Instacart workers are threatening to boycott the company over a payment policy change that they say has cut their wages
- 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."
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."
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
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.