Instacart’s Shaky Ground is Your Opportunity

I respect Instacart’s three-tier model for retailers: Do it all -- just do delivery, license the software and back end. The company is valued at over $2 billion and has raised more than $270 million from top Silicon Valley investors, but with the recent announcement that it's cutting the pay of “some” workers in “some” cities, we have to wonder what's going on. This, by the way, is the second time in less than a year that Instacart is cutting pay.

Recode took a look at the screenshots from Instacart workers’ internal app and showed decreases ranging from 11 percent to 19 percent, both for workers who shop for grocery orders and those who deliver them. Pay reductions for delivery-only workers ranged from 6 percent to 21 percent. 

Instacart's shopper/delivery people are complaining to customers. On four separate orders, three in Los Angeles and one in New York City, my delivery person explained to me -- unrequested, by the way--  that the “service charge” I was paying didn’t go to them – and if I wanted to make sure they received a “tip,” I needed to add a tip in addition or give them a tip in cash. 

So here’s the rub for Instacart: Not only do they have disgruntled employees, but I also have to wonder how many people are thinking about the cost. Let's say you've been giving 15 percent as a service fee, and now you have to tip on top of that? Or instead? Topline is that you're adding 15 percent to 25 percent to the cost of your groceries. That's a lot more than just a $5 delivery fee, or free pickup at a supermarket.  

You might recall that about four months ago, we reported that the company replaced default tips for workers with a default service fee that Instacart collects and says it puts “toward” worker pay; we haven't been able to determine just how much of that fee goes to the workers. The company ended up adding the tip option back after complaints from workers, but the service fee is still the default option. 

It’s time for supermarkets to take advantage of this trained and able workforce by recruiting them and putting them to work to build their delivery and pickup business.