
What is Instacart really charging?  the breakdown - jawngee
https://np.reddit.com/r/boston/comments/5xj47l/ever_what_instacart_is_really_charging_you_in/
======
pyrophane
Instacart and some of these other apps charge a LOT of money, so they go to
pretty great lengths to hide the amount they are actually charging. Instacart
is being especially clever by raising the price of the item then charging an
additional service fee and delivery fee with, apparently, surge pricing. It
also isn't clear how much of any of this goes to the actual person doing the
work, so you still need to tip around 20%.

For me, this isn't just about whether it is "worth it" to not have to shop for
groceries, but also whether there is a much cheaper option available through
either your grocery store or a non-Instacart personal shopper.

It boggles my mind that people are paying this much for the privilege of being
able to use an app rather than having to interact a bit more with an actual
human being.

~~~
enraged_camel
Several of my friends have raved about Instacart recently, saying the
convenience and time savings are well worth the meager delivery fees. Normally
I'm not that into such services. However, I desperately needed groceries
yesterday, but I was feeling sick and didn't want to get out of the house. So
I decided to give it a try.

I got on the site as a first-time user and entered my zip code. From a list of
stores around the area, I pointed it to a grocery store in my neighborhood.
Then I started searching for items.

When I saw the prices on the Instacart list, I did a double-take. Turns out
there _is_ a margin, and it is _at least_ 20%, if not much more. The reason I
noticed this is because I shop at that store every week and am very familiar
with the prices of the items I was browsing. Keep in mind I was browsing
around 11 am, with a delivery window of 2-3pm, so it wasn't (or shouldn't have
been) subject to surge pricing either.

And like you say, the exact margin is hidden, and even the fact that they do
have a margin isn't explicitly stated anywhere that I could see. So if I
wasn't familiar with the prices at that specific store, I may have just gone
with it.

This lack of transparency (and in fact I can go one step further and claim it
is purposeful obfuscation) immediately eliminated all my trust in Instacart. I
closed the window without completing my order. I have since received three
emails from them (in 24 hours) reminding me that I have an incomplete order.
Suffice it to say, I have no intention of logging back in, ever.

~~~
grandalf
> Turns out there is a margin, and it is at least 20%, if not much more.

This is not true. In some stores Instacart offers the same as in-store prices,
other it does not.

The same is true of anything one buys on Amazon. Low-cost items that ship with
Prime shipping are usually marked up a bit, but I order from Amazon (and
Instacart) in spite of this because of the convenience offered.

You can pick a basket of goods in Instacart where the percentage is high, but
there are many other baskets where the percentage is low.

~~~
enraged_camel
Maybe it is based on store. I don't know - and _that 's the problem_. Like I
said, Instacart (as far as I could tell at a glance) doesn't make the
information easily available. That's the problem.

I did some casual searching and discovered that they supposedly have page
([https://www.instacart.com/store/prices](https://www.instacart.com/store/prices))
where they list their markups per store, but it doesn't work for me.

~~~
foota
Why is this such a big deal? It's not like safeway tells you what markup they
are charging.

------
kinkrtyavimoodh
I've never used Instacart but it seems to be a weird thing to outrage over,
when apparently you are told the final payment upfront, and you know you are
ordering from a premium service that is fundamentally a luxury offering. And
I'd expect most people to have some basic ballpark idea of how much everyday
groceries cost.

Does this person also expect businesses to disclose their profit margins
before he's comfortable doing business with them? Ever bought a bottle of
water at a stadium? We're looking at several 100 percents of markup there.

~~~
icebraining
While some people do get outraged by high margins, the main issue I see here
is that they _do_ pretend to publish their markup, but it's widely out of
whack with reality. 63% may technically fit into "15%+", but it's highly
misleading. They should just remove it.

~~~
notyourwork
Exactly. It is like saying this item only cost a few dollars. When in reality
it is a $100,000. I didn't lie but it is surely misleading.

~~~
IAmGraydon
Wow.

------
tommynicholas
Many comments saying something to the effect of "$140 for $80 worth of
groceries? Robbery!"

What's $80 worth of groceries? It's what you're willing to pay $80 for. The
grocery store is marking up the food from their suppliers, is that a rip off?
Grocery stores in urban areas charge more than in rural areas, rip off? When
there's only 1 small store in an area (food deserts) they charge 10-30% more -
an outrage?

This is great information to have and a benefit to consumers that they know
the difference, but if Instacart gives you a price and you pay it then that's
a fair price by definition. It's not an outrage in any way.

~~~
CydeWeys
The outrage is that they are intentionally obfuscating the cost of using their
service. It's not unreasonable at all to want to know how much more using
their service costs than if I were to go shopping myself; that's how I can do
the cost evaluation of whether it's worth it for me to spend that extra money
to save me the time of a shopping trip.

Information is critical for driving free markets. Instacart is pulling some
sleazy shenanigans, sending them down a path pretty similar to where Uber has
ended up. I don't make it a habit of patronizing businesses that use deceptive
pricing practices to try to rip me off.

~~~
tommynicholas
The price of their service was $140 for the groceries the customer selected.
Hard stop. The grocery store doesn't tell you what the underlying cost of
their food was, nobody does that. It's not a requirement.

Now it could be something consumers DEMAND which would give a competitor an
advantage if they did it (see Everlane with their transparent pricing) but
it's not unethical or sleazy not to disclose the underlying costs of your
goods.

~~~
brown9-2
It seems unethical for a company to tell you "our markup for this grocery
store is 15%+" when in reality it was ~50%.

~~~
jimmywanger
Is it unethical for stores to advertise "savings up to 50%" and have most
items not be on sale for 50%?

~~~
brown9-2
The difference here is that shoppers in that store can see the final price and
actual savings before purchasing. Can you do the same with Instacart?

~~~
jimmywanger
> Can you do the same with Instacart?

Instacart shows you the final price. The price they paid for the goods is
immaterial - you're choosing the convenience of not having to write your own
delivery app, recruiting employees, or set up payment.

When you walk into a book store, do you demand to see the book price broken
down into manufacturer's price, store rent, employee pay, and store profit and
complain when the difference between the manufacturer's price and the retail
price is too high?

------
true_religion
If you rely on a lot of service companies like Uber & Instacart, appified dry-
cleaning and maid service then it may actually be cheaper for you to hire
someone for 8 hours a day to do your chores.

This guy ended up paying $70 for a single grocery trip, do that and take Uber
twice a day, and you're verging on "I can hire personal staff" territory.

~~~
jasode
_> it may actually be cheaper for you to hire someone for 8 hours a day to do
your chores._

Whatever math calculation one does, it has to factor in the hassle of becoming
an "employer" which is a complication that most consumers don't want. E.g. If
you pay someone more than $36 a week[1], a law-abiding tax payer would have to
file a W2 to the IRS reporting the income. (Yes yes, most parents don't
actually file W2 for their neighborhood babysitter but that's technically "tax
evasion".)

You can legally circumvent the W2/employer relationship by using an agency and
that staffing firm becomes the "employer of record." However, there's no such
thing as a free lunch and that agency has its own 50% to 100% markup on the
personal assistant's hourly rate. This gets right back into Instacart pricing
territory or even exceeds it.

Without any survey data, I'm guessing that there's a huge market of customers
willing to pay Instacart profit margins instead of becoming an "a W2 employer"
or paying 3rd-party agency.

[1]
[http://www.usatoday.com/story/money/personalfinance/2013/04/...](http://www.usatoday.com/story/money/personalfinance/2013/04/07/nanny-
tax-domestic-help-irs/2045517/)

~~~
true_religion
As an employer, W2 forms aren't terrible hard to fill out and I don't know why
everyone seems so scared of them.

People have had this viewpoint that filing taxes is 'hard', but recent
improvements have made it 100% electronic and really cut down on the effort
needed to compile it legally.

And then of course, no one would pay a babysitter a W2. You'd count them as a
1099, but not need to file till they made more than 10,000 a year.

What's more interesting is having an _actual_ employee though who can do
nannying, picking up dry cleaning, and all of the other personal chores you
just put off or have apps do. They're your personal assistant, and honestly if
filing taxes is a hassle for you, you can have them fill out the forms because
what else are assistants for?

~~~
jasode
_> As an employer, W2 forms aren't terrible hard to fill out _

You're taking my example too literally. The "W2 filing" is shorthand for all
the extra legal complications such as withholding taxes, paying employer's
portion of Social Security, Medicare, and any state mandated payments such as
worker's comp, etc. All of that is a big leap of complexity compared to just
pushing a few buttons on an iPhone and getting a service-on-demand.

 _> And then of course, no one would pay a babysitter a W2. You'd count them
as a 1099, _

Unless the IRS (or even the babysitter) wants to reclassify the relationship
as W2 instead of 1099.[1] Now the consumer owes back taxes (and possibly
penalties) which is more complicated (and more expensive) than using a phone
app.

 _> What's more interesting is having an actual employee _

Sure but probably 95%+ of consumers who want to periodically use Instacart /
Uber / Blue Apron / etc do not want jump to the next level of complexity with
an _actual_ employer+employee relationship. The threshold for inflicting that
bureaucracy on oneself is high. Lastly, the extra employee taxes a consumer
would have to pay makes the W2 relationship more expensive than a naive
calculation would suggest.

[1] [https://www.nytimes.com/2015/03/14/your-money/contract-
worke...](https://www.nytimes.com/2015/03/14/your-money/contract-worker-or-
employee-tax-liability-rests-on-the-difference.html)

------
pfooti
Initial post removed, here's the imgur link to the receipt that was
accidentally left in the bag and screenshots of the instacart list.

[https://imgur.com/a/r6KGn](https://imgur.com/a/r6KGn)

~~~
free2rhyme214
Highway robbery

~~~
pfooti
wellll, I'd wondered how instacart worked, when my nearby nice grocery store
got bought by safeway. Originally I thought it was just the delivery fee, and
I felt like the delivery people couldn't possibly be getting a living wage out
of the work.

Here at least I can see that instacart gets enough revenue to probably be
sustainable and pay someone a reasonable wage for doing the actual work of
going to the grocery store on my behalf.

That said, I've just been finding great small grocery markets in the outer
sunset to shop at. I'm lucky to live in a place where I can walk to a number
of excellent small markets, so I just do that instead of paying for grocery
delivery.

~~~
MegaButts
I'd love to hear about some great small groceries in the outer sunset. Please
share!

~~~
pfooti
Assuming you mean the Outer Sunset of San Francisco:

Noriega Produce Mart (gus's, but I love that it's NPM) has almost everything I
need, except the meat / fish selection is pretty low. Noriega and 43rd(ish).

Other Avenues (judah and 41st-ish) is a worker-owned cooperative. They don't
carry meat at all, but they have a great bulk food selection.

Both have excellent produce selections and a surprising amount of useful dry
goods - with the exception of meat / fish, the only real pull to Andronico's
was the parking lot.

I went to Guerra Quality Meats for the first time last weekend, and it was
pretty great as a butcher, and had some fish selection. They're at taraval and
15th. I'm considering going back to marin sun farms for their CSA meat boxes.
There's also a fish seller going in at irving and 42nd (or so) where the old
cajun restaurant was. That's a long-term thing, though, since it's been
"coming soon" for a while.

There's a couple great Asian markets up on irving - sunset super at 25th and
irving is really great, although a tad overwhelming at times. They've got a
_lot_ of meat and fish.

No grocery store in the area is as _cheap_ as going to safeway and shopping
frugally (or quite as satisfying as Berkeley Bowl, but since I don't go to the
east bay often anymore, it's hard to justify a really long drive to the
grocery store), but these places sell high-quality organic food and other good
brands of dry goods (I can get both king arthur and antimo caputo flours for
my breads and pizzas, respectively, at NPM) and are local stores rather than
chains, so I'm willing to pay the premium to support them.

------
zaroth
When buying commodity items like most produce but in particular packaged
goods, there's still an unsolved problem of "how much should I be paying for
this?" and oftentimes I see even unit prices which are straight up
miscalculated.

The problem seems compounded when shopping for this stuff online, when each
individual item is so cheap, it takes too many clicks to realize how badly you
are being ripped off.

I find even when grocery shopping online through a store's own site the prices
are inflated over in-store. It compounds the anxiety over someone else picking
low quality/old stock to the point where I won't grocery shop online as much
as would really like to optimize the process.

I also find the menu system and scrolling lists of items an incredibly
frustrating way to pick out the right gallon of milk.

I think the underlying fact is that it's extremely expensive for Instacart to
provide their service.

I think an automated / lights out grocery store where you order through an app
and drive by on the way home to pickup the food would be an order of magnitude
more efficient. But you have to build the warehouse (like Amazon does) to
allow robots to fill the order.

If you're paying for the overhead of food to be stocked on shelves nicely
enough for picky customers to look at it, and then only _after_ that point are
you filling an online order, that's hugely wasteful.

~~~
maxerickson
It depends a lot on how many online orders you are filling.

In a lot of areas there wouldn't be the population density to support a pickup
only location, but it's easy for an existing store to implement pickup and
delivery services. A locally owned store here has done it using Rosie:
[https://www.rosieapp.com/](https://www.rosieapp.com/)

~~~
zaroth
Eventually the only option will be pickup only. It's the simple evolution of
removing as much of the (human) cost as possible.

Of course it seems crazy to make the claim today that people won't o inside a
store to pick their own groceries. About as crazy at it will seem to people
then, that we used to do exactly that.

------
xapata
Breaking news: business charges margin above cost of goods to support
employees and make profit.

We don't ask Walmart to disclose the prices it pays to its suppliers. Why care
about Instacart's suppliers?

------
apersona
I think the reason why people are outraged is because Instacart already has a
service and delivery fee. You would assume that the fees is where they're
making the money.

In grocery stores, etc. there isn't a service fee, so it's expected that the
prices are marked up. In Instacart, there is already a service fee, but the
prices are also marked up.

------
curiousgal
$150 for $80 worth of groceries, wow.

~~~
maxerickson
Another way to look at it is that it is $150 of groceries.

I'm sure not going to be using a service with such a high mark up, but I can
see how someone with a high income might be willing to spend extra for the
convenience.

------
wpeterson
This may be a confusing thing, I suspect Instacart may get volume discount
from stores for bringing the extra business.

So this markup may be based on discounted cost instacart pays, not necessarily
what YOU would pay at the store.

Still think it's a crazy premium, but I enjoy grocery shopping.

~~~
brown9-2
Can you explain further? Because this makes no sense on its face. If they get
a discount on what the grocery store charges, then the final price after their
markup should be closer to the store's price, not further.

~~~
mikeyouse
His insinuation is that the "Instacart receipt" that the customer received is
the discounted one that reflects the bulk discount. If an individual went to
the store and got the same list of items, it would be more expensive, so the
markup wasn't $140 - $80 but more like $140 - $100.

I have no idea if that's true or not..

------
mnm1
Do people really expect corporations to be ethical and not make the most money
possible given the circumstances? It sounds like many people expect to leave
corporations to their own whims while at the same time expecting them to be
fair, self-correcting, and a benefit to society. Sounds pretty delusional to
me. That's like sitting each day staring at the computer for years on end and
expecting a finished program to emerge while having done nothing. Maybe that's
why this business model is exactly the same as that of supermarkets that offer
delivery direct to consumers (in the US), down the opaque pricing.

------
eizenh3im
I used to shop on instacart but the lack of transparency made me switch back
to going-to-the-store shopping. Started using prime now for about 2 months and
love how much more transparent it is about its costs. They charge the same as
the store and add a default $5 tip as suggested tip. Wish instacart would get
their shit together. Delivery business is a growing market and would love to
have multiple great providers. Also feel for instacart since it was so much
early to the game than all of its current competitors.

------
aphextron
I just used Amazon Prime Now for the first time. As a long time Instacart user
in the main target demographic, I just don't see how they can compete. The
delivery fees are already rolled into my existing Prime account. On top of
that most prices are actually _lower_ than the stores, rather than marked up.

The issue all comes down to scale. Automated robot warehouses and delivery
vans are far more efficient than individual drivers searching through grocery
stores.

~~~
bognition
The main problem is that Amazon Prime Now isn't available everywhere

------
coldcode
I wonder how transparent they have to be legally, and who decides that. Saying
your fees are 10%+ and having it be 60% seems highly misleading. Then again I
saw a TV commercial that advertised free shipping and handling for a fee. I
guess if no one notices and no one can force them to be reasonable, you can do
just about anything.

------
simplehuman
I do wonder which People are too busy to shop but won't pay 50 USD per hour
for the shopping premium?

~~~
aphextron
There are plenty of people for whom $50 is a pretty good deal to save an hour
of time. Whether that will scale is another question entirely.

------
moonka
Wow, I knew there would be a markup but that is way more than I expected.

------
ex3ndr
When i worked in UAE (United Arab Emirates) grocery delivery was like magic:
you can just call any grocery shop to bring food to your flat and they bring
it to you in a few minutes. Delivery was performed by cashier - he just take
required items and bring in in a bag to you. So simple, so cost-effective and
so useful. I wonder if anyone is done something like this at scale?

------
chrismealy
Does Instacart ramp it over time? I've only used it once and there was no
markup at all.

------
pentae
My housekeeper here in Thailand costs about $290 a month and fetches groceries
for my household daily, so this makes me feel quite lucky.

------
friedman23
is this markup present for items advertised as same in store prices?

------
ddorian43
Come on dude, can't you add the 43% on the title ? Why do you have to make it
clickbait?

~~~
mjw1007
I make it 63%, including the "service fee" and delivery fee but not the taxes
or tip.

