Instacart’s Case for Banishing Online Grocery Markups

LAS VEGAS — Instacart wants grocery shoppers to stop wincing at the online price tag. At Groceryshop this week, CEO Chris Rogers said reducing item markups is now the company’s top priority for converting price-sensitive households into weekly delivery customers.

Rogers framed the move as a cost-barrier problem rather than a technology problem. “We’ve added net new customers at our fastest growth rate since 2022,” he said, but affordability remains the main reason many shoppers never complete the switch online.

The markup problem is a trust problem

When a shopper sees an item priced higher in an app than on the shelf, they are not just calculating a difference. They are judging fairness. That in-store price becomes the reference point, and the markup reads as a hidden penalty for choosing delivery.

Instacart’s data makes the case. Rogers said retailers that do not mark up online are growing about 10 percentage points faster on average and keep those customers longer. “Customers are gravitating toward value, and online, that often means retailers that don’t mark up,” he said.

This is classic pricing psychology: the first price a customer remembers becomes the anchor. If delivery carries a visible surcharge on every item, convenience is reframed as an expensive luxury instead of a time dividend.

From delivery app to grocery operating system

Instacart’s broader pitch is to become the underlying technology layer for grocers, not just a courier. Rogers said its storefront technology now powers 380 grocery e-commerce sites, and the company has expanded internationally beyond Canada and the U.S. for the first time.

The strategic argument to retailers is simple: money saved by removing markups can be reinvested in on-shelf affordability, loyalty programs, or consumer marketing. Instacart is also wiring retailer loyalty programs and promotions into the flow, retailer by retailer.

It is adding lower-cost routes at the consumer end too:

• Instacart Plus now offers $0 delivery starting at $10.
• In-store pickup offers a cheaper alternative to doorstep delivery.
• No-rush delivery trades speed for a lower price.

What marketers can actually use

The lesson is not specific to grocery. Any marketer with an online channel should ask: where does our channel pricing create a fairness violation? If a customer can stand in a store and see a lower price than the one in their cart, the brand has trained them to check and to hesitate.

Convenience is valuable, but it does not override the feeling of being overcharged. The brands that grow are the ones that make the value explicit and the price gap disappear, then reward loyalty at the point of purchase rather than making it a separate program.

Source: Digiday