that would have required grocery delivery services to “clearly and conspicuously” disclose when they mark up prices for the groceries they deliver, so shoppers can make more informed choices about the prices they choose to pay. State lawmakers passed the measure almost unanimously – with a combined Assembly and Senate vote of 207-2. But the governor agreed with the delivery services themselves, that the would-be law could have done more harm than good.
“I support the goals of facilitating a consumer’s ability to make informed choices when shopping,” Democratic governor Kathy Hochul wrote in a memo explaining her decision. But forcing delivery services to comply “may lead to increased costs for consumers at a time when the cost of groceries is already a substantial burden for New Yorkers and their families.”
As originally proposed last year, the bill would have mandated the clear disclosure of “any price mark-up on any product that is also offered in-store,” so anyone ordering groceries online would know exactly how much more they’re paying for the very same items they could get for less in the store.
Grocery delivery companies already make money from add-ons like delivery and service fees. Some shoppers don’t realize, though, that they’re often being charged higher prices for each individual item as well. “This mark-up is not always clearly stated to the consumer,” a memo accompanying the bill explained.
But the original version of the bill was vague, as critics complained that disclosing “any price mark-up” could be read as requiring delivery services to monitor the prices of every item at every grocery store in real time, and update the price differences on their websites and apps accordingly. So the bill was changed to read that delivery services should “use the prices most recently provided to it by the food retailer.”
That, too, was criticized as being vague. What’s the definition of “most recently”? An hour ago, or a couple of weeks ago?
Back in August, five of the biggest delivery services – Instacart, Doordash, Shipt, Uber and Grubhub – co-signed a letter to Gov. Hochul, arguing the bill would “lead to increased grocery prices,” by putting an extra burden on the delivery services and grocery stores alike.
“While well-intentioned, this bill would be an operational nightmare for grocers who would be required to share with app companies the changing prices of items in real time,” Uber spokesperson Freddi Goldstein told the Gothamist. “This would likely discourage sales and drive up the cost of groceries to cover the added administrative responsibilities.” In addition, small independent grocers without the resources to maintain detailed pricing information might have to stop working with delivery services altogether, the companies argued.
At least one grocery delivery company is working to eliminate the problem before any other lawmakers try to propose a similar solution. Instacart has been pushing its partner retailers to offer “same-as-in-store pricing” for items Instacart delivers. Stores that do so, are highlighted with an “Everyday Store Prices” banner on Instacart’s platforms.
Ultimately, incongruously, Instacart says not upcharging online shoppers is more profitable, too. “Retailers that price items at in-store parity consistently grow faster on average than those with markups,” the company explained.
Supporters of the measure are disappointed. “These apps will lose some customers – that’s what this is all about,” Democratic state Senator James Skoufis told Spectrum News 1 about the delivery companies’ opposition. “Disclosure would expose those markups to consumers, many of whom unsuspectingly believe the prices on the app are consistent with in-store prices.” If the bill had been signed into law, he said, some shoppers, “when learning that the prices are not the same, are going to say to themselves, ‘Well, I’m not gonna pay 20% more to have my groceries delivered, I’ll just go to the store.’”
In theory, lawmakers could override the governor’s veto. But it’s considered unlikely that the Democratic-controlled Assembly and Senate will overturn the decision of a governor from their own party.
So next time you order groceries online, remind yourself that convenience doesn’t come for free. To get food delivered to your door, you’ll have to pay the price – even if you don’t know exactly what that price is.
Image source: New York Governor Kathy Hochul
