Tuesday, June 4, 2013

Instacart lost my trust with their secret 30% price markup.

UPDATE 04/2015: Instacart is trying to be more transparent, to their credit. This change directly addresses my concerns below. http://news.instacart.com/2015/04/23/greater-pricing-transparency/

How could I not be smitten with Instacart when their customer support contact email is happycustomers@instacart.com?

After my first order with free shipping, I was exciting at the prospect of saving an hour a week using Instacart (that adds up to five 12-hour days a year!). But something just didn't add up. How was Instacart making money?

The overhead for Instacart, disregarding website costs, is simply paying the "personal shoppers" to go to Trader Joe's to get my European Thick and Creamy yogurt, and deliver it to my door. If these shoppers are paid minimum wage ($10/hr in CA), then they must complete three trips an hour to break even. The shoppers must do parallel runs to the grocery store, so let's say they average 10 shopping trips + delivery every hour. That's $30 in delivery fees minus $10 to pay for the personal shopper's salary. So  $20/hour profit for every 10 Instacart users, or about $2 per person -- less than a latte. And this isn't even accounting for costs of website infrastructure, paying back Yc investors, etc.

So there's only one other way that Instacart is monetizing: they systematically raise their prices relative to the in-store price. Is this true, Instacart FAQ?
Are your prices different from the store?
Yes, Instacart prices are our own and vary from the store’s price. Our prices can be lower, the same, or higher than the store price. If you notice an item that you believe is priced incorrectly or unfairly, please email us at happycustomers@instacart.com.
Well, it certainly doesn't sound like they raise the price systematically. Maybe Instacart has some kind of business arrangement with the grocery stores, with some monetary incentive for sending customers along? I emailed customer support to find out.
Alexandre Colavin Mar 09 06:58 pm (PST) Dear Instacart
This was my first order, and I'm happy with how it went. I do have some question about how your company works... From navigating your site, it's not transparent how your business operates. Do your personal shopper employees simply go to the store on my behalf? Is there a formal relationship between TJ's, Whole Food or Safeway and Instacart?
Mike Price (Instacart) Mar 09 07:04 pm (PST) HI
Thank you so much for your order! I am super glad to know that your experience with us has been a good one. Instacart does not have any type of relationship with any of the stores. We receive your order and our shopper is alerted of the order and does personally go to the store and shops for your groceries. Please let me know if you have any other questions.
Hope you have a great night!
So prompt and so nice! They must be a good company. But from a user's standpoint, this response is plain fishy. I'm not a lawyer, and I'm uncomfortable with the idea of buying food from a third party. I asked a TJ cashier if they ever saw the Instacart personal shoppers. I imagine them coming to the cash register with three of every staple, like milk, eggs and almond cocoa spread.

So here's some quick stats of in-store versus instacart prices that I put together (retrieved June 2013, and from above photo.)

Screw you, Instacart. We're over. Not because you raised your prices, but for being so damn sneaky about it, and for not trusting your customers enough to let them know how you make money. Why don't you just disclose that all prices are 30% higher on your website? 30% is a big deal. That's four times the state sales tax. I feel betrayed, and I'm making sure my friends in Oakland know.

Of course, Trader Joe's is also run by an ultra-secretive German company. Let be honest: the real reason I can't rely on Instacart is because they don't deliver booze. Insta-deal breaker.


Brian said...

I just did the same thing in Chicago - Googled to find if anyone else had and saw your blog. My order was marked up 23%, making a $4 delivery charge actually a $16 delivery charge. If they were honest about the prices, then I could make an informed decision about whether it was worth it to go to the store myself. Hell, at those prices I could take a taxi and still save money on the Instacart price.

Until they have transparent prices, I'm also done with Instacart. And I'm also a lawyer - this is very ripe for a consumer protection lawsuit. I'm also filing a complaint with the Attorney General now.

Anonymous said...

why would you people assume you could get a personal shopper, a courier and groceries for just a meager delivery fee. of course there is a big mark-up, you're paying for convenience. i usually use peapod but since i fractured my arm, i need some things same day which peapod at their relatively low prices cannot do- so i pay for instacart. if you don't like it- go get your own groceries. with pizza deliveries you have always been able to get better carryout deals than delivery plus you still pay a delivery fee- who cares.

Anonymous said...

How is it sneaky if it's included in their FAQ?

Anonymous said...

Why is this such a shocker? I don't care if there's a markup - I actually expected a markup of some sort. I just placed an order to have my grocery shopping done and delivered to me and I'm only spending $15 more than I would have if I went to the store myself . . . and that's with a tip. I'll gladly spend a little extra to have that time back. I hate grocery shopping.

Anonymous said...

You expected the same prices and pay $3.99 for a delivery and maybe a tip? If that was a case, good luck finding any personal shopper to make any deliveries for you. So a company wants to make a profit...wow unbelievable. You do realize there are actual expenses in terms of developers, customer service, paying the driver, etc. Business 101, look it up.

Anonymous said...

You're a Stanford grad and you can neither work out nor accept that they make their profit from mark ups? I checked the prices today vs Peapod in Chicago and they were identical or slightly less in most instances. Businesses need to make money and pay their employees. My free time is worth money. I'm happy to work out what my time is worth in $$s per hour, and happy that personal shoppers are able to make a living from doing this for me, even though it's probably, sadly, a meagre per hour rate for them. Why is this business model (or, it seems, any business model that involves profit) such an issue for you when they say in the FAQs that prices are marked up..?

Anonymous said...

oh, and Brian the lawyer? Please grow a pair. How can you honestly expect anything other than derision when a highly-paid man can't even accept that a personal shopper won't cost you $4. What's your hourly rate, huh? Good luck with that Attorney General complaint and not looking like a tight-wad when it goes public with your name attached to it.

Anonymous said...

why would you be pissed at the mark up you retard..they obviously need to make money in order to continue with their service. and if they answer that issue in faqs its not secretive...

Anonymous said...

Bwuahahahaha. I love the lawyer complaining about companies marking things up.

Anonymous said...

The problem is not that they need to mark up to make money. Lots of businesses do that. The problem is that they are intentionally creating confusion to make their money. Why don't they just charge a flat rate percentage based on volume or item price? There's only one reason why - deception. That's what Alexandre and Brian and I have a problem with, and why we won't be their customers.

The store itself has its own markups - we know that. But Instacart says 'the prices could be lower or higher'. For what percentage of products are the prices lower? I imagine given Instacart's deception, this statement is true for 1 product, in one store, in one City, just so they can write that on their FAQs and not be lying.

Anonymous said...

Ok people, I just received my order from Instacart, which included tilapia from Wholefoods that cost me $6.99. The actual sticker on the tilapia said it cost $10.44, so yes, you CAN pay less with instacart. Get over it all you naysayers, no one gets something for nothing. And if you don't like it, it's simple, don't use them.

Anonymous said...

Ironic that a lawyer would complain about markups. The same lawyer who would charge a client $50 for a "billable" 30-second phone call and take a 33% cut.

Anonymous said...

You go to Stanford? Must be lowing the bar pretty good nowadays.

Anonymous said...

You are an idiot.

afafafaf said...

Addendum: it's been a year since I've used Instacart. Not sure and if their PR has changed. If an Instacart representative would like me to take a second look, please shoot me an email.


This whole line of discussion is just plain naïve. This is a convenience business. Nothing more, nothing less. Of course they're going to mark it up. And they are no less transparent than any other store you shop at. Next you'll want all merchants to disclose their profit margin on the shelf label. Nuts!

Anonymous said...

Ridiculous outrage here. Just ask yourself if the price you see on the website (plus some allocation of the delivery/tip to that item if buying more than 1 thing) is reasonable. If so, then just forget what the price is in the store because that's not a comparison - you're getting convenience! Total bundle picked up yourself versus total bundled hand delivered. If that differece is outside a reasonable markup FOR YOU - then go get them yourself. That is all.

Anonymous said...

Just completed my first day of "working" for Instacart. Might be better to call it hell. Here's how it went:

Got an order to go to a grocery store across my city. Probably cost me about $5 in gas to get there. First order came in and I shopped for it. The app crashed so I had to call customer support. The guy on the phone made me feel like as ass, while simultaneously excusing my foolishness because it was "your first day." Was instructed to call the customer if the items weren't available, and did. Customer wanted to change out a whole bunch of stuff, which basically required me to shop again, from scratch. Delivered to customer in freaky gated community. Customer stated there may or may not be a tip online for me. There was!! Oh the everlasting joy!! It was $5, covering the gas money is costed me to get across town in the first place. I make $10 per order and a commission on anything over 10 items. The average order is 10 items, btw. For about 2 hours of work, I made around $25, including the tip. I then was encouraged to return to the store to wait for my next order. It came 1 hour later and consisted of 6 items. I then had to go downtown to deliver. You know, downtown, where there is absolutely no parking anywhere. Instacart does not pay for parking, but I did. I paid about $4 in parking, which ended up being $1 less than my huge $3 tip. Oh the joy again!!! I made $13 on that order. I was then encouraged to go back across town to another grocery store and wait for my next order. I did. It never came. About 15 minutes before my shift was supposed to be up, I got a text (that's how they do) letting me know my shift was up.

So just to recap: I worked 6 hours today, including commuting. During this time I made about $7 and hour and completed two orders/ If you subtract gas and parking, I actually made around $6 an hour.

Fuck Instacart, indeed.

ukay-ukay said...

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rosemariel said...

I love instacart !! Fast, easy, and reliable! Plus use code RLARK1 and get 5 dollars off your first purchase !!

Rosio Valdez said...

We personally do not mind paying the markup for the price of convenience and opportunity cost. We are business owners and every minute equals big dollars for us so it's totally worth it in that respect. I do agree though. They should be more transparent with their markup.

For what its worth we wrote a review on our experience that you can read here at http://sociallyshoppable.com/style/grocery-delivery-has-never-been-easier-a-quick-review-of-instacart-and-more/

Anonymous said...

I've only used Instacart twice for Costco purchases due to the price markup, but I've been very happy. I despise the Costco experience so much that I stopped going on my own. Even with the markup, it's cheaper than stopping by Whole Foods or a farmer's market (plus, I don't have to pay the membership fee). While I agree that they should be a bit clearer about the total costs for the service, that's certainly not going to stop me from using them. And I'm also a lawyer, but I was able to quickly assess the pricing situation and make a decision whether to use the service without involving the government.

Anonymous said...

The problem is NOT paying extra for the service. It is they are intentionally being ambiguous, which is unethical. They definitely won't tell VCs that they cannot give a percentage for service charge.

Anonymous said...

Hi, I am a shopper for Instacart and am about to quit. Yes, they mark up your groceries, constantly counsel us to keep the receipts out of your sight, tell us that we'll make our money on tips and "commission" while charging you a delivery fee and telling you that tipping is not necessary.
The worst part for me is that they, like you say are sneaky about all of it. They advertise a certain pay rate that is nearly impossible to achieve. They effect all kinds of penalties and punishments for imperfect deliveries and yet they the,mselves make many many errors that leave the shopper unsupported and the customers unhappy. If they spent a quarter of the time and IT muscle creating a win/win culture for both the employees and the customers, as they spend trying to find ways to suck as much money as they can from both of us, they might have more loyalty ink both cases.
At this point I am done being exploited by Instacart.

Anonymous said...

Instacart is a rip off in the name of convenience. I'm sure they can think of better ways of making money rather than marking up the prices and forcing the customers to also tip the driver.
Google express is delivering items at the exact store price with 95$/year and a 15$ minimum order. They do not make you feel guilty at the checkout page to add tip. The only bad part is that they do not deliver refrigerated and frozen items.

Anonymous said...

I've used this service three times now and love it. I checked their prices and am very familiar with what I pay at the store because I always buy the same things over and over again. I checked and there were several items that were $1 below and several that were $1 over but mostly it was either below or about the same price. It seems to even out on the final bill what you would pay if you went yourself. It's totally worth the money to not have to spend an hour of my time in the store when I hate grocery shopping for the small fee and tip. I don't think they must pay the employees very much here so I have started tipping more especially if it's really cold and/or raining. These shoppers work hard for their money should look up glass door for what they get paid. They spend money on their own gas. You pay for the service to sit your booty on the sofa or at the PC and have it delivered to your door. And when you're sick or not feeling well it's a life saver. Yep worth it to me! I'll use it again!

mitchee said...

continuing problem with their mark-ups and am about to stop using the service. revet, and ongoing problem:

- boars head sliced turkey: store price $9/lb...instacart $13.49.

customer service has not helped.

Anonymous said...

I love instacart! Why? Because I don't have time to shop. If you live in Chicago, you know that going shopping for groceries isn't a one stop deal. It's a one day excursion and if you have children it's a nightmare. I don't just do to one store to do my shopping but many however I do buy the bulk of my groceries from both COSTCO and either Mariano's or Strack and VanTill. I go to about 4 specialty shops for everything else. Instacart has made this so much more manageable. I ordered my groceries for next week while waiting for my daughters to get out of school. Took me 20 minutes and now all I have to do is wait. And it's Super Bowl weekend, that's worth at least a 70% markup!(Just kidding Instacart) But still, my kids hate it when I have to drag them all over town to go shopping and I hate it as well. I don't feel that I am spending anymore than I would if I went and ended up buying a bunch of crap I didn't need anyway. So, while the world isn't perfect, I believe this a great alternative for people who are incredibly busy and value their down time. I get to spend the evening with my kids, I didn't have to get stressed out driving around Chicago, I didn't buy a bunch of things I really didn't need and I got my groceries. Not bad for a 30% markup. Oh, and I am not an instacart employee I work in education and my wife is a nurse.

rbc303 said...

I tried this for the first time excited I could save a little time. The markup is fine as yes, they have to make money, but it seems they just pull random prices out of the air! The website says up to 25% markup, but as you can see below, the markup was way more than that.
I ordered a box of Name Brand Vermicelli on the website, cost .39. The shopper contacted me to let me know that only the store brand was available and if it was ok to replace. I agreed on the phone that is was ok. I get the bill and I am charged $3.29 a box!! I am also charged $3.09 for a box of store brand sandwich bags that cost $1.48! They did adjust the Vermicelli cost, but they were not very friendly about it, and that is why as the Sharks would say, "I am OUT!"

Anonymous said...

The $2 B valuation! Welcome to the on demand economy bubble. Reminiscent of the dot com era... At the end only companies with back to basic business models will survive. Everything else is an app and clever marketing....... Gone very quickly..

Anonymous said...

The $2 B valuation! Welcome to the on demand economy bubble. Reminiscent of the dot com era... At the end only companies with back to basic business models will survive. Everything else is an app and clever marketing....... Gone very quickly..

Unknown said...

I'm really having a difficult time understanding the outrage from most of you.
"How DARE a BUSINESS try to make a PROFIT!"?

Are you kidding me?

As someone mentioned earlier, it's a convenience. That is what you are paying for; a 3.99 delivery charge and (hopefully) a tip to your delivery person isn't going to cut it anywhere in the world.

I've not used their service for several reason, including that I actually enjoy shopping. But after looking over their site I FULLY understand that the costs will be more; doesn't matter if the store is having a sale or you have a 50 cent coupon for the cat food; the price is fixed at Instacart's higher prices. THAT is where their profit comes in.

If you are extremely price-sensitive (as some of the complainers seem to be), you probably shouldn't be paying someone else to do your grocery shopping in the first place. It's a household chore that your parents probably did (as long as money was coming in), and that most of us regular nobodies take care of ourselves.

1.) I have a bit more time than money, and on occasion when the reverse is true, I FIND MORE TIME.

2.) I'm an extremely observant shopper. Do it enough times and you'll be too.

3.) I usually only shop sale items and when I do, I buy in bulk, use coupons, look for bonus packs, clearance, and comparable items. (see #3).

4). I'm not the entitled idiot brat that complains that the certified organic, top-shelf, diamond-dusted, gold encrusted, Sumatran cocoa ice cream in the single-serve convenience pack) that I ABSOLUTELY MUST HAVE DELIVERED RIGHT TO MY DOORSTEP costs 14.99 instead of the 3.99 half gallon block of Breyer's Chocolate that the single parent with two kids in their cart is buying, and ONLY because it's one of the kids' birthdays.

Seriously, some of you are amazing.

Unknown said...

Another note:

People don't seem to realize that the grocery business (at least in the US), is a very slim margin industry; around 2-3%. Americans actually enjoy the least expensive food price in the world.

Keep in mind Instacart is NOT a store. They don't have warehouses, fleets of refrigerated trucks, 50,000 sq ft stores (and the property tax, maintenance and utility bills that go with them).


They are absorbing ALL of the overhead costs of the manufacturers, suppliers, the ship, rail, air and truck distribution, the wages of the shelf-stockers, the baker, butcher and deli workers, the cashier, bagger, the unlucky guy that has to chase down stray grocery carts when it's freezing cold outside and every executive and manager of each one of the business listed above, all trying to extract a profit for the shareholders.

This is all reflected in the price you pay when you step into the checkout line.
Oh, don't forget the sales tax.

And THIS is what Instacart pays.
FULL RETAIL PRICE for the products they deliver.

That's fairly unheard of.

It SHOULD be more expensive.

Buying your stock at retail is expensive if you are essentially needing to slap your own price sticker on it to re-sell.

Anonymous said...

They do deliver Booze, just a little FYI :)

Anonymous said...

You're paying for a service.

Unknown said...

Thank you for this post. Keep it up. Hope to read more post from you guys.


Anonymous said...

I wonder if Mr. Stanford complains when he pays $100 for that bottle of whine, I mean wine, that cost the restaurant a whopping $25?

Anonymous said...

Yes, there is a markup... but worth it for the convenience :)

At least try it once and see for yourself.

$10 off your first purchase with this link!


Anonymous said...

This is the dumbest blog I have ever read. Of course they mark the prices up you idiot. How did you think they were running a business if they charge you the exact store price and $3.99 delivery?

Anonymous said...

I see in California, shoppers are requested to use their Ralph's reward card in order to get the discount sale prices for the customer, and points for the shopper to use for gas discounts at Shell. A grocery bill of $150, with discounts becomes let's say $124, a $26 discount using the reward card, the shopper may get 100-200 points. But the discount amount is not passed to the customer, Instacart will charge the customer the $150 plus markup.

Anonymous said...

Hi everybody. I am Instacart shopper in Philly. I am 53 years old widow. Our business is gone due to recent death of my husband. I also lost my parents in past two years. I have a college degree, real estate license (no business) and no jobs. Nobody is hiring me.
I became an Instacart shopper. Two days ago a had 2 hours shift. I was delivering wine and spirits. Two delivery. No tips from person who ordered booze for $160 and very heavy bags delivered to the Lobby of expensive apartment building. It was a pretty heavy order I drove about 25 miles that day. I made $19.57. I wrote this post just for those who are able to make orders, do not pay tips and worried about mark ups.
Thanks others who appreciate and help people like me to pay for gas, car insurance and other bills with their orders and tips.

Anonymous said...

Ahh, Instacart does hire a lot of people. But I support you, Alexandre Colavin,
to expose the fact, which helps me to avoid this company. Thank you.

Anonymous said...

Such a scam!

Since we don't like spending extra money on things... here is $20 off a gourmet meal on Munchery for you all to enjoy :)


Anonymous said...

I am also a Philadelphia shopper. I am in a similar boat as you fellow shopper.....and make probably as much money. I am so sorry

Anonymous said...

I am a shopper in Philadelphia.

I need to stress to all of you that yes in the stores they do not have a contract with, Instacart does mark up the prices. But I assure you that us the shoppers do not reap those benefits. We get paid a minimum of 10 dollars per order and we have to pay for our own gas and parking. We have to pay for vehicle maintenance and do not get a kick back at all!

We were scammed like you were. Yes it is a service that is optional. And a mark up is inevitable in this kind of service. But we don't get your money. The owner does. Be nicer to us delivering your food. Tip us. We like that. Don't treat us like we are beneath you. Because believe me, you crap smells just as bad if not worse than ours.

Anonymous said...

Instacart does mark up the in store items as does other delivery companies such as SHIPT. They have agreements with the stores they shop at and I'm sure they give them a kickback for being the exclusive delivery company. They pretend to be offering the service to customers, but really they are upcharging people and pretending they have inexpensive delivery. It is unethical (not to make a profit) but to hide their charges and take advantage of people. SHIPT even charges an annual fee, pretending it is a co-op, these guys are discraceful.

Instacart and SHIPT suck.

Anonymous said...

It is actually up to each individual store if they want to allow the prices to be marked up or down on the Instacart site. I know because I work for a store who uses Instacart and they asked us if we wanted that option in our contract.

Anonymous said...

I am a new Instacart shopper in California. Some prices match, Whole Foods, while others do not. Instacart claims that Safeway requested/wants the Instacart prices to be different. From what I have seen though, there are many items that are cheaper at Instacart than at Safeway, like Ragu sauce, or anything that has gone up recently. IE grocery stores regularly change their prices, like on eggs lately, I suspect you can buy cheaper of those items for some time before Instacart pricing catches up to the grocery store price change.

The last commenter is right, Instacart has agreements with stores that saves them some money. I believe I heard Instacart gets a small discount on Whole Foods shops. Trader Joe's though, I heard, kicked Instacart out of shopping for them.

The Instacart website is a lot more clear than it used to be that the pricing is different. Apparently in the beginning they hid the pricing difference a bit more and that is what really irked people. Now, you go to the website and when it is a store that they don't price match, it tells you that. Now, is the markup only what the website suggests? Doubt it, especially when it concerns to short term sale prices. I typed in a Safeway receipt of mine, and overall it was 50% more expensive with instacart, but know I am a bit of a couponer, who mostly buys sale items at Safeway.

Lastly, I will reiterate what others are saying. The shopper/deliverer makes very little, so if you order instacart groceries, leave a tip. It is part of the package. Does not have to be a large one, but do leave a tip. Please.

Unknown said...

I ordered from instacart and they replaced most of my organic produce with non-organic produce, which I verified by contacting whole foods with the PLU# to confirm that the items were indeed not organic (I know from experience that organic produce is supposed to be a 5 digit number that starts with a 9, but wanted to confirm my suspicion before I ate the produce; bell peppers, poblanos, jalapenos, cabbage, red and yellow onions, which either had 4 digit PLUS or no sticker at all. Whole foods confirmed they place stickers on all their organic items, something else I also know from experience but felt compelled to confirm). I am beyond offended not only that I was still charged for the organic priced items, but that sheer ignorance of thinking it would be appropriate to replace a pesticide and herbicide treated plant for an organically grown one. And then to further the frustration, their terms and conditions attempt to relinquish responsibility over their shoppers, who are actually employees, and should be fully liable for their decisions or mistakes. This world is becoming absolutely unacceptable when we outsource responsibility to the individual and leave them with no ability for recourse. How are you supposed to trust anyone to do anything with honesty and integrity when there is no transparency and people equivocation that with being a given standard, that people exploit and take advantage of others for profits. yay, capitalism. Now I'm going to go throw all my Monsanto round-up ready and GMO vegetables away...

Unknown said...

I ordered from instacart and they replaced most of my organic produce with non-organic produce, which I verified by contacting whole foods with the PLU# to confirm that the items were indeed not organic (I know from experience that organic produce is supposed to be a 5 digit number that starts with a 9, but wanted to confirm my suspicion before I ate the produce; bell peppers, poblanos, jalapenos, cabbage, red and yellow onions, which either had 4 digit PLUS or no sticker at all. Whole foods confirmed they place stickers on all their organic items, something else I also know from experience but felt compelled to confirm). I am beyond offended not only that I was still charged for the organic priced items, but that sheer ignorance of thinking it would be appropriate to replace a pesticide and herbicide treated plant for an organically grown one. And then to further the frustration, their terms and conditions attempt to relinquish responsibility over their shoppers, who are actually employees, and should be fully liable for their decisions or mistakes. This world is becoming absolutely unacceptable when we outsource responsibility to the individual and leave them with no ability for recourse. How are you supposed to trust anyone to do anything with honesty and integrity when there is no transparency and people equivocation that with being a given standard, that people exploit and take advantage of others for profits. yay, capitalism. Now I'm going to go throw all my Monsanto round-up ready and GMO vegetables away...

Simon said...

Instacart lets you know what stores have a markup when you are ordering. Right next to the store on the app- it would say up to 15% price markup or whatever it is. Don't blame Instacart because you don't read the fine print. Did you really expect your groceries delivered within 2 hours for $5? If you can't afford it than go to the store yourself and buy it. They will find plenty of customers willing to pay the fee as you can see by their growth.

O'Rourke said...

vary from the store’s price- not good

Anonymous said...

Another good question is what happenns to tips in the instacart order, depending on how the order is processed and the timing , Instacart in some instances keeps the tip you the shopper has designated to the shopper. ASK corporate !

theoj274 said...

As a business owner and former Instacart delivery person, I have no problem with a company making money, We all like to be paid right ?
What isn't so clear is our financial and business' willingness to crow about the greatness of businesses that are built effectively on back of everyday working people, albeit trendy, cool and fabulously valuated companies. There isnt anything illegal in the transaction but think about the Instacart's real business proposition.
Consumers want convenience and service assistance in getting their grocery/shopping. (Demand) They wont pay the real cost of this convenience ($5.00- $10.00 delivery charge for selection, and delivery, credit card charges, insurances, all on groceries which already are a pennies business.. how does this model really work ?
There are a greater number of people that have a vehicle, a smart phone with data availability and extra hours who are willing to exchange their assets at a below market price because their need for some cash regardless of whether they or the government thru lost tax revenue, additional costs of insurance, healthcare, data charges) end up subsidizing this.
So all we have to do is create a system where the greater people get .10 on a $1.00 and the program gets .90, wrap it in a oh so cool APP and voila, thank you for your robbery.
And somehow this transfer of wealth assets for the consumption of the next class up for the complete advantage of the investing class is cutting edge, trendy, brilliant, new economy.
And the investing class places higher value on these new economies than it does on companies that hire people, pay wages and taxes, provide livable incomes. New economy - uber, instacart, blah blah ? New serfdom. less money for the worker, at ever cheaper cost to the corporations.
Slaves at least knew that they were enslaved, happiness shoppers and uber drivers cheer for their masters for allowing themselves and their possessions to be monetized and used.
Viva the emperors new economy !

Erin said...

Hi, Actual Instacart Shopper here! This is how they pay us. For full service shoppers (go shopping and delivering the order) they get a 20cent per item pay plus $2 a delivery plus 100% customer tips. For the In-store shoppers (we stay at one store, usually Whole Foods or Costco, and shop order after order) we get $5/hr plus 100% of tips. We don't make any money from instacart, just what people decide to tip us.

There is a delivery fee plus tip for any kind of food ordering, and there's a markup for at least Whole Food's personal shopper service that doesn't even deliver. For heaven's sake, restaurants mark up their food past the point of cost for labor. Of course they mark up the prices, $4 couldn't possibly cover the cost of business let alone profit and paying investors. You're right that Instacart isn't great to it's employees, but if you're going to get angry over basic costs of business then please don't order because I expect you'll waste my time with a crappy tip.
On the first page of the site it tells you which stores are store price and which aren't, and if you read the FAQ you could have known all of the things that were "secret". You're paying for convience, which means you're paying.

Oh, and Brian the non-lawyer? You know very well that unless they're lying about their prices (which they aren't) you can't file a customer protection suit. You can however drive Instacart prices up by making them pay for a bogus lawsuit.

And for everyone who had problems with their shoppers, I'm sorry about that, of course there are some sucky people. You can help everyone out by putting in your notes to shoppers things like "ONLY organic produce please". We really are trying to do the best we can for you.

Anonymous said...

It is not just instacart, Shipt also deceives customers, rips them off and then shipts the blame to their independent contractor drivers. They even screw those people by advertising $15-$20 hr, when they are paying them 7%. If lying to customers and employees by promising one thing and doing another is the new norm, forget about any business ethics. Dot-com, sub-prime mortgage, etc is the new way of making money. Shame on them, and shame of us for allowing it.

Unknown said...

Every business needs to make a profit. If it has been working for instacart it seems to work for customers. if you were to try to make a delivery service like this from scratch you would come to the conclusion that this is a very effective pricing model to generate revenue. A business cant survive off 3.99 delivery charge. your laughable. and it makes sense that a nonbusiness major would think that way as well. ironic like many people have said, that youre a lawyer but will charge $50+ for consultation. explain that. and thats abuse and in my opinion turns away new clients who couldve been.

Sabra Ewing said...

I am tired of hearing from people that they have to make a profit. Yes they do, but they don't have to trick people through Price markups although they haven't done that at the store where I order. Instead of doing price mark ups, they could charge a $20 delivery fee, but they don't do that because they know that a lot of people wouldn't pay a $20 delivery fee. They would rather hide the price in price mark ups. Also, a lot of you are very judgmental. Please stop assuming that everyone who uses Insta cart is lazy. I for example, cannot drive. I will never be allowed to have a drivers license until the self driving cars get advanced enough. I agree that people should pay fair prices for delivery, but it is wrong to say that I am lazy for using an option that doesn't require me to haul 30 pounds of groceries on the bus. Plus, when I am using shopping assistance in the store, I don't have the ability to compare prices for items, know about coupons, or figure out if we can't find something I needed or if the store isn't carrying it that week. I am really sorry the shoppers at Instacart aren't happy, but this is my second time using it, and I found lots of things in my local grocery store that I didn't know were there including some vegetables I didn't even know the name of. If it is too hard in the long run to get the groceries delivered, I wish they could at least make a compromise where you could shop using the app and pick up your groceries at the store. I don't know. I'm just annoyed that a lot of commenters called Instacart users lazy when not everybody can load things into a car, easily find items at the store, and access all of the sales and coupons.

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Fantastic observation - very helpful. I signed up for "Shipt" yesterday (Houston), but when I say your post I did the calculation on my 1st and only order. 25% surcharge. That will cost our family an extra $1,923 per year. No thanks - my wife said she'd rather put that towards a trip to Europe.

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My first shopping was fine, free delivery, 3 or 4 items I need quickly, tipped the delivery girl $5 but still worth it to me.

Second order was for $46. Now I don't know about markup (didn't compare prices) but I had the following charges which caused me to decline and decide NOT to use IC:

10% Service fee of $4.60
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So (not counting potential markup) that is $16.55 in fees for a $46 order for NEXT DAY. Why would I possibly choose that when Fresh Direct will deliver the same exact order for $0-$3.99 (even if you don't buy the free delivery package they offer several free delivery windows per month).

Having a personal shopper to deliver in those times I need things fast thus becomes an expensive luxury (as well it always was yet IC seems to imply they've solved that but they have not); if I had guests coming and was short item, sure I'd pay almost $20 for my $50 order but otherwise with Fresh Direct (and good old walk and shop) it is impossible to justify that cost.

Anonymous said...

I hope you might be willing to add this to your post. You said update about transparency. I'll give you an update based on a shopper perspective. They advertised "same as in store pricing" for Whole Foods. I, personally, would always change pricing for the customer in the app. I am fairly certain now after a year of working with them that they NEVER used my pricing. I called their shopper happiness line and told them that the pricing was different. They simply said that Whole Foods doesn't honor in store sale pricing. I objected saying that the website did not say that, it said same as in store. They claimed that the website did tell customers. Jump forward a year. Company comes out and changes "tips" to "service", doesn't notify the customer that a.) this is optional and b.) that this doesn't go to the shopper. Many shoppers have been paying this "service" fee which is OPTIONAL, thinking they are tipping the shopper. This is not happening in actuality. A shopper friend of mine delivered groceries the other day and the customer was billed $256 for an order she paid $132 for. This is "Whole Foods" by the way, same store pricing. But realize that they have now changed the wording from "same store pricing", and is buried 3 pages deep, as is the optional "service" fee that customers think is a "tip". Everyone is being scammed. We are organizing both shoppers and customers to take action for transparency. Please visit our facebook page https://www.facebook.com/UpsetInstacartCustomers/

Anonymous said...

Sorry, update to my last comment. I said many shoppers are paying the service fee. I meant "customers" are paying the OPTIONAL service , thinking it's a tip. The company is not transparent about anything and customers are paying far too much money for a "convenience"

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Hi, I work as a shopper for the outfit. I been pissed off of them playing with my compensation and ripping consumers off for a long time. How many times has anyone paid $2.99 per apples and not by lbs. I have to change it all the time so that we are not over charging for apples because I'm one of the good shoppers. That's just the produce department, other departments are worst. We, the good shoppers, continues to submit corrections over and over and nothing is done. The management is making tons of money with all these pricing games and fraud. They have slowly cut the pay rate for the good shoppers to weed them out so that they want to play all these over-pricing games. I am making 60% of what I use to make with the same hours doing the same territory. They settle a $4.5 million dollar class action lawsuit for taking out tips and as retaliation, they decided to take the tip line away from the customers. The managements are liars and are ripping all the customers and shoppers off. I don't know how to report them or what agencies to report them to on the over-charging. It's too bad as it's a great concept but run very poorly with illegal and unethical practices.

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