Instacart’s Shaky Ground is Your Opportunity

It’s time for supermarkets to take advantage of this workforce.

I respect Instacart’s 3 tier model for retailers. Do it all, just do delivery or 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 is cutting the pay for “some” workers in “some” citites we have to wonder what is 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 deliver them. Pay reductions for delivery-only workers ranged from 6 percent to 21 percent. 

Their shopper/delivery people are complaining – to customers. On 4 separate orders, 3 in Los Angeles and one in NYC, 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 have to wonder how many people are thinking about the cost. Lets say you have been giving 15% as a service fee and now you have to tip on top? Or instead? Topline is that you are adding 15-25% to the cost of your groceries. A lot more than just a $5 delivery fee, or free pick up at a supermarket.  

You might recall that about 4 months ago we reported that the company replaced default tips for workers with a default service fee that Instacart collects and says it puts “towards” worker pay; we have not been able to determine just how much of that fee goes to the workers. They 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 and recruit this trained and able workforce and put them to work and build your delivery and pick up business.