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Hidden markups, missed sales on Instacart leave customers feeling 'ripped off' – CBC.ca

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While many Canadian consumers likely know to expect delivery and service fees when ordering groceries on Instacart, what they may not know is they could be paying as much as $2.50 more per item in hidden markups — and some retailers say that Instacart is keeping all of it.

A Marketplace investigation into groceries being sold on Instacart from Loblaws, Costco and Walmart found that shoppers at Loblaws and Costco are paying about 10 per cent more per grocery item beyond the itemized delivery and service fees, as well as missing out on advertised in-store specials and sales.

  • Watch the full investigation tonight at 8 p.m. (8:30 in Newfoundland) on CBC-TV and CBC Gem.

With a valuation of $39 billion, the third-party delivery app — which allows users to hire a “shopper” to pick up their groceries at a variety of stores — has seen delivery sales grow over the pandemic.

But what’s less clear is just how much consumers — some of whom live with disabilities and depend on Instacart for access to food — are paying for that convenience.

To find out, Marketplace compared the costs of purchasing identical grocery orders at each store on both the Instacart app and in-store. While the prices at Walmart were the same in store as they were on the Instacart app, Marketplace producers discovered substantial hidden markups at Costco and Loblaws.

While every Costco grocery item the team looked at was marked up, the only grocery item that didn’t have a hidden markup at Loblaws were the cucumbers.

In one example, Marketplace paid $12.99 in store at Loblaws for President’s Choice Blue Menu lean Italian beef meatballs; on Instacart, the price was $15.35 — a markup of $2.36.

“I’m thinking that that’s ‘tief.’ That’s the Caribbean word for being ripped off, so I’m very surprised and I feel misled,” said Joanne Dominico, a mother and small-business owner who helped Marketplace with the test.

In total, Marketplace paid $74.16 more for the same order of 20 items through Instacart than when purchasing inside Loblaws; the in-store total was $ 242.49, while on Instacart the receipt for the identical items totalled $316.65.

But while $46.17 of those fees can be attributed to the company’s itemized service and delivery fees, taxes and a default five per cent tip, the markups on grocery and sale items — which totalled an additional $27.40 — were not disclosed on Instacart’s receipt.

In one instance, Marketplace paid $4.01 more for a block of butter that was promoted as an in-store sale at Loblaws, but cost $8 on the app.

“I could have bought a whole new chunk of butter for $4,” said Dominico.

WATCH | Why was this butter $4 in store and $8 on Instacart?

Marketplace investigation finds hidden markups and missed sales on Instacart

12 hours ago
Duration 2:00

While it’s no secret that online grocery delivery service Instacart charges delivery and service fees on each order, many Canadians might not know they could be paying more per item in hidden markups at some retailers and be missing out on in-store sales not included on the app. 2:00

Both Loblaws and Costco do not offer in-store sales and promotions on Instacart.

While shopping at Costco on Instacart, Marketplace found similar hidden markups. In one example, the team paid $2.50 more on Instacart for Kirkland Signature Organic lean ground beef, which was priced at $25.99 in store but $28.49 on Instacart.

Instacart says it notifies customers ‘prices vary relative to store prices’

In emails, Costco and Loblaws told Marketplace that while they set the prices, Instacart keeps all of the profit from pricing differences, in addition to the delivery and service fees.

While Instacart confirmed that the retailers are responsible for setting the prices, it did not respond to questions about who receives the money from the markups.

In an email, the company said that “where there are item markups by a particular retailer, we notify customers that prices vary relative to store prices, so they can make clear and informed purchasing decisions.”

On the Instacart app, there’s a small link to the company’s pricing policy, which discloses that prices on the app for products at Loblaws and Costco are not the same as they are in store. (Instacart)

But not everyone finds that notification to be clear enough.

The extra fees are acknowledged in the Instacart app through a small pricing disclaimer, but customers have told Marketplace it can be easy to miss, and they don’t know how much more they are paying for each item.

‘I didn’t see any mention of the higher prices’

Erin Matthews reached out to Marketplace after ordering groceries through Real Canadian Superstore (a Loblaws company) on Instacart. Matthews had broken her ankle and needed groceries delivered to her Calgary home.

Her Instacart shopper accidentally left the in-store receipt with the shopping; the in-store bill was for $177, but Matthews had paid $226 on Instacart. After determining service and delivery fees, tax and tip, Matthews was surprised to find almost $30 unaccounted for.

“I was so angry,” Matthews said. “I didn’t see any mention of the higher prices online. When I called Instacart, they told me that the shopper shouldn’t have left the receipt in the bag.”

Joanne Dominico, a mother and small-business owner living in Newcastle, Ont., says the convenience of Instacart’s grocery delivery service gave her hours of her life back. But now that she knows about the hidden markups at some stores, she wants to see more transparency from the company. (Anu Singh/CBC)

Dominco, who helped with Marketplace‘s test, wants to see Instacart be more transparent with its pricing.

“Just let me know and then I can make the choice. But when I don’t know, that’s when I feel disappointed,” she said.

‘We call it the disability tax’

The extra fees may be surprising for some of those who rely on Instacart for their regular grocery deliveries, but even more so for people with disabilities, who frequently rely on the service to meet their essential day-to-day needs.

“I mean for us … it’s an essential service and, you know … we have to pay through the nose to use it. So it’s not really fair,” said Martin Courcelles, a frequent Instacart user who is blind.

Courcelles and his wife, Erin, who uses a wheelchair, appreciate the convenience of the service, but are frustrated by Instacart’s fees and markups.

“We call it the disability tax,” he said.

Martin Courcelles says that Instacart’s delivery fees and markups essentially amount to a ‘disability tax’ for people like him who are unable to go pick up their groceries in person. (David MacIntosh/CBC)

Higher prices might also place the service out of reach for more vulnerable clients, Courcelles worries, especially in light of a harsh economic climate amid COVID-19.

“A lot of people with disabilities aren’t working these days. And this might be the only way that they can get food in the house,” he said. “And for them, you know, all these extra costs, it builds up after a while, right, and some might not be able to afford it.”

It’s a sentiment shared by officials at the Centre for Independent Living in Toronto (CILT), who also note that many people with disabilities are living in poverty and at higher risk of contracting COVID-19.

“For some folks, their only option is grocery delivery through an app, but the high fees can reduce their food budget, and this means less food on their table,” said the CILT in a statement.

“With food prices set to rise in 2022, yet more disabled Canadians will become more food insecure if there’s no reduction in delivery app prices or a discounted option of some kind.”

Sylvain Charlebois, the senior director of the Agri-Food Analytics Lab at Dalhousie University and a professor studying food security, says that as the food delivery market continues to grow, companies like Instacart will have to look at making their services more accessible to those who have no choice but to order their food online.

Charlebois says for those living with physical or intellectual disabilities, or people who need to quarantine, “service charges are simply a regressive tax.”

“As we learn to live with viruses and other unfortunate public health challenges, access to online food delivery services can be an asset only if they don’t penalize those who have no other option, temporarily or permanently.”

No price break for those with disabilities

Currently, Instacart does not offer reduced delivery prices for those living with disabilities, but the company says it does offer a dedicated phone line for clients who have disabilities and need more assistance.

Charlebois thinks a reduction in fees for people with disabilities or mobility issues is long overdue.

“Just on the basis of compassion, absolutely. I think it should have been done by now,” he said.

With the food delivery market poised to reach $20 billion in Canada by 2025, the time to act is now, says Charlebois.

“I think it’s the right time to have that conversation as the market grows,” he said. “If you don’t figure this one out, a lot of people will be in big trouble.”

Walmart, on the other hand, charges only in-store prices on the Instacart app and allows consumers on the app to take advantage of in-store sales for about the same fees as ordering through Walmart directly. Customers can look for stores that display “in-store pricing” or “everyday store prices” on Instacart to shop for groceries without hidden markups. But they should check the fine print, as not every retailer offers advertised in-store sales or promotional prices on Instacart.

Instacart says that “when possible” it works with companies to ensure the prices on the app are the same as in the store and that customers can review their pricing policy for more details, adding that in North America more than half of Instacart retailers offer same as in-store pricing through Instacart.

Costco and Loblaws say that customers who order directly from them will get a better deal.

Costco’s SameDay Service, powered by Instacart, has no added delivery or service fees. However, there are markups on grocery items.

Loblaws customers can use PC Express where available and receive in-store pricing and sales, and orders can be picked up for a small fee or delivered for $9.95.

As for hidden fees, Instacart maintains that it’s clear about the possibility of price differences in the app, and says it’s working to add more features to make grocery shopping more affordable for everyone by implementing features like reduced fees and free delivery on orders placed 24 hours in advance.

In the meantime, shoppers like Courcelles who depend on Instacart will have no choice but to pay a premium.

“During winter, it’s pretty much the only service that we can use to get food into the house,” he said. “It’s the only option we have at this point.”


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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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