Instacart offers more sticks than carrots

(4 minute read)

I’m obsessed with Instacart and its orange carrot logo. I was an Instacart shopper prior to the pandemic and I can’t seem to get over how much customers love having groceries delivered to their door and yet how badly Instacart consistently treats its growing army of shoppers.

When Apoorva Mehta started Instacart in 2012, the very first shoppers were employees paid by the hour. Over time Instacart switched to using independent contractors who were paid using a straightforward calculation based on a flat fee per delivery, an amount per item, plus an amount per mile from the store to the customer’s house. The larger the shopping list, the more money the shopper was paid. Customer tips sweetened the deal. Teachers quit their jobs to become full-time shoppers because working as a full-service shopper paid 50% more than working in the classroom. The Instacart website used to claim that shoppers could make $25 an hour. Today most shoppers make less than minimum wage and that’s including the tip.

The trouble started for Instacart shoppers in 2016 when Instacart replaced a transparent pay model with an algorithm-based model. Shoppers suddenly noticed that the pay per batch had suddenly dropped about 30% and, worse yet, they were no longer getting their tips. Instacart apologized, blaming bugs in the new algorithm. Instacart restored the missing customer tips, but they continued to and still continue to tweak the algorithm used to calculate pay and, in the process, gradually reduce the pay per batch.

Experienced shoppers have noticed that Instacart has a history of tweaking the algorithm and cutting shopper pay during holidays or whenever there’s a high demand for groceries plus people who are willing to take on a low-paying job for some extra pocket money, such as during this pandemic with 30 million people getting unemployment benefits. 

Shoppers have no idea how the algorithm works. It supposedly tallies the number of items on the shopping list, the number of heavy or oversized items, peak shopping hours, driving time, and customer ratings. Many shoppers refuse to take the lowest-paying batches so if the algorithm did its jiggery pokery and came up with a number that was too low, such as a request to pick up two items at the grocery store, Instacart would round up the offer to a minimum of $7 or $10, depending on the location.

Instacart shoppers have gone on several strikes to ask for better pay and working conditions. The strikes have had mixed results. The most recent strike in March asked for help to reduce the risk of exposure to COVID-19. Instacart responded by announcing that they would give shoppers personal protection equipment. This consisted of a one-time offer of a pair of gloves, a mask, a small bottle of hand sanitizer, and a paper thermometer. The kit did not include any wipes or disinfectants for cleaning shopping carts or their cars. Instacart also promised two-weeks of sick pay for shoppers who contracted COVID-19, but the company has made it nearly impossible for shoppers to get compensated.

Tips, scams, and bots

Customers have been generous with tips during this pandemic, although a few have tried to game the system. Some customers offer a generous tip up front and then remove the tip after delivery. Smart shoppers have started taking photos of the grocery bags at the customer’s door as proof of delivery because some customers have claimed their groceries never arrived although the shopper placed the bags in the customer’s hands at their door.

Shoppers need to watch out for phone scams where someone claims they are from Instacart and then asks the shopper to confirm some personal information. The scammer then uses that information to break into the shopper’s account at Instacart and transfer the shopper’s hard-earned cash to the scammer’s bank account.

Instacart has been slow to respond to complaints about bots or third-party apps that hack into Instacart’s database and route the highest paying batches to unscrupulous shoppers for a fee, essentially stealing batches meant for other shoppers.

Despite all these obstacles, enthusiastic new shoppers sign up with Instacart every day. You can find them on social media, especially in the private Facebook groups for Instacart shoppers. Since March, Instacart has added 300,000 shoppers and plans to hire 250,000 more by the end of the year. In some parts of the country there are so many Instacart shoppers that shoppers are waiting for hours for the next batch to come in. I wonder how many of these new shoppers understand what it means to be an independent contractor, that they have to set aside part of what they make for taxes and for the extra car insurance required, that there is no paid time off, or no worker’s comp if they get injured carrying someone’s groceries.

Shipt workers cite lower pay, missing tips with their new algorithm

Shipt is a grocery delivery service that is similar to Instacart. Shipt is owned by Target. Shipt’s business has boomed during the pandemic. And like Instacart, Shipt’s good fortune has not trickled down to its shoppers who risk their lives to provide this service.

Shipt is gradually replacing their flat-fee pay model with an algorithm-based model just as Instacart does. Shipt says that the algorithm allows shoppers to be compensated more fairly as it takes into account the actual effort it takes to complete and deliver an order, rather than just the size of the order. However, under the new algorithm, some shoppers have reported a 30% to 50% drop in earnings. Some areas of the country have reported missing tips.

Understandably, shoppers are not happy and have gone on strike in April, May, and again on July 15. They worry that Shipt is going the route of Instacart where the company will use the algorithm to discretely lower pay whenever it wants to. Shoppers are asking Shipt to not lower their pay and to also provide masks, gloves, and other personal protection equipment for shoppers.

Summary

Business has been good for Instacart, Shipt, and other home delivery services. Thanks to COVID-19, the CEO of Instacart has become a billionaire. But the workers who risk their lives to deliver food to the healthy and to the sick have another story to tell, of low pay, an unpredictable work load, missing tips, phone scams, bots that steal orders, and inadequate protections against COVID-19.

These shoppers are the face of the company as far as the customer is concerned and treating shoppers badly in the long run is going to negatively impact the quality of the service they provide.

The combination of low pay plus high risk has caused many shoppers to walk away from the gig economy. But for every shopper that has left, many more are jumping at the chance to have some money coming in again. The reality is that if these home delivery companies don’t start treating their shoppers better and start paying their workers a living wage, as soon as the economy gets back to normal, these shoppers along with some customers will go somewhere else.