Online grocery service Instacart is facing a boycott from shoppers who are unhappy about the company’s decision to eliminate tips in favor of raising guaranteed delivery rates. Although Instacart positioned the move as a way to smooth out the earnings curve for its shoppers, some of those affected by the change say it will instead reduce their incomes dramatically. In the case of top shoppers, some expect to lose up to 50% of their earnings, they claim.
Hundreds of shoppers are now preparing a nationwide boycott on October 16th through 17th, when the new pay structure goes into effect. The hope is that enough will join in to impact the workload and delivery times, in order to force Instacart to reconsider the changes.
It could be difficult to have a sizable impact, however, given that there are tens of thousands of shoppers working across the U.S., and they have no real way to organize outside of social media and word-of-mouth.
No tips, higher guaranteed delivery commissions instead
The revamped payment structure was announced earlier this month and discussed during an interview at TechCrunch Disrupt SF 2016. At the time, Instacart COO Ravi Gupta explained that shoppers would instead make somewhere around $10-$12 per delivery, instead of relying on around $5 per delivery plus tips. He said that 20% of Instacart customers don’t tip, which is a “really tough experience for shoppers.”
Instacart’s customers will now instead have the option to fill out a new “service amount” field, which sounds a lot like a tip.
Instacart’s documentation says the “service amount” is paid out entirely to shoppers. As one observer, Jon Hendren, noted on Medium, Instacart tells customers that “tips are welcome, but not required.” (Hendren says he’s not a worker or regular customer, and is not involved with the boycott.)
Naturally, customers may believe the service amount is basically the new tipping field, but it’s really more like a “tip share” of sorts. The funds go back to Instacart, who then distributes the money to those who worked on the order, but at flat rates.
In some cases, in-store shoppers (who are employees) prep the order, which is then handed over to drivers. But in many cases, one person both shops and delivers the order. Plus, the in-store shopper is actually an employee, not a contractor – and this pay change wouldn’t affect them, as they’re compensated differently.
Only the full-service shoppers (contractors) are affected.
To even out incomes, Instacart says it increased delivery commissions as part of the shift away from tips; these commissions will also be increased on busier days. And the top 25% of shoppers will receive a $100 weekly bonus. This is in addition to extra pay for “larger orders, long distances, and other cases,” the company explains.
Top shoppers say they’re hit hardest
However, some shoppers say that the company is deliberately trying to muddy the waters with regard to how the service charge works.
“While there are sometimes two people working on an order – an ‘in-store shopper’ and delivery driver – the majority of the time there’s only one person working on the entire order,” the boycott’s lead organizer (who is choosing to remain anonymous) told TechCrunch. “Independent contractors are the only ones affected with the new pay, and there’s never more than one independent contractor working on an order. The term ‘pool’ is absolutely misleading,” they said.
The organizer also explained that top shoppers are impacted the most by this change, as they could lose over $100 per day through the elimination of tips. “The $100 weekly bonus is a joke,” they scoffed.
“[Instacart’s] most loyal, top-rated shoppers are all outraged. Reducing our pay in hopes of finally becoming profitable isn’t new. Instacart already did this to us in March,” they added, referencing the pay reduction affecting drivers and shoppers announced earlier this year.
“But no one really cared that Instacart’s rates were so low because customers tipped so well. I’ve talked to over 100 employees one-on-one thus far, and no one expected this,” the organizer said.
Twenty-seven people have signed up to lead the boycott in their local areas, which covers all major cities like New York, the San Francisco Bay area, L.A., and other markets, we’re told.
Flyers are also being passed out to shoppers locally, and shared over email. Yesterday, over 100 shoppers received the printable boycott notes via email, the organizer said.
However, an L.A.-based organizer, Ken Barton, said that organizing over email is challenging, because Instacart doesn’t share the names and emails of its contractors. Working with the lead organizer, the two used social media to network the group together instead.
Barton also got involved because this change, unlike March’s pay cut, affects their tips.
“Now that Instacart has decided to steal our tips in order to fold them into a new revenue stream for the company I realized I had had enough,” he said. “I felt I needed to do anything and everything that I could to organize shoppers together to vocalize their concerns with the company and the public at large.”
An organizer in Seattle, Michael Rittman, meanwhile, notes that the new payment structure will impact customer satisfaction as well, as there will be no real incentive to pick quality items or be friendly, as shoppers are only paid based on speed.
“Tipping accounts for about half – if not more than half – of the money I make,” Rittman laments. “I complained to my boss about it, and I will quote his response to me, ‘I’m not gonna lie, it’s gonna be harder to make the kind of cash you’ve been making’,” he was told.
Under the new pay structure, shoppers’ base pay will be $0.50 more, and $0.20 per item more, but without tips. This helps in the cases where shoppers are stiffed, but in the 80% of cases where the shoppers get tipped, often well, it means they could make less than before.
Instacart, for its part, is inviting shoppers to reach out to discuss their concerns. This is mentioned in a new blog post that went up today, where it also argues that pay will actually increase, as indicated by the chart below:
Various organizers also report being invited privately to speak to managers, we’re told. However, the company, at this point, is not backing down from its plans.
One email sent to a disgruntled shopper, basically explained it was a take-it-or-leave-it scenario, i.e.:
When the new updates take effect on October 24th, you’ll be offered a new contract. If you don’t feel the new system works for you, you can choose not to accept it. In that case, of course, you would no longer have access to the platform. We would be sad to see you go, but that option is available.
“They are hoping, company-wide, that all shoppers expecting fair treatment will either be fired or deactivate their accounts so that an entirely new fleet of naive shoppers can step in and take over,” says Barton. “People are always looking for work. There are plenty of new shoppers out there ready to take our place no matter how little they are paid, and Instacart is banking on that fact.”
That being said, it’s hard to gauge how many shoppers will actually walk out on October 16th, as there’s no real means of tracking those who have committed to do so. That said, the Instagram account has over 100 followers, as one more visible metric.
“A small minority”
An Instacart spokesperson declined to comment on the boycott specifically, but said the company has “a direct and open relationship with shoppers,” and all the changes it made were actually based on shopper feedback. In fact, one of shoppers’ biggest complaints was that too much of their compensation was tied up in tips, the spokesperson said.
“We are hearing a lot of positive feedback, to be clear. There’s a small minority of people who are angry and very vocal about it, which is totally their right. But we’re not that worried; we think things will get cleared up in terms of misconceptions,” they added.
The company, however, is having to work very hard to make that happen. The company is communicating through emails, speaking on the phone to contractors, taking feedback, and even hosting open office hours in a number of U.S. locations.
But at the end of the day, Instacart believes the pay change is in the best interest of all. “We have to make a decision that makes sense for all the shoppers and we can’t base it on a handful of shoppers,” says a spokesperson.
Here is the email shoppers received detailing the changes: