The concept behind a pending bill in Albany seems simple: Apps like Instacart and Shipt would be required to disclose if their prices are different from the prices on the shelves of grocery stores where delivery workers pick up products for customers.
The apps don’t see it as simple at all.
Five giants of the rapidly growing grocery-delivery industry — Uber, Grubhub, Shipt, Instacart and DoorDash — sent Gov. Kathy Hochul a letter last month. They urged her to insist on changes to the bill state lawmakers overwhelmingly passed earlier this year, a vote that came after the companies already convinced the Legislature to water down a prior, more-restrictive version of the measure.
The bill, which Hochul has until the end of the year to sign or veto, would “lead to increased grocery prices,” according to the letter. But the bill’s sponsor, state Sen. James Skoufis of the Hudson Valley, said the companies’ argument is absurd.
“The various companies that were pretty relentlessly lobbying against this bill I felt were acting like petulant children on this issue,” said Skoufis, a Democrat.
Lawmakers passed the bill in May and June. It’s just two pages long and has attracted significant attention from grocers and delivery apps alike.
DoorDash, Uber, Instacart, Shipt and Amazon all reported lobbying on the measure in Albany. Collectively, they spent $1.5 million on lobbying New York state and city officials from January through June of this year, though that includes money they spent on other measures, too — including a New York City bill setting a minimum wage for grocery-delivery workers.
If the governor signs the bill, any grocery store or third-party delivery platform would be required to “clearly and conspicuously provide a pricing policy that discloses whether the online price of products is the same as the in store price, or if it is not the same.”
From there, the app — or the retailer if a consumer is buying directly from the retailer’s platform — would have to say whether the online price is higher or lower than the in-store price. If the grocery store has a website, the delivery app would have to provide a link to it so the consumer could compare prices.
In some cases, the major third-party delivery apps – which dispatch a “shopper” to a grocery store with a customer’s shopping list and then deliver the products — already do some version of that.
Instacart, for example, has a link to its pricing policy visible when you pick a particular store. For a Hannaford Supermarket in Albany, for example, the app tells the user that product prices “may be higher than in-store prices in your area” and that discounts may not apply.
But Skoufis said the bill would make the policy uniform and ensure that more consumers know whether they’re paying more for their products.
“ I think a large majority of consumers, they just assume that the produce, the milk, the bread that they're buying online is going to be the same price as those products are in the store,” he said. “And it turns out in many, if not most, cases, there’s a significant markup online compared to the price in store.”
Representatives of the delivery apps and grocery stores, however, say the bill is untenable as written.
“ I think a large majority of consumers, they just assume that the produce, the milk, the bread that they're buying online is going to be the same price as those products are in the store. And it turns out in many, if not most, cases, there’s a significant markup online compared to the price in store.”— State Sen. James Skoufis
The stores and apps would be effectively required to provide real-time pricing information in order to say whether the online price is higher or lower, which the major delivery companies claim would require significant resources, according to the memo they sent Hochul.
“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 said in a statement. “This would likely discourage sales and drive up the cost of groceries to cover the added administrative responsibilities.”
The letter from the delivery companies suggests they would have to disclose whether each product is higher or lower than the store price. The bill, however, says third-party delivery platforms can, in some cases, satisfy the disclosure requirement by prominently displaying their pricing policies on the main landing pages for particular stores.
The bill also says the apps can base their disclosure on the “prices most recently provided to it by the food retailer.” Skoufis, meanwhile, said grocers frequently provide the apps with prices, anyway; how else would they know what to charge their users, he asked.
But Mike Durant, president and CEO of the Food Industry Alliance, a trade group representing New York grocers, said the recency clause and others in the bill are too vague.
Like the delivery apps, Durant’s group is calling on Hochul to veto the bill or insist on changes through a process known as a chapter amendment, where the governor signs the measure in exchange for a negotiated pledge from the Legislature to make agreed-upon tweaks.
“ There shouldn't be a gray area,” he said. “‘Recent’ to some people could be a month ago, ‘recent’ to others could be an hour ago, right? That’s a fluid target, and it needs to be figured out.”
The delivery apps and grocers already had significant success scaling the bill back.
The state Senate originally passed the measure in February. At the time, the bill required the apps to disclose the app price and the store price of each product, as well as the percentage difference between the two.
The bill’s sponsors amended the bill, however, before the Assembly put it to a vote in June, requiring only the disclosure of whether the app prices are higher or lower. The Senate passed it 60-2; the Assembly 147-0.
State Assemblymember William Magnarelli, a Syracuse-area Democrat who sponsored the bill in his chamber, said much of the pushback came from smaller grocers, not big chains.
“The [larger chains] have this information online all the time, but some of the smaller grocery store stores — especially those in urban areas — that might have created some problems for people,” he said.
In their letter to Hochul, the representatives for the major delivery apps suggested that Hochul push for a change that they say would make clear they can satisfy the disclosure requirements by including a general disclaimer. Without that change, they want Hochul to veto the measure.
A spokesperson for Hochul said the governor will review the legislation.
