Instacart is just one of the many Uber-lookalike “technology platforms” that is also functionally in the business of providing a service – Instacart’s just happens to be grocery delivery. Also like its friends Uber and Lyft, it’s been subject to a class-action suit citing misclassification of its “independent contractors,” whom some allege function more like employees (unlike Uber and Lyft drivers, they’re actually required to work “shifts”).1
Only time will tell how we’ll look back on the Uber-driven explosion of these outlets to make a quick buck, but the good news is, Instacart is refashioning itself as one of the good eggs. On its rocky road to profitability, it’s so far seen some lows, and has clearly attempted to cut corners, but CEO Apporva Mehta’s recent blog post let his shopper community (and the world) know that it stops NOW.
The company formerly denied – in the face of a different lawsuit – that it was including customer tips as part of its base wage to shoppers, but real shopper receipts posted online proved this damage-control wrong. In an extreme case, one shopper was paid $0.80 for more than an hour of labor by Instacart, simply because a customer had chosen to tip him $10 – which the company factored in as part of the $10 “batch minimum.”2
Instacart has changed its shopper payment structure a number of times – previously electing to eliminate tipping in favor of higher base pay rates, then backtracking after shoppers staged a boycott – and so far they haven’t managed to get it right. Startups like Instacart, a few years beyond ample subsidies from glowing VC’s, are struggling to rely on their actual business models to turn a profit.3
Things might just turn around for Instacart, though, after Mehta’s substantive effort to win over shoppers again. He announced that all shoppers will now have a $7-10 base compensation per full-service batch (shopping and delivery), tips will always remain separate from base pay, and those whose tips were included in base pay will receive back pay for the “mistake.”4
He even cited the 80-cent debacle, saying, “Instacart shouldn’t be paying a shopper $0.80 for a batch… it happened to one shopper and that’s one too many.”5
Despite the added expense, it’s better to do it honest or don’t do it at all. The worst thing that could happen to Instacart, which would slash their bottom line more than anything else, would be an abandonment by shoppers and a reputation for shady practices that would prevent them from recruiting new ones. Mehta’s statement is also a textbook example of how to handle any mistake – CALL IT OUT, even to the most unflattering realities (80 cents!!) to show that you truly own it and you’re committed to making things right. Here there was no beating around the bush. Mehta went for broke in regaining trust, and hopefully Instacart’s shoppers can breathe a sigh of relief.
Internal PR – External PR – sometimes they’re one and the same. Instacart definitely needed the WIN.
- Steinmetz, Kaity. “Lawsuit Claims Instacart ‘Personal Shoppers’ Should Be Classified as Employees.” Fortune, Fortune, 18 Mar. 2018, fortune.com/2015/03/18/lawsuit-claims-instacart-personal-shoppers-should-be-classified-as-employees/.
- Dickey, Megan Rose. “Instacart Faces Class-Action Lawsuit Regarding Wages and Tips.” TechCrunch, TechCrunch, 6 Feb. 2019, techcrunch.com/2019/02/05/instacart-faces-class-action-lawsuit-regarding-wages-and-tips/.
- Griswold, Alison. “Inside Instacart’s Fraught and Misguided Quest to Become the Uber of Groceries.” Quartz, Quartz, 15 Mar. 2016, qz.com/627605/inside-instacarts-fraught-and-misguided-quest-to-become-the-uber-of-groceries/.
- Dickey, Megan Rose. “Instacart CEO Apologizes for Tipping Debacle.” TechCrunch, TechCrunch, 6 Feb. 2019, techcrunch.com/2019/02/06/instacart-ceo-apologizes-for-tipping-debacle/.