Apoorva Mehta is the
founder and CEO of Instacart.

Steve
Jennings/Getty Images


  • Instacart,
    a grocery delivery company that relies on contract workers
    called “shoppers” to pick out and transport items to customers,
    announced at the beginning of November that it would be rolling
    out a new payment structure for those shoppers. The changes
    will be put into effect across the United States by the end of
    the year.  
  • Hundreds of
    shoppers
    are now complaining online that the changes have
    resulted in cuts to their earnings. Many are also calling for a
    boycott of the company.
  • An Instacart executive told Business Insider that
    shoppers’ average earnings have stayed the same even after the
    change in structure.
  • Instacart has come under scrutiny for its payment
    structure and tipping system in the past. 

In November, Instacart quietly slashed its delivery and
membership rates in a bid to woo customers and compete with
Amazon, Business Insider
reported last week.
 

While the news was welcomed by its customers, many in the
company’s army of shoppers — the employees who pick out and
deliver groceries to customers — say that these price cuts have
come at their expense.

Hundreds of the 70,000 shoppers whom Instacart employs on a
contract basis have
taken
to social
media
and Reddit forums
to say that they plan to boycott the company as it has rolled out
a new payment structure in some areas of the United States over
the last month.

This structure will be rolled out to the
rest of the country by the end of the year, Instacart said
in
a blog post announcing the changes on November 8. 

Business Insider spoke to six Instacart shoppers and found
numerous Reddit and Facebook commenters who said that under the
new payment structure — dubbed “the Boulder model” because it was
first trialed in Boulder, Colorado — their earnings have been cut
significantly.

“Their main directive is to pay us as little as possible,”
Matthew Telles, who has worked as an Instacart shopper since
2015, told Business Insider. “They really do not care about us at
all.”

Telles published a
fiery blog post
directed at Instacart’s
CEO Apoorva Mehta on November 24, calling for the
company to adjust the way it pays shoppers. 

Instacart said it launched the new payment structure in order to
make the process more transparent for its shoppers. Unlike
before, shoppers can now see a preview of the items
requested, how far they would need to travel to deliver the
order, and exactly how much they would be paid for the job. This
gives them the chance to see exactly what they would be receiving
before they accept or reject the work.

“We are very upfront about the precise details of the batch
to give the best possible view to a shopper before they are
committing to doing anything,” David Hahn, chief product officer
at Instacart, told Business Insider on Monday. 

However, the fees have also changed. Under the previous system,
shoppers were paid a flat delivery fee — which varied by region —
in addition to $0.40 per item shopped and the customer’s
tip. 

Under the new system, the flat delivery fee has been removed and
replaced with a “Batch Incentive” fee, which varies by order and
is determined by the order’s number of units, the type of items,
the overall weight of the order, the trip length, and the
location. Shoppers also receive a $0.60 per mile commission. The
total amount that Instacart pays shoppers is now called the
“Batch Payment.”

“Before, we were treating all batches the same way, and
shoppers were saying, ‘That doesn’t seem right, that’s not always
aligning the pay with the effort,'” Hahn said. “We have now tried
to incorporate all these different inputs into that overall batch
pricing.”


Instacart
On this particular order, Instacart paid the shopper
$3.33.

Instacart

But shoppers say the Batch Payment fee is typically low —
sometimes as low as $1 or $2 — and that it seems very random to
them. 


Read more:

It’s now cheaper to order Whole Foods delivery on Instacart than
on Amazon

Hahn said the fee may seem more random because more factors are
being taken into consideration to determine it. 

“Now that we are taking all these inputs into the batch, there
are more variants in the batch price than there was in the old
system,” he said.

Mark Johnson, who has been an Instacart shopper in the Seattle
area for 14 months, said that the new system has had the biggest
impact on shoppers delivering large orders, especially from
warehouse stores such as Costco. Previously, shoppers would be
given set bonuses that could be anywhere between $2 and $8 for
these bigger deliveries, depending on the area. 

“While a bonus for heavy deliveries is meant to be factored into
the new incentive fee, it is not always consistent,” Johnson
said. “I’ve seen crazy jobs of 30 to 50 items for $10 or $15.
Before, we were making twice as much.”

Hahn said that tracking the weight of the items has created some
issues. Instacart is in the process of adding the weights of all
the products that they deliver to the system, which is why
shoppers might see some discrepancies.

This is something that the company is working to improve,
he said, adding,

“This is going to be a continuous
process. We are not perfect.”

But the biggest complaint among unhappy shoppers is in how they
say the customer’s tip is being presented in shoppers’ overall
payment. 

Instacart has set a $10 earnings minimum on every job. This
number is made up by what Instacart pays the shopper — the Batch
Payment — and what the customer tips. Several shoppers said it
seems that what Instacart actually pays out is dependent on the
size of the customer’s tip, which, they said, can result in them
earning less than they might have before. 

“They are subsidizing what they are paying me with the customer’s
tip,” Instacart shopper Andrew P. told Business Insider. Several
of these shoppers requested to keep their full names private in
order to avoid publicity for speaking with Business
Insider. 

“It’s unfair. The company is basically taking advantage of the
customer’s tip,” Sheila V., who has been a shopper in the Fresno
area since May, said. 

These shoppers claimed that for example, if a customer tips $4,
Instacart will pay out the remaining $6 in order to reach the $10
minimum. If the customer tips $6, Instacart pays $4. 

Hahn denied that this is how Instacart determines how much it
pays shoppers and said that that amount is not related to the
amount that the customer decides to tip. However, if the customer
does not tip — or tips a low amount — Instacart will add extra to
ensure the shopper makes a minimum of $10. 

“We wanted to make sure, especially if those numbers were going
to add up to be less than $10, that we went further and we added
more to that Batch Incentive,” he said.

“It is something that we did to benefit shoppers. Instacart is
then stepping in to make up that difference when a customer has
chosen to zero off the tip.”


Instacart
Sheila W.’s recent
Instacart trip.

Sheila
W.


Some shoppers are urging customers to add the tip on the app once
delivery is complete, so that they can receive it as an added
bonus after they are paid by Instacart. 

This isn’t the first time that Instacart has come under scrutiny
for its payment and tipping structure. In
2016
, it removed tips and replaced them with a service fee,
which went directly to the company. The tips were later
reinstated, but shoppers said they were too hard for customers to
find in the app. Then, it 2017, Instacart admitted to
accidentally
withholding tips from shoppers
.

Turning down work has repercussions


InstacartInstacart

The increased number of jobs with relatively low fees has meant
that many shoppers are rejecting work that comes up on the
app. 

Andrew P., who has been a shopper since February, said that up
until these changes were put in place, he hadn’t rejected a
single job. He said that since the changes were made in his
market on November 19, he has turned down six in two weeks. 

Aside from working less, shoppers run the risk of losing their
job altogether by turning down work, they say. 

If shoppers reject four jobs in a row, they are tagged as “idle”
on the app. If they don’t log in for 30 minutes after that, they
are unable to work for the rest of the day and are marked
down for a “reliability incident.” If shoppers accumulate five
reliability incidents, they are moved to “day before access” for
pick-up hours. This means that instead of signing up for hours on
a weekly basis, they are only able to pick up hours a day ahead
of time, a spokesperson for the company confirmed to Business
Insider.

“They only have so many hours. Lose early access, and you may
never get it back, or it could take months,” Telles said. 

Customers complain of delays 

The payment changes may be having a domino effect for customers,
many of whom are reporting delays online.

Shoppers say this is because some of them are now rejecting more
jobs that don’t make financial sense. Other shoppers say they are
even looking to work elsewhere. 

And it doesn’t look like these shoppers are going to stand down
anytime soon. 

“I love doing this and helping these customers, but the
morale has been so terrible that everyone is jumping ship,” Debi
L., who has been an Instacart shopper since July 2017,
said.



Credits: Business Insider

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