Business

Instacart may be getting cheaper for you — but your ‘shopper’ may be feeling the effects

A close-up look at Instacart, an online grocery delivery service

How Instacart works from the perspectives of "shopper'' and customer. The company plans to expand its delivery zone to Olympia on Oct. 3.
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How Instacart works from the perspectives of "shopper'' and customer. The company plans to expand its delivery zone to Olympia on Oct. 3.

When Josali Gonzalez, a Hollywood resident and widow, first started working as an Instacart shopper 13 months ago to help support her two young children, she was making as much as $600 a week for a 30-40 hour stint.

After spending a year driving for Uber and Lyft, she was ready for the change of pace, she said. The idea of sticking close to home, not to mention being off the road, was especially appealing.

“It was easy,” she said.

But last year, Instacart changed how it pays contractors — ”shoppers” in Instacart parlance. Today, Gonzalez has to work nearly twice as long to earn the same amount. For now, she’s stuck with it, she said. But she’s looking for alternatives.

“If I get something better, I’m definitely going to change,” she said.

She’s not the only Instacart worker keeping an eye out for new work as a result of the changes.

Over the course of 2018, the San Francisco-based company that picks up and delivers groceries from major supermarkets — including Publix — changed the earnings structure for its 70,000 active contractors. (The company declined to say how many shoppers or customers it has in South Florida, where it has offered its service in Miami since 2015.)

Prior to the change, contractors earned $0.40 per item, plus a base rate set for each city, plus a tip. There were also occasional bonuses for especially large orders.

But according to Instacart, some contractors complained it was not always clear what fee they would earn on a given order. The pay structure did not account for factors such as the weight of goods or distance traveled.

Now, before they decide whether to accept an order, contractors see an up-front estimate of what they will earn. The goal, the company said, was to spell out potential earnings on a given order, and also provide contractors more choice on which orders they accept. Instacart also now guarantees $10-minimum earnings for contractors on each order, more incentives, pay from a store to a customer, and changes the way it awards performance bonuses. Meanwhile it has also cut prices for hungry customers as new competitors have come online.

But Gonzalez and numerous other Instacart contractors across the country say the changes have caused a sharp reduction in how much money they can make. And that cut is too much to absorb — even with the benefits of flexible work hours and community relationships.

Some contractors say a boycott is in order.

“We are connecting with Uber activists, helpful organizations already fighting, and lobbying Congress,” said Matthew Telles, a Chicago-based Instacart contractor involved in organizing the protest.

Instacart was among the first of a growing group of app-based, same-day grocery shopping services. It has remained the largest, thanks to $1.6 billion in venture funding, even though it faces competition from services including Shipt and Google Express, as well as in-house offerings from Walmart, 7-11, Target and Amazon-owned Whole Foods. In December, Instacart said it would start dismantling its Whole Foods service.

Last winter, Instacart began phasing in pay changes in select markets, then in all the cities it serves, which number more than 1,200. According to company blog posts, it first consulted with more than a dozen of its shopper-contractors before making the changes.

David Hahn, Instacart’s head of product, said contractors’ earnings have remained consistent even with the changes. He declined to say what average earnings were.

That’s no comfort for Jennifer Reid, a shopper based in Jacksonville, who said the changes have resulted in pay cuts ranging between 30 and 70 percent since she signed up to work for Instacart last summer.

The flexibility allows her to spend more time raising her two young children.

“I enjoy it. I try to have fun. I’m very communicative with my customers,” she said. Many of them are disabled or in assisted-living facilities, she said, and she is happy to provide them this kind of care.

Prior to the change last fall, Reid said she would typically make about $15 on a 15-item order: $0.40 per item, plus her local base rate of $3.40, plus a $5 tip.

Now, Reid said, it is no longer clear how Instacart is calculating its earnings estimates. A screenshot of the order website available to contractors showed two orders worth $10 each. One was for two bottles of vodka; the other was for 60 items.

Another common complaint: Instacart is using tips to subsidize payments. If a shopper tips $5, for instance, Instacart could put the contractor’s batch payment at $5 to reach the $10 minimum earnings threshold, say contractors.

“We are no longer being paid a fair wage,” Reid said.

Instacart denies the assertion that it is calculating batch payment amounts based on how much a customer tips. Many order earnings come in well above the $10 minimum.

Still, in November, Reid posted a petition on Change.org calling for a reversion to the old system; it has received more than 4,300 signatures.

The criticisms come as an increasing number of Americans have turned to gig work to supplement their incomes. They echo past complaints about ride-hailing platforms Uber and Lyft, which have also changed their pay structures numerous times; Uber’s latest change came in November. A study from JP Morgan Chase looking at the bank’s own payment processing data for the ride-sharing platforms found that between 2013 and 2017, earnings fell by 53 percent. In reaction, New York City enacted a minimum wage for drivers in December.

Meanwhile, the share of Americans relying on such contracted services is growing, while it’s become increasingly difficult for gig workers to precisely define their work arrangements. Often, the amounts earned from gigs may only represent a few thousand dollars a year, especially when gig jobs serve as a bridge between more permanent employment.

But that extra pay is no less essential to their livelihoods.

In an interview, Instacart’s Hahn called complaints like Reid’s and Gonzalez’s “edge cases.” He said feedback to the changes from many shoppers has been positive.

But dozens of Instacart contractors complained about the new system when queried on a Facebook group page. One called the new pay structure “clear as mud.”

“I work the Orlando region, and girls in our group are CRYING over these pay cuts,” wrote contractor Kara Carmichael.

Contractor complaints are still piling up. Telles, the boycott organizer, wrote his own post on Medium.com in November urging contractors to boycott.

“There are NO UNIONS for independent contractors. So if the laws wont catch up, we will have to take matters into our own hands,” he wrote.

In South Florida, he said, some longtime shoppers are simply quitting.

“Many of the veteran shoppers have finally moved on to other jobs because of previous pay cuts,” he said.

Not all Instacart contractors are dissatisfied with the recent changes. Edward Catanzaro, 50, said he first signed up to shop on a part-time basis this summer, then decided to work full-time in October. A Fort Lauderdale resident, Catanzaro said he is making about the same amount now as he was before the changes — as much as $800 a week.

“It’s a livable wage,” he said. Plus, he said, it’s fun. He likes to shop.

Rob Wile covers business, tech, and the economy in South Florida. He is a graduate of Northwestern’s Medill School of Journalism. He grew up in Chicago.


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