Instacart is playing games with its workers’ pay
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If I could take a guess, I'd say this is more related to the user experience. I hate tipping. I'd rather just attach a 10-20% fee instead of needlessly evaluating someone else's performance with every delivery.
Or better yet, I'd rather just use a company that adequately pays its own employees instead of attempting to offload a portion of that cost on its customers.
I was all for Uber being tip free until drivers started driving for Lyft which does tips in-app, and now all the drivers expect it.
I've always felt this way with Pizza. Most places charge a delivery fee. That itself should be the tip. If it costs more to deliver a pizza then work it into the price.
Unfortunately, I don't think tipping culture is going away any time soon.
I'm pretty sure they are just doing it to bait Americans.
That's basically what Uber did (except for "you have to refuse once"). They tried to make it a tip-not-required zone and make everyone understand this going in. And yet still, you hear the refrain,
"What, I'm basically a cabbie. Don't you tip cabbies? Shouldn't I be getting tips?"[2] [3]
Even the media coverage comes with that implicit assumption. To paraphrase: "under the ruling, Uber drivers can solicit tips -- you know, like cabbies, duh".[1]
It's like people think that tipping cabbies is some fundamental invariant of reality rather than a default custom that can be overridden by explicit agreement. [2]
My uncle still thinks I'm a bad person because I didn't visibly tip the Lyft driver. "No, it's through the app" 'sure, sure...'.
[1] warning: browser-abusive site even with blockers: https://www.bloomberg.com/news/articles/2016-04-22/tipping-i...
[2] Characteristic example: https://www.quora.com/Should-you-tip-your-Uber-or-Lyft-drive...
[3] And in fairness, a lot of what drives the attitude is that the pay dropped so low that it effectively only works as a tipped job
Why are we taught by people to tip some personell and not to tip others?
Because the first group has a very low income. That's why. Because corporations cannot be trusted to treat their people nicely. That's why. Because the first group usually works hard and shows effort, while the others don't. That's why.
I don't mind to tip when someone has done an excellent service, but i always try to make sure my tip goes to that person directly and not some weird strange thing like a jar or a fund the corporation came up with.
> Because corporations cannot be trusted to treat their people nicely. That's why.
No, it's noblesse oblige: I am well off, and therefor it is my duty to show my appreciation to those who perform services for me.
That's the incentive to work hard so that you are not part of that group. That group doesn't have much to offer, and often didn't work hard to offer anything society valued. I knew, from an early age, that the consequence of not trying at school was ending up in a dead-end job.
> Because the first group usually works hard and shows effort, while the others don't
Citation needed - their work is hard because they have little leverage. Some have the deck stacked against them, fair enough, but that first group exists in places with less opportunity inequality, and far more welfare than in the US.
Many people spend most of their lives on their careers, trying to improve their worth to society, and offer things deemed valuable. Few go into accounting for the love of it, but because society desires accountants.
EDIT: there are exceptions. Temporary jobs held by students, people from impoverished backgrounds, or who were never motivated to succeed, low-skilled immigrants that fall into these last two categories. These are exceptional, sympathetic situations (except students, their condition is temporary), but society should seek to reduce these groups, rather than normalise them by developing some kind of coping mechanism. Welfare is a good safety net for all citizens, but low-paid work is too. The problem is groups who are stuck in ow-paid work with little opportunity to escape; in those cases it's not "greedy" corporations to do anything - it's exclusively the governments role to participate in any social engineering efforts.
BTW, if a company puts out a tip jar, by law that tip jar must actually go to the employees. The company cannot come along and take the contents of the jar for itself (and if they try, employees can sue them).
A large percentage of the pizza restaurants that deliver here offer a discount for online purchases, so tgey have essentially done what you describe.
It's not expected to tip a delivery person, though some people do.
I also really dislike tipping, but in reality it's not the cost they are offloading onto customers (all the cost is paid by the customers, since costs are paid out of revenues, which come from customers), but rather they are offloading compensation decisions onto customers - since the difference between a tip and having the cost of service built into the price is that you can decide the amount of the tip.
There are industries where the employees are paid less than minimum wage as anticipated tips are factored into their overall compensation. If the tips do not meet the minimum wage threshold, the business is responsible for the difference. In this case, the costs (wages) are being offloaded by tips. Not to mention the industries that pay low wages as the tips subsidize a living wage.
I don't think it is. I really don't like being involved in figuring out how much someone should be paid.
When seattle raised the minimum wage a bunch of places started doing exactly that. I like it better.
A few places started adding on fees that go to back of house employees as well, which I'm fine with.
Apparently this didn't annoy people the way they wanted, so they just started adding in an extra fees because of the minimum wage.
I wish they would just raise their prices and pay people properly.
That's in fact the actual economic purpose of the tip anyways. People think it's to encourage good service, but in fact, in jobs where you can make significant money tipping, there's already competition for slots. And, either way, insurance of good service is the job of the business owner. Any way you slice it, a tip is simply a cost sharing mechanism.
Amazon Prime Now and Grubhub both ask you to "tip" their drivers before they even do the run. You can't possibly be asked to evaluate performance in those cases. I'm fine with that, too! I'm not sensitive to the amount of money we're talking about, but across all their jobs, those tips probably make a pretty significant difference.
What's not OK is transforming a "tip" to a "service charge" that is then split with other elements of the business.
I just make a purchase. Now it's time to calculate the arbitrary variable buyer price-sensitivity upcharge.
Not to mention of course that charge will invariably be higher for those that are attractive. More so if they flirt.
Also tipping is not socially obligated in a lot of fields with employees who actually need the money: e.g. Fast food, bank tellers, retail employees.
Just go to cheaper places if you are 'price-sensitive'. Arguing 'there's already competition' doesn't make sense, it isn't a binary thing.
Are you arguing that if you can afford to pay more, you should? Isn't that socialism? This isn't how capitalism is supposed to work.
1. I'm paying 15-20% more for groceries just on line-item price. The prices Instacart shows vs what you see in store are sometimes a bit less, but more often not, 20% or more more.
2. Inconsistency between what's in Instacart's catalog and what's in the store. Making special requests isn't easy and they usually just go unfulfilled as it's up to the discretion of the shopper if they want to spend the extra time to find something special.
3. Safeway.com's online store got a little bit better -- and next day delivery is usually okay with me.
4. This service fee issue to top it off -- I just don't feel like paying 20% more for stuff, 10% for delivery, 10% for a service fee, then I'm compelled to add a tip? Poor UX IMHO if the solution is to manually change the service fee to 0% and tip 10%.
5. I had an incident last year that was sorta hilarious -- I had a shopper tell me Safeway was out of ice cream. Like, completely out of ice cream -- I went to their online store at the location the shopper was supposed to be and they list 400 different ice cream products. There is no way they were out of ice cream unless they had lost power for a day or something. It was just completely nonsensical and made me think they were maybe trying to fulfill my order out of their own warehouse because they had 90% of the stuff there -- and 90% in crunch time is maybe okay? That was maybe the first nail in the coffin.
In San Francisco at least, almost every store is listed as "Prices are same as in-store." Target and Whole Foods have "Everyday store prices," which means Instacart doesn't match sale prices. Costco and Cash&Carry are the only stores where Instacart prices are not matched.
I'd expect they'd get called out right away if they weren't honoring this.
But if you agree to a service fee and tip, you'll still end up paying 10%-20% more.
Companies need to pay the drivers fair wages, and charge the customers enough to do so. Don't push that responsibility to the customer.
Also, the service fee is perfect example of a Dark Pattern[1].
The actual service fee option (which is pre-selected at 10%) is hidden below the fold in the iPad app (and iOS?) checkout widgets. You have to scroll to see it, but it's aligned just perfectly, and with a hidden scrollbar, to hide the additional options. If you're not looking closely at the final cart total you'll never notice the extra 10% charge.
If there was an organized effort, and it was actually sending a message, then great, let's all do it! But really all you're doing is stiffing some poor underpaid delivery person.
So yes, there's an organized effort and it's making a (slow) difference in shifting the culture of companies under-paying their employees and expecting customers to make up the difference.
The presence or absence of tips may influence some, but not all, and I'd speculate not the majority.
I agree these are dark patterns. Better to just keep the transaction obvious and clean and leave out tip shaming of any kind.
Restaurants have paid large fines under the Fair Labor Standards Act for tip skimming; I have no idea if FLSA applies here, but if a consumer chooses to tip, s/he has a reasonable expectation that the money will be going to the person providing the service and not to the person's employer.
I can understand the logic though of a fixed tip. There are all kinds of situations where a server spends the same amount of time/effort for each table and get different tips based on what the person ate?
Why does that make sense that I would tip more because I got a steak instead of a burger and the server had to just bring it to me in either case?
There are people out there that honestly think this is normal behavior. Hey your experience was terrible, but have this $5 your don't deserve.
I live in the US and only tip when service is good.
That's just incredible.
Let's say they have 100k customers who each use the service every week. That's 5.2m orders per year.
Let's say $100 per order, to be generous. At a 10% service fee, that's $50m for a two-year-old 40x revenue multiple. Before paying their contracted workforce.
This does not make sense.
EDIT
What I'm really getting at is that these are optimistic numbers, in the wealthiest country in the world, that just elected a populist president (partially) due to economic insecurity.
What is the market for +10% on groceries and basic necessities?
EDIT2
It may be tens of thousands of contractors, not customers (thanks @trevyn!) This is confusing, since I'm not sure what verb to use for the end user on Instacart. ("I am _______ on Instacart" (consuming, shopping, grocing?))
Regardless, my number could be an order of magnitude off. I stand by the conclusion.
People who live in the suburbs without cars.
Cities are successfully discouraging car ownership by making parking scarce near downtown offices and even the suburban transit stations that lead to downtown offices. At the same time, cities aren't permitting the construction of dense, walkable neighborhoods, at least not fast enough to make them affordable. So you have a large and growing segment of the population with:
- A built environment where distances are scaled for driving.
- A hard time justifying car ownership, since it isn't useful for commuting.
- Neighborhoods which are now becoming crowded enough that parking is a hassle, but haven't become dense enough to have useful businesses within a convenient walk. (When they reach this point, they may cease to be affordable).
"Outsourced driving" is immensely popular in such environments. Instead of Target and Walmart and BestBuy, you use Amazon Prime for most purchases. Instead of driving the SUV to the supermarket every week, you use Amazon Fresh, or (in the case of Instacart) pay someone else to do it or you. Instead of going out to eat or picking up takeout, you order from UberEats/Grubhub/whatever. Each use case for personal car ownership can potentially be replaced with a fleet of service workers from further outside the city, and each permanent parking space can be replaced with one of them double-parking for 30 seconds every few hours.
How do the economics work?
- Labor + car operating costs for some contractors < value of the land the people they serve would otherwise park on.
- Delivery fees and markup on everything you buy < parking, gas, insurance, maintenance, and depreciation (by a couple hundred bucks maybe) < rent premium to live in similar apartment in a walkable area (by $1000+/mo) < psychological cost of the tradeoffs you'd have to make, like roommates, to live in high density on a middle-class income.
Whether that's $2bn, I don't know. But I think selling car-based services to the carfree will be a winning proposition as long as NIMBYs and anti-car activists remain simultaneously empowered.
They have to stop making it illegal to build dense locales, though.
The grandparent makes a great point. Anecdata, but it mirrors perfectly my experience living in a moderate-density mixed use neighborhood (South Park, San Diego). My wife and I managed without a car for several months largely through techniques they describe.
I use these services occasionally (2-3x/mo) for a family of five (DI3K). When you're outnumbered and have to play zone-defense against your kids, taking a trip to the grocery store at rush hour is neither fun nor productive (kids are usually hungry by then and late snacking = poor appetite for dinner).
I'd love to see the US cityscape turn into something more akin to Europe's (what you described), but I think you have to instead promote mass-transit (to be better) instead of making car transportation a hassle.
The flip-side though is that car and petrol industry do lobby to prevent electrified mass transit from being viable.
I've ordered lots of Instacart in NYC and Chicago. I used to have it drop off a few things at the office for lunch, and a few to go in the fridge for lunches later in the week. Consider that Instacart will charge 10% to deliver a baguette and some cheese, which can make lunch for several people. This is a way better deal that Seamless.
Seamless charges what amounts to a 25% markup to deliver food which has often taken so long on the way to its destination and ends up relatively unappetizing.
In NYC the startup Maple has tried to solve the soggy Seamless problem by improving logistics. I haven't tried it, though, so I don't know if they were successful.
I live in the suburbs with multiple cars. That said I would love if a service (ideally for grocery and restaurant delivery) was in my area. I just don't feel like dealing with rush hour; or the time it takes to grocery shop. I have tried taskrabbit and hiring someone off craigslist. I had better luck with craigslist (for grocery shopping), yet then all sorts of legalities some up that I don't feel like dealing with either.
All 10 of them?
These services are great for people who live in urban ring communities. I use uber to get downtown, prime same day delivery replaces trips out of the city and while I haven't gotten lazy enough to use instacart, I'm probably going to give it a try one of these days.
It's easier for public transit to do an okay job with "trunk" routes from the suburbs to downtown at commute time, than to do a passable job with connecting neighborhoods to their nearest grocery stores at all the times people might want to go shopping.
I've have never used instacart though.
Two years ago downtown L.A. didn't have a Whole Foods Market, and Instacart-branded packages were commonplace in residential complexes. Low and behold downtown L.A. gets a Whole Foods Market. Someone at Instacart probably has the right numbers, but combined with Costco delivering more of their everyday stuff, anecdotally I see fewer Instacart bags around.
More likely, most Instacart customers earn much more than $10/hour. For someone with a busy work schedule, there might be 2 hours of leisure time available per day during the week. This means that by using Instacart I increase my after-work leisure time by 10-20% per week.
If you consider that grocery stores are more crowded during the weekend, and assume 10 hours per day of leisure time, someone who places one order per week likely increases weekend leisure time by 10%.
Since stores close early on Sunday, having Instacart do the shopping on Monday instead can make a weekend getaway possible that would otherwise have had to end in time for that Sunday shopping trip.
I'm sure some people prefer to wander through the store filling up a cart, searching for difficult-to-find items and waiting behind several people for the checkout clerk to finish bagging all their orders. I do not.
I've also found that Instacart sorts items by price, so it's easy to fill the virtual cart without falling victim to all the end-cap advertising and impulse purchase scams that the stores have going. When I go to a physical store I frequently end up buying things I didn't really intend to, but with Instacart, I only end up with the things I actually wanted.
I value my leisure time at the arbitrary amount of $1000/hr. Have I broken even if I pay $1000 to someone so they'll do my grocery shopping?
Specifically what products do you end up buying? I have always wanted some insight as to who buys these items near the register and why, as I rarely see anyone pick them up.
I don't personally buy things like tabloid magazines, but I'm sure grocery stores have spent lots of time researching this to optimize the placement of these products
Why do you think that?
Presumably said investment bankers are capable of doing the same math as Hacker News readers, so why did they still fork the money over when they have many other crazy bets to choose from?
For any given investor, the decision to invest in Instacart or any other "crazy bet" is not made in isolation, but within the context of their existing portfolio, which means that the same investor could rationally decide to either invest or not invest, because that decision depends on the rest of their portfolio.
Back-of-the-envelope calculations on HN are always calculated in isolation.
People don't like companies being disingenuous, and not realizing that treating employees fairly is actually an important part of building a healthy company (putting aside it's the right thing to do).
If they really needed to do this then don't play games. Just explain that revenue growth can make or break a company at this stage so we need to take these actions. Just being honest about the realities of business and your choices go a long way.
This week Uber and Instacart have damaged their brand due to nothing other than poor leadership.
Who knows, maybe the future of these semi-infrastructure businesses is actually as co-ops, with workers earning a stake that can be worth more in the long term.
I'd like to see one of these companies create a special class of stock and award one unit for every dollar of business each employee participates in.
I think it's getting easier and easier for a new entrant to disrupt the market by offering a platform that better incentivizes driver loyalty.
It's not necessary to force drivers to switch, only to put the new app on one of the phones they are already using.
In the UK, which is much less car focused, we've had a successful instacart equivalent, Ocado, for a decade. They're presently turning over about £1 billion per year ($1.25 billion) [1]. Market cap on today's market is £1.5 billion ($1.85 billion)[2].
Now all the major supermarkets home deliver and have for 5+ years. There's been a massive shift in the big chains' store building, they now build small "express" stores in town centres and near offices allowing people to pick up minor things without having to do a full shop. As far as I know, no-one's building large stores at the moment.
And the American market is potentially worth more a lot more than the UK one.
[1] http://www.bbc.co.uk/news/business-31108569 [2] https://uk.finance.yahoo.com/quote/OCDO.L?ltr=1
EDIT: Other interesting note, in the UK, the markup for delivery is free or a fairly nominal charge (£5/$6), but only if you pick a slot in a few days. If you want it sooner, or in a prime-time slot, you have to pay more for those delivery slots. The supermarkets are building the costs into the prices.
Also, here gas costs a lot more and it's almost cheaper to pay £5 than it is to drive to the supermarket.
EDIT2: I should add the small stores have a regulatory reason they're small, UK law means only stores under a particular size can be open more than 7 hours on Sundays.
But they actually launched the product proper, in 1996, where they would give you a CD-ROM and it would then sync the diff of products available when it connected. Very ahead of its time - nearly 20 years.
The US grocery market is so far behind on this it's pretty crazy.
To be honest though, the technology is superb. Compared to Tesco, Asda or Sainsburys, deliveries are always bang on time and I have only out of dozens of order had one item that was out of stock, which is much better than the competition who always have to substitute random items in.
https://en.wikipedia.org/wiki/Kozmo.com
Although they did more than just food.
Not sure what the right language is, but I'll revise my post :+1:
[1] https://www.washingtonpost.com/news/wonk/wp/2014/10/14/the-m...
http://time.com/money/4185441/millennials-drivers-licenses-g...
Etc.
It's half a bet on massive growth combined with eventual profitability, and half a bet on some massive non-linear outcome. (For example: search -> ads, or books -> hosting)
Why is grocery shopping any different? Most people buy pretty much the same stuff on a routine basis. Items have varying shelf-life, making parcel shipment practical for only a subset of items (not to mention the hassle of dealing with all the boxes).
Local grocery retailers are essentially market makers for the items they carry. They also provide parking, merchant processing, and a variety of other services (like store brand items, made-fresh refrigerated items, etc.)
Unless you are a chef looking for inspiration or insist on getting the absolute best looking tomato in the whole store, for most people, the time spent trudging through the aisles is mostly wasted.
In other words, the lack of delivery imposes a significant transaction cost upon obtaining groceries. Thanks to Instacart, I buy a lot more groceries than I used to, which means I spend less money at restaurants. Instacart turns grocery stores into a bigger competitor for restaurants.
Unlike Seamless where you pay close to $5 for delivery of a single meal, with Instacart you can order food for a whole week and pay not much more to have it delivered.
Instacart makes keeping the fridge in stock with just the right items significantly easier and removes the immense hassle of manual shopping/transport.
What's a reasonable ratio for customers to contractors/shoppers? Perhaps we could estimate the number of customers from the number of contractors/shoppers. (Of course, "tens of thousands" may be a lifetime value, not currently active ones.)
[1] https://www.statista.com/statistics/197626/annual-supermarke...
Lots of people are willing to pay for delivery even if they own cars though it's not necessarily a huge market. In general, in the US, people haven't really embraced online grocery shopping unless hopping in a car and driving to the store is inconvenient for some reason.
Personally, I used Peapod for a period when I was on crutches but it wasn't great. (Frequently didn't deliver everything, etc.) I'd probably use Instacart now and then today but it's not available where I live. Friends who live in a city but aren't easy walking distance from a good grocery store and don't own a car use it all the time.
You're hijacking the comments with your company valuation thing instead of thinking about the workers for once as is the whole point of the article.
I've done this before with an excel sheet for a specific business my friend was enthusiastic about. It turned out he would have been alright had he gotten a loan.
Having an $x delivery fee (paid to the company) and then a tip as a separate item ($ or %) would be fine. Making the "delivery fee" into a "service charge" is itself dishonest; making it adjustable when it doesn't go to the user is pretty bad, too.
I can't tell if this loses them more goodwill with customers or with delivery employees, but it seems like a bad decision either way.
Consumers should understand that services have a cost. Companies should charge consumers an amount that is commensurate with the cost that it takes to deliver that service (unless they operate in a non-competitive market in which case they are free to charge whatever their customers are willing to pay). If there are humans involved in providing that service, they should be paid a living wage.
Tipping is the backward part of US consumer expectation. Not service fees.
My understanding of the article is that the service fee wasn't originally optional. It was a static 10%, required, service fee. No information is given about how much of that fee goes to workers, meaning it's entirely possible that all of it does. It doesn't go to _the_ worker who delivered your groceries, it goes into a common pool that is distributed across all workers.
If 10% is enough to break the barrier into a living wage then this could be a positive change. Workers no longer have to fear having a "bad night" where they have 5 runs to get a single $10 items vs a "good night" where they have 3 runs to get $200 worth of groceries.
They made it optional and mutable when their workers protested.
There was a far easier way to do this (a fixed order charge which is clearly an instacart fee, and then a separate tip clearly marked as per driver) -- the right solution would probably be to do like Amazon and reduce the fixed order charge or eliminate it when customers buy certain high margin items, make large orders, or sign up for a subscription.
Also, per the article, the service fee wasn't originally something that could be changed. It was a static 10%. Neither you nor I have enough information to know if 10% is enough to pay drivers a living wage. Maybe it should have been 15% or more but there is no way for me to know.
I am, however, very confident that a service fee that goes into a common pool and is paid out across all workers is a better solution than customers tipping.
Why does Instacart use a service amount?
Instacart is different than other delivery services because multiple shoppers may be involved in a single order. Some shoppers work in stores, for example, while others are involved in driving to deliver an order.
The service amount is used to pay this entire set of shoppers. Furthermore, it helps to ensure that all shoppers are compensated fairly and competitively, and that shoppers are working collectively toward the common goal of providing an excellent experience for all customers throughout the entire order process.
Should I still tip the shopper delivering my order?
Additional tipping is optional. The entire amount you select goes directly to the shopper delivering your order.
Why is there as service amount and a tip?
The service amount is distinct from a tip. Instacart uses the service amount to provide higher guaranteed commissions to all shoppers on the platform. This will help us ensure that shoppers no longer rely on unpredictable tips for the majority of their compensation. Leaving a service amount is optional, and you may set the service amount to $0 in the checkout flow before you place your order.
If you wish to include an additional tip for exceptional service performed specifically by the shopper who delivered your order, you may do so on our online platform, or in cash.
If the service fee was split across everyone who participated in your individual transaction, I could understand. Otherwise this is just a way of them saying "a service fee is a way to tip the company, so we can maybe pay our employees more".
I think a great example of an app that lets me give positive feedback to service people is Uber. They let you get a ride ASAP with as little decision making as possible, and then you can rate it after you get where you're going and you have some down time. If they let me, I would probably leave a tip along with my good ratings. Everything else is invisible: I have no idea if there's a "service fee" included in the ride fare. They don't make me worry about it. They definitely don't make drivers have to hand out paper flyers in order to feed their family.
Lyft simply asks you after your trip to rate and tip, all optional.
I don't know how Instacart works, but could it be that Lyft/Uber drivers have ratings they need to maintain, whereas Instacart delivery people don't? (Someone feel free to shine some light/correct me here.)
Yea with Uber the drivers are just forced to grovel for your 5-star rating or face not getting future fares.
Why keep things murky? If it is against the law we have a justice system, I will not all of a sudden be reminded of greedy bankers on Wall Street being the reason that box was moved to a different screen. Do people benefit when things are less crystal clear? Why do we want them to stay that? Why should the tradition of tipping should still be alive in this country? What are we trying to prove? Who is benefiting? Do we enjoy this sadistic power imbalance every time we get a meal at a restaurant? Is it because it gives us control over livelihood of someone else? How is it any different that the Romans throwing Christians to the lions for their enjoyment? Let's create a society that we think is fair and just instead of trying to take things in our own hands. Engaging in social debate to win over your fellow citizens to see eye to eye with you on things like increasing the minimum wage would be a benefit not only to those at the bottom but also to the society as a whole if that's what you think is the right thing to do.
This is 100% nefarious. There is no reason to have both an optional service fee and a separate optional tip. It's one or the other; combining both options makes absolutely no sense.
Again if someone thinks what they're doing is illegal or should be illegal one day then either take them to court or change the laws!
You're asking why you need to justify paying someone else to "feel like a chimp" so that you don't have to?
In other words, it is, by way of social conventions, implied that the money goes to the 'chimp in a grocery store' doing work on your behalf. There is nothing wrong with them adding fees all day every day as long as it is made clear to the customer that said fees are not actually benefiting the actual service provider and consumers opt-in to this transaction. The shady part here is where consumers THINK the services fees goes to the service provider when actually it goes to the broker.
"The Fair Labor Standards Act does not apply the minimum wage payment requirement to independent contractors. However, merely classifying a person as a contractor instead of an employee does not automatically keep the worker from being considered an employee entitled to minimum wage."
Searching around led me to [2], which talks about Form 1099-MISC, which is used for independent contractors. On the other hand, I found [3], which makes me think that some can choose to become part-time employees, but I don't know what the status of that is.
It's also worth noting that, for full-time employees, vehicle-miles traveled are often reimbursed for car usage as part of the employee's work. I don't know if that's being done here, and that would be a major expense. It would also be an expense that your normal full-time employee would not have to pay, as they wouldn't use their car as often.
[1]: http://work.chron.com/minimum-wage-apply-contractors-1758.ht... [2]: https://payable.com/taxes/understanding-your-instacart-1099 [3]: https://www.wired.com/2015/06/instacart-shoppers-can-now-cho...
Is your answer going to be self-driving cars? What about alternatives that don't fundamentally replace the labor?
In my opinion, it is impossible to achieve venture capital goals and pay service labor commensurate to the value it delivers.
But this is exactly the point.
* Assume that hamburger ingredients cost $2. * Assume that hamburgers sell for $5 each.
==> Net added value per hamburger is $3.
* Assume that a worker can make 1 hamburger per hour manually. * Assume that the same worker can make 10 hamburgers per hour after the business owner has invested in a $300 hamburger machine. * Assume that the same worker can make 100 hamburgers per hour after the business owner has invested in a $1000 hamburger machine.
==> Is the "full value of the worker's labor" $3 / hour, $30 / hour, or $300 / hour?
The worker's value add is not solely dependent on the worker and the products being created, but also on the capital invested by the business owner (and other factors). Just because the worker is not paid the entire economic value added being produced by the business does not mean s/he is being exploited.
It seems like it should be possible to do this. I pay for raw, undirected labor. It's like raw iron. When I use my skills for planning (speaking as the management for the company), I can pay full price for labor, but get synergistic effect not possible without thought? To keep with the iron reference, in the end I produce steel or even better a car. Seems like the labor to extract the iron met a multiplier of my metallurgic enhancements.
Suppose in your raw iron example, instead of making steel or a car, you make an inferior product because either you or the people who work for you are incompetent. Suppose you make the 1960 Chevrolet Corvair, a car so horrible that it inspires the book "Unsafe at Any Speed" by Ralph Nader.
Even though nothing about the product or the labor used to produce it changes, your product loses value immediately because people don't want to buy a dangerous car. Your hypothetical multiplier turns negative overnight, even though your car is just as unsafe before the book as it was afterward. If the labor and your intelligence were the source of the labor, the value of the car should not change just because Ralph Nader says it's dangerous.
The people involved in customizing your car configuration prior to it being delivered to the dealership are not, to my knowledge, exploited. Most laundromats in my area do bag service, those workers don't seem to be exploited. I feel sure that the list goes on.
There are some common threads amongst companies that are exploiting their workers:
1. They are b2c companies. 2. Most seem to be venture backed. 3. The worker they employ are mostly unskilled. 4. The law doesn't seem view the current treatment of these employees as illegal in any way.
#1 seems most significant to me, the price that a critical mass of consumers are willing to pay for the value that unskilled workers can provide seems to be too low to build a large business on the back of.
Sure, but Instacart is demolishing a very worker-popular tipping feature. That suggests that actually, there is a critical mass of consumers willing to pay more.
The question is, why does it matter to Instacart so much that some consumers pay less than what they're willing to pay?
> Sure, but Instacart is demolishing a very worker-popular tipping feature. That suggests that actually, there is a critical mass of consumers willing to pay more.
Nothing about this article says that to me. Nothing.
At least one worker has given this information to someone who tweeted the information whose tweet was picked up by recode. We don't know if tipping is "very worker-popular" we know that some workers asked the company to change it back and they half capitulated.
I'm personally a fan of charging higher fees and paying all workers the same living wage. That's effectively what a static service charge does.
> The question is, why does it matter to Instacart so much that some consumers pay less than what they're willing to pay?
We also don't know that. Do you know what the average tip was on instacart before this change? So you know that a 10% static service fee is lower than the average tip before now? Do you know if brown workers were tipped less than white workers? Men more than women, the inverse?
We don't have the information required in order to make the judgements that you've decided to make.
For me, if I wouldn't be comfortable asking a neighbor who was less well off than me if they'd mind dropping off my laundry for $10 a month, I'm not going to do it via a shiny website.
But then, you'd be surprised at how many highly-compensated programmers never bother to exercise their options. The same ones who then go on Hacker News and complain about bad treatment of workers, and how if only they owned the companies.
Can't speak to if this is their real motive, but does seem to be in line with other criticisms of tipping (e.g. waitresses making much more than kitchen staff).
It can be boiled down to this: Money > People.
I think it ultimately boils down to how real power operates in the countries. The average Russian or Chinese citizen is way less powerful than the average American citizen. If they have a grievance to make, whether it's against a local or national policy, Russians and Chinese have way way fewer options.
Whereas Americans, if they feel aggrieved at the state of their world, can turn to any one of many many many political organizations that exist solely to collect and distribute that outrage and drive results. We may not be completely 100% satisfied with those results, but it's better than relying on the legal process.
This network of civic participation has mostly replaced the usual role of electoral politics and Americans believe in their system, secure in the realization that if some bullshit is going down, outrage will be generated and justice will be served.
The last election threw that whole system into critical disarray. It got yoked into the service of Donald Trump and the Republicans because liberal Americans trusted the system enough to stop looking to see how it was being used. Trump realized he could game the system to get elected and did exactly that.
The critical insight here is that Americans are not stupid, and they are not ignorant, they just believe in the power of systems and institutions and want to just be able to rely on them to drive better results over time. We shift public attention gradually away from everything, and slowly onto the parts of the system that aren't working.
In Russia and China, public arms of policy-making are non-existent. Citizens must therefore be extremely careful about picking their battles.
Trump is the personification of the outrage over illegal immigration, crime, bad trade deals, and the Neocon (globalist) wing of the Republican party.
> liberal Americans trusted the system enough to stop looking to see how it was being used
Umm, what? For over a year, liberal Americans were aghast at the rise of Literally Hitler and made no bones about sharing their opinion on the matter.
Exactly, it's the system working for the other side of the country. They didn't have nearly as good of a grassroots outreach mechanism, they finally built one.
The two sides cannot agree on what justice means. That's ultimately a national question and so it had to be settled in the election. It's the Republicans now that get to decide what justice means, and liberals get to lick their wounds and retrench.
The direction the world is moving in is liberalism. So this can only be a minor setback.
> Umm, what? For over a year, liberal Americans were aghast at the rise of Literally Hitler and made no bones about sharing their opinion on the matter.
Right, they pressed the outrage button thinking it was going to fix the problem, like it usually does. It didn't because Trump outmaneuvered them.
No, blame management. Not until programmers have a union masquerading as a professional association that backs us up, like the AMA or the ABA, and we enjoy much greater autonomy and a much stronger position from which to say "no," should we be made to shoulder the blame along side management.
I'm livid. It's on instacart to pay fair wages with the delivery fees if they think it's a problem. Their misleading double fee system is unfair to both me and (more importantly) the people who are directly providing me with service. I'm sick of the uber-ish "on-demand" service culture abusing their non-employees under my dime.
edit: funny thing is, I just watched the infamous episode of Kitchen Nightmares about Amy's Baking Company. In the episode, Gordon Ramsay becomes furious when he finds out that the customers' tips aren't going to the servers. He goes into the restaurant and asks the patrons if they would have tipped if they knew this and everyone agrees no. The owner meekly explains in a follow-up episode that he does this so he can pay the waiters a "fair fee". https://en.wikipedia.org/wiki/Amy's_Baking_Company. This episode utterly destroyed Amy and her husband's company. Instacart, I love your service. It's changed the way I grocery shop and I planned on being a regular, high-value customer. Please don't make me question my decision on this.
From conversations with the shoppers, it also varies by store chain. Different chains have different deals with Instacart as to how the shoppers can perform their jobs, including if it's the same person delivering.
My impression is that when they get what they want, Instacart has shoppers that stay in the store shopping and drivers that deliver.
To your point, I have noticed that Instacart users fall into two groups, those that care about specific replacements when an item is out of stock, and those that just want the shopper to use their best judgment. If you care about replacements, then you want your shopper to be responsive and well-mannered in working with you to resolve the shortfall.
I'm not saying the lack of tips doesn't hurt drivers, but I agree that I have no idea how I could determine when a tip is justified.
My favorite delivery + service start up is this.
You should see which VC are backing this ridiculous idea.
https://en.wikipedia.org/wiki/Ron_Johnson_(businessman)#Enjo...
I have no idea how they would every make any money. With every order, they bleed cash.
"Yup, that’s right. The only thing you pay for is your new device. How is it possible? Well, we spend our money on training awesome Experts instead of on building stores. So, you get an amazing experience instead of just a device."
That doesn't explain how it works at all. I'm guessing they have partnerships with the supplier so the customer pays the same price as retail and Enjoy gets a piece of the revenue. My understanding though is that these new hardware items usually have very thin margins. I would love to hear how they actually make money.
Their Experts page says all of them are full-time and not contractors and it looks like they have about 50 people listed there - https://www.enjoy.com/pages/meet-the-experts
I went through the first part of their checkout process and they suggest accessories to purchase with the item so maybe it's an upsell thing? Maybe the in-person "expert" is really just an incentivized sales person that you've invited into your home that will try to push other accessories that you "need" for the product you've purchased.
I imagine the kind of people that would need this service would be people that are not technically adept and could probably be easily manipulated into purchasing things that they don't really need.
Yes, they are taxed the same as wages. For tips done via credit/debit card, that will even be reported and have taxes withheld by the employer. For cash tips, the recipient is supposed to report them on their own, though of course, it's fairly common not to report the full amount because it's hard for the government to track.
Amazon wants to fix grocery shopping by eliminating checkout.[0]
The friction with grocery shopping for me is in a completely different area, and also easily solvable.
If I could go to a store that was basically a Kiva[1] fueled warehouse, enter an order on a tablet, and have it brought to my car (or order in the morning and do curbside pickup on my drive home from work), I would save the hassle of searching store shelves while playing demolition derby with a bunch of other carts.
Walmart has toyed with free curbside pickup.[2] It should actually make groceries cheaper though. If they had a warehouse logistics backend, without customers wandering around through their inventory, they could do amazing things.
With apologies to Clarence Saunders, yeah, basically I want to end self-service.[3] Customers were more efficient than the clerk for that job, so that model won. But robots are much more efficient than customers now, so I'm ready for the next revolution.
[0] http://www.businessinsider.com/amazon-go-grocery-store-futur...
[1] https://www.cnet.com/news/meet-amazons-busiest-employee-the-...
[2] http://www.businessinsider.com/walmart-is-expanding-free-cur...
[3] https://en.wikipedia.org/wiki/Clarence_Saunders_(grocer)
It's far from perfect; but at least you don't have to walk the store for hours.
Also, no tip culture in France, but workers seem to run against the clock, so I suppose they have incentives to deliver fast.
"To get to the tip option, customers would have to click on a small arrow to the right of the service fee that doesn’t give any indication where it leads. Even if someone knew to click on that arrow (but honestly, why would they?)"
Seriously?? Has this guy never seen a mobile app before? There is a line reading "Service (10%)" with an actual dollar figure and an arrow pointing to the right. Find me a mobile user who doesn't know what that arrow means. This whole article reads the same way, like the author is just trying to stir up outrage and get page views.
Disclaimer: I have never used Instacart and have no connection with it. Not familiar with Recode either but I am less likely to read anything from them again.
We got a lot of complaints. People couldn't see their resume in the "years of experience" box. Worse they kept getting error messages saying their resume was too long. It was restricted to 2 characters! These same people had glossed over the "biography" box.
So, yes, your ability to reason about a UI and the requisite UX has nothing to do with how others will reason about it. You'll get to learn the hard way like I did.
My point is that the author writes as if something that is perfectly familiar to any mobile app user--and is literally the standard way to present a default option that can be changed--is something that has never been seen before. As I said, find me a mobile user who doesn't know what that arrow means in the screenshot in his article. He gave up all credibility with me at that point in the article. It may be that there's a story here, but either way this is just terrible journalism.
There certainly is a understanding problem here, even if the individual components are all familiar, because it's not at all clear what tapping a chevron on a "service fee" would do anyway, and it's certainly far from default to assume that that's how you would tip, especially if you were unfamiliar with Instacart, and didn't realize tipping is a thing.
It's also unclear how the "Service" fee is distributed. There is an explanation which states that "Unlike a tip, which can only go to the shopper delivering your order, a service amount allows us to pay all shoppers (including those, for example, that also pick out ordered items at the store)".
This implies that it's a "Shared Tips" model as in some restaurants, where tips are distributed evenly amongst the staff that worked that shift. But could also be interpreted that they just collect these "optional" service fees centrally in order to pay all nationwide workers, which simply amounts to corporate revenue unless they are actually distributing 100% of the service fee to Instacart contract employees.
Instacart, as with all "sharing economy" apps, seems to be making quite a bit of corporate revenue on the backs of workers by misleading users.
That may be true, and I'll take your word for it. However, if I have to have used the app to understand the author's point, it's a poorly written article. Catching this kind of thing is why newspapers have editors. It's bad writing and it weakened whatever point the author had.
Agreed about the ambiguous wording and whether this goes to the company or directly into worker pay is unclear.
You are not your user You are not your user You are not your user
~~
Beyond just that, putting things behind a chevron dramatically decreases actual usage. It's why things like hamburger menus are so bad--significantly reduces discoverability, -even when users understand the pattern-. A chevron is even worse, because it generally indicates "details", "settings", or "advanced". Nobody wants to do that.
http://freakonomics.com/podcast/danny-meyer/
It shows how the "Hospitality Included" program removed tips from their restaurants. I guess its not always the idea, but also how you implement it. Instacart tried to do the same thing but appear to have totally botched it up
With Instacart specifically, this creates a confusing dilemma by giving me the option to tip before any service is done. Mainly because Instacart DOES allow me to modify the tip after the order is complete, which is good, but here is the dilemma...
A) Do I not tip when placing the order (with intention of tipping when the order is complete and I can evaluate the service to give a fair tip), but also risk that the shopper knows I didn't tip when I placed the order thus thinks I won't tip at all making them not care as much and do a poor job because they think I'm cheap.
B) Do I tip ahead of time when placing the order and risk that they think just because they already got the tip there isn't much I can do, so they could care less either way, and then I'm stuck paying a tip for service that wasn't up to par.
Either way it's a lose-lose and a terrible experience. And I'm PRETTY sure the shopper doesn't seem the tip when they get the order so maybe that makes both A & B irrelevant, but it's not like the UX of the app tells me that so I'm stuck in this awkward dilemma during checkout making me hesitate my conversion. It's a terrible and very confusing flow/checkout/experience every time I use Instacart.
When there's nothing left to optimize, the way to become profitable is to either pay drivers less or charge customers more, and customers are not down to pay more.
Instacart apparently has a surge-like system called "busy pricing." It'll be interesting to see whether that'll now occur more or whether they can actually retain their couriers (assuming they don't have an excess).
Leave the things as they were initially. Let customer decide the performance part of the pay, you just take care of the base portion.
Unless, all they really want is the 10% for themselves.
The contract between a customer and Instacart is very simple: The customer picks out groceries and they show up at the door an hour or so later.
Uber's decision to remove tipping was brilliant. Why impose additional uncertainty and friction into the work flow? Star ratings allow Uber to compensate top performers without creating an inconvenient friction point for users.
Instacart's initial approach to tipping was to default it to 10% and force the user to change it. This was very bad UX. It not only takes extra time, but it was included during the checkout flow before you even know how good the service was.
Star ratings (such as used by Uber) are way more powerful. People feel an archaic obligation to tip as is clear from the shaming tone of the linked article. But with ratings, customers have an incentive to be honest about the service, and the company gets to incentivize whatever qualities are most important to customer satisfaction.
I've found that in restaurant tipping, most people are reluctant to tip below 10% even if the service was really bad. This creates a bad incentive. Most service problems in restaurants are due to waitstaff being over-stretched and not having time to stop by tables often enough, etc. If a waitperson realizes that adding another worker would reduce tables/tips by 30% (for example) he/she would have to make up for that via a higher tipping percentage for it to be worthwhile. Meanwhile, customers are tipping mostly out of obligation and the restaurant owner may not realize the extent of bad service that is going on, even though it slows through-put and gives customers an inferior value.
Why we'd want to carry this sort of system over to a modern service like Instacart is beyond me.
I have written to Instacart support/management suggesting that they create a financial incentive for shoppers to be available at peak times, even if that results in something more like surge pricing. On Superbowl Sunday all deliveries were taken by around noon, and I could really have used some more tortilla chips, beer, etc. Shoppers willing to work during those times should make enough money that they are willing to miss the game themselves, etc.
I think that if Uber were competing in this space, there would be no tips and also no service fee (still not sure what it is, but it seems to be Instacart's way of charging a baseline tip for all orders).
I think the most important thing during the growth phase for Instacart is to gain market share and to deliver a service level that creates a disincentive for stores like Whole Foods to start their own delivery service (or an incentive to white-label Instacart's).
I think Instacart should be raising enough money that it can really think long term about its strategy. It's doing so many things right. The shopping experience and app experience are superb, the shoppers are conscientious and friendly.
Uber was able to grow rapidly by subsidizing rides significantly. It seems Instacart wishes to avoid this. I very much like the free delivery subscription level, but the service fee is annoying, as are the price mark-ups at some stores.
Getting this right is likely very difficult for companies that generally follow in Uber's wake but who have more challenging labor relations. I was quite disappointed to get a tip solicitation flyer like the one shown in the article. As an Instacart customer who just paid a service fee and an annual fee, I don't want an ugly reminder of Instacart's labor relations problems arriving along with my groceries.
Uber drivers with a high rating get paid more?
Almost every other country tips restaurant servers <1%. Tips aren't required for adequate compensation. This should be covered by a competitive base wage.
However, it's important to note that the tips while I worked varied immensely - and tended to be MUCH higher when completing order at Whole Foods, as opposed to HEB.
The negative spin is that they wanted to capture some percentage of the tip money.
I'm in Silicon Valley and it's just groceries here
Taxes. People are supposed to pay taxes on tips, but one of the things that lets people live on sub-minimum wages is not reporting tips. Tipping is BS, and I wish it would go away, but this is unfortunately how the US economy works.