
Instacart is playing games with its workers’ pay - prostoalex
http://www.recode.net/2017/2/20/14503128/instacart-service-fee-tips-controversy
======
matt_wulfeck
> _Instead of the tipping option appearing on the checkout page as it
> originally had, a default 10 percent “service fee” sat in its place._

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.

~~~
dawnerd
I feel like even if they paid their delivery people a reasonable wage they'd
still expect tips. Ive had movers that made over 50/hour not including the
cost of materials/truck/etc ask for a tip.

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.

~~~
mikeash
The solution is to pay them better and forbid them from taking tips. Make it
clear to customers that it's not even allowed, let alone expected.

Unfortunately, I don't think tipping culture is going away any time soon.

~~~
lostlogin
The worst part for me - places here in NZ are trying to introduce it. I've
solved it by not going back, that that doesn't work if the practice spreads.

~~~
Negitivefrags
I also live in NZ. I've seen a few places prompt for tips but typically only
in areas tourists frequent. I always just tip nothing.

I'm pretty sure they are just doing it to bait Americans.

~~~
navs
Curious, I live in Auckland and haven't seen mention of tips except in
'hipster' cafes and I rarely see gold coins or notes. I wonder if it's less
about baiting Americans and more about emulating Americans.

~~~
lostlogin
Non solo pizza in Parnell do a hard sell on the tip. Very much a tourist
location as mentioned above.

------
mattbillenstein
I recently stopped using Instacart, there wasn't a single reason, but the sum
of:

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.

~~~
freyr
> _I 'm paying 15-20% more for groceries just on line-item price._

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.

~~~
mattbillenstein
Yeah, they say that, but I challenge you to do the experiment I did -- put
some stuff in your cart you use every week on instacart and safeway.com and
compare the total.

~~~
freyr
I'll try it. I expect that would be an actionable case of false advertising.

------
jasonpeacock
I'm an avid Instacart user, and I refuse to pay the service fee, nor the tip.

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.

[1] [https://darkpatterns.org/](https://darkpatterns.org/)

~~~
timcederman
Yeah, I'd prefer to not pay the service fee, or the tip, but realistically by
not doing so you're screwing the delivery folks, who get deliberately
underpaid by companies like Instacart.

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.

~~~
jasonpeacock
Where I live (Seattle) we've passed minimum wage law increases ($15, on a 7yr
schedule) that has already resulted in many restaurants adding an automatic &
non-optional 20% gratuity to checks, where the fine print says it will be
shared between front & back staff.

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.

~~~
inimino
How does that work? It seems like raising the minimum wage would make it less
necessary for restaurants to add a gratuity, not more.

~~~
alex8022
The gratuities are usually counted towards the minimum wage, i.e. Hourly wage:
5$/hr, Gratuities: 10$/hr.

~~~
inimino
I see, thanks. In that case the customer sees the gratuity on the bill and
then presumably doesn't feel the need to tip? So if I understand correctly
this is kind of a way to run a no-tipping restaurant located in a place where
tipping is part of the culture.

~~~
finnh
Yes. There is no tip on top of fixed-service-fee restaurants in Seattle.

------
tyre
They have tens of thousands of customers, yet are worth multiple billions of
dollars (valued at $2bn in 2015.)

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.

~~~
closeparen
>What is the market for +10% on groceries and basic necessities?

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.

~~~
coldtea
> _People who live in the suburbs without cars._

All 10 of them?

~~~
cmdrfred
How do they get to work? If they don't work, with what money do they buy food?

~~~
closeparen
To get to work, you might walk 30 minutes to a train station, wait 10 minutes,
and ride a packed train for another 30 minutes. Many (grudgingly) find it
acceptable to do this 2x/day for commuting, but aren't keen to do it for a
quick grocery run.

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.

------
l8again
Before Instacart was on the scene, my brother and I thought of about a similar
service. My brother in his college days used to be a pizza delivery driver, so
he had the "real world" experience. Over the weekend, I quickly created a
simple dropwizard java jar that would take in two variables - number of
drivers, and number of orders. Everything else was randomized to be close to
reality - such as delivery times, routes, etc. To be clear this was a bare
bone, CLI application. I would run the service for 5 minutes, and collect the
metrics. One thing was clear as mud, the more we scale up, the higher the
loss. The thing was that my brother kept telling me that I am paying too less
to my drivers, and that no one would work for me at that rate. Also, I will
admit that my algorithm was a "simple Fed-ex" style hub-spoke model.

~~~
kovek
Interesting! You estimated the costs using a small program. Have you ever done
this with other ideas? Is there some resources which teaches the best ways to
do such estimates?

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.

~~~
marcosdumay
There is a concept called "Monte Carlo Simulation" that can help on that.
Pushing random numbers into a program can be as rigorous as you want.

[https://en.wikipedia.org/wiki/Monte_Carlo_method](https://en.wikipedia.org/wiki/Monte_Carlo_method)

------
rdl
Wow, that seems gratuitously dishonest -- especially misleading customers
about what's a "tip" vs. a surcharge.

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.

~~~
wwalser
How is it dishonest? It's a fee for the service that one receives. You pay one
amount for groceries and another for the service of those groceries being
delivered. That's exactly what a service fee should be.

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.

~~~
developer2
You may have missed the part where the service fee is optional and can be
removed, or replaced with a tip to the employee. The fact that the fee is
optional, instantly makes it _not_ a "fee". Service fees are not a
discretionary addon that customers can choose to eliminate.

~~~
NotSammyHagar
Yes, you can set it to 0, but they are 100% trying to trick people into not
tipping and giving instacart the money. At my neighborhood restaurant they
eliminated tips and replaced it with a fixed service fee of 20% they give to
the employees. It's common to call such things service fees and to think that
goes to the end workers, instead of the corp. It's indefensible to say they
didn't mean to trick people into thinking it was a tip for the delivery
people.

~~~
wwalser
The article doesn't say that the service fee is _not_ given to workers. It may
pass through Instacart. It may all go into a common pool paid to workers.
Instacart may take a rake. We simply have no idea. Until someone shows some
data, everything that you've said is assumptions.

------
malz
[https://www.instacart.com/help/section/200761924#213895126](https://www.instacart.com/help/section/200761924#213895126)

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.

~~~
ben174
The way I read this is "the service fee is a way to give us more money, so we
have more money to pay to everyone who works for us". So then why not just
raise your prices and pay your employees more?

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".

~~~
timcederman
Because their basic fee is just the delivery fee. They don't set the prices -
the supermarkets do. The service fee is a consistent way for them to generate
enough revenue to pay their shoppers and drivers, compared to the variability
of user-provided tips before.

~~~
edent
That doesn't make much sense to me. There's no difference in labour cost for
buying a single roll of toilet paper or a bottle of Champagne.

------
artursapek
This sounds extremely scummy, and if the story really is as simple as this
article tells it I don't understand how the CEO of this company can look at
himself in the mirror.

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.

~~~
ontoillogical
One of the reasons I prefer to use Lyft is that they let you tip drivers.

~~~
twblalock
I tip my Uber drivers. I just give them cash. Uber doesn't know about it
unless the drivers report the tips, and I doubt they do.

~~~
eeeeeeeeeeeee
Right, but why not offer tipping in the app? I think everyone knows that would
reduce the friction for tipping. One of Uber's original selling points was
convenience -- not having to carry cash around for taxis. Now they've solved
their problem, but who cares about the driver, right?

Lyft simply asks you after your trip to rate and tip, all optional.

------
soheil
I don't understand the outrage, I like Amazon Fresh even more, next to the
tipping box it specifically says in big letters tipping is neither required
nor expected and defaults to zero. If the current laws regarding minimum wage
are inadequate why not try to pass new laws instead of trying to read between
the lines on why Instacart moved an input box and put it somewhere else?

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.

~~~
developer2
So Amazon Fresh has an optional _tip_. Instacart is adding a default 10% _fee_
that goes into their pockets - it is _not_ a tip. And they do not pass the 10%
fee on to the employees in wages - it stays as part of their bottom line.
Higher-ups realized just how much the tips are worth, are now stealing them by
default behind a purposely confusing interface that their customers cannot
understand, and pocketing the difference while affecting their employees'
income.

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.

~~~
soheil
I understand it's not the most conventional way of doing it, but why it's
someone "higher up" and that's a bad thing? Instacart is not Mother Teresa,
its sole purpose is to make profit and I want it to do that as much as it
possibly can. I want this service to exist so I don't have to feel like a
chimp in a grocery store with a basket going from aisle to aisle in fact why
do I even need to justify why I want it to exist? I am willing to give them my
money for the services they provide, period.

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!

~~~
mathgeek
> I want this service to exist so I don't have to feel like a chimp in a
> grocery store with a basket going from aisle to aisle in fact why do I even
> need to justify why I want it to exist?

You're asking why you need to justify paying someone else to "feel like a
chimp" so that you don't have to?

~~~
soheil
_They_ may not feel like a chimp and also I like to be the kind of chimp best
referred to as a code monkey, thank you! And what makes you think grocery
stores with all their deceitful marketing will exist as we know them today? If
everyone is a worker for Instacart shopping on behalf of someone else the
stores will have to adapt and there won't be any point of distracting those
workers with random product placements forcing them to move aisle to aisle
since they're only allowed to buy whatever they're asked to buy and nothing
more. It seems very shortsighted to think pain can only be transferred and not
eliminated altogether with technology if that's what you're implying.

~~~
pshposh
Grocery stores will be redesigned to accommodate personal shoppers just like
cities were redesigned around the Segway. If the Segway or personal shoppers
were free you might have an argument.

~~~
soheil
I think Amazon fulfillment centers maybe a better example.

------
doctorpangloss
Is it possible to have a value-added services company that doesn't exploit its
labor?

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.

~~~
tray5
Profit has to come from somewhere. You can't reimburse the workers the full
value of their labour if you wish to make a profit. I'd say that counts as
exploitation. Unfortunate, but thats the reality of capitalism.

~~~
virmundi
Is value created by labor necessarily the only way to create value? Can labor
by itself cost $10, I pay out $10, but when I combine that labor (a largely
undirected force) with thought (scheduling, order placement, etc) I get a
multiplier over the labor?

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.

~~~
thehardsphere
The mistake here is the assumption that value comes from labor. Value is
inherently subjective, depending on what the purchaser is willing to pay for,
not due to intrinsic properties of whatever the good or service is.

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.

------
nashadelic
Not a US citizen but I find the whole tipping experience rather stressful and
an additional item to worry about. I like it that Uber has it built into the
service and there's only one thing to pay. I'd rather pay a flat increase on
the menu and expect higher staff salaries than to have the delivery boy/waiter
be at my mercy of tipping.

~~~
hn_throwaway_99
Note there have been several articles about how some Uber drivers give lower
ratings to riders who don't tip in cash.

~~~
mrits
How could anyone ever know this? Uber doesn't even have this data, since the
tip is in cash.

~~~
rahimnathwani
I've seen Uber drivers discuss this on forums. For some drivers, 'no tip' =
'no 5 star rating for the passenger'

~~~
pshposh
What are the implications for a passenger with a poor star rating?

~~~
mrits
I've never tipped in hundreds of Uber rides and I have like a 4.9 last I
checked. Because I'm not a special snowflake I would think that most people
have a good rating. But if you don't and there are options of who you can pick
up, you gotta think that someone with a 4.5 would be picked up over a 3.5.

~~~
pshposh
So someone with a 3.5 customer rating will just have to wait longer?

------
MaxGabriel
I think Instacart's other justification for this is that multiple people are
now involved in procuring your groceries. One person shops and another
delivers. If you tip in cash, the shopper gets nothing.

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).

~~~
marcell
This is a misdirection and Instacart knows it. In the old system, the shopper
got half the tip. Source: I worked as an Instacart driver for fun.

~~~
MaxGabriel
Ah, sad to hear that

------
nathanaldensr
When are we as a society going to tire of company executives feigning
stupidity and ignorance when it comes to these _very deliberate actions_? All
these executives--and likely all the developers, too--know _exactly_ why these
business model and app changes were made. The reasons given in the article are
completely accurate.

It can be boiled down to this: Money > People.

~~~
vinceguidry
I have been reading a lot about Russia and China recently, and I'm struck by
just how much more realistic their citizenry is compared to America.

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.

~~~
jquery
> outrage will be generated and justice will be served.

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.

~~~
vinceguidry
> Trump is the personification of the outrage over illegal immigration, crime,
> bad trade deals, and the Neocon (globalist) wing of the Republican party.

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.

~~~
marknutter
I'm curious as to why you think the world is moving towards liberalism.

~~~
vinceguidry
Ultimately it's because of the Internet. Sharing of ideas, remixing them,
iterating on them, that's all the province of liberalism. Holding on to
tradition, resisting modernization, that's conservatism. Liberalism is the
rising tide raising all boats. It's always happening, everywhere, behind the
scenes, in people's minds. Even the most conservative person has liberal
ideas.

Liberalism is imperative, conservatism only impairs. You can have individuals,
groups, communities, industries, cities, provinces, countries, even whole
blocs of countries espousing conservatism, but the natural trend is towards
idea evolution and that's liberalism. It might take a long, circuitous route
to get there, but when you take the totality of the whole world, and the logic
of ideation, that's where it's going.

~~~
pault
> the rising tide raising all boats.

FYI, usually this rhetoric is used by rich people when they are trying to
screw you.

~~~
vinceguidry
Lol, in my defense it's a more of a philosophical point than an economic or
political one.

------
rm999
Wait a minute... wait. Those service fees I've been opting to pay haven't been
going to the shoppers/drivers who are processing my order? On my last order I
asked the shopper to specifically go out of her way to check on an out of
stock item. I did this with the assumption that my 7 dollar service fee was
going directly to her, and that she would therefore be happy to go out of her
way. When the delivery person (I think the same as the shopper) came by and I
smiled at her, I thought that was a "we're square", not a "sorry for not
tipping you" smile.

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](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.

~~~
vaishaksuresh
I think DoorDash does similar thing. You pay Tip, Service Fee, _and_ Tax. It
would still be ok if the food was being delivered from far off, but most of
the time it is within a 2-5 mile radius. A $20 order easily becomes a $40
order.

~~~
strictnein
And didn't DoorDash just bump their fees recently? Could be just my area, but
man I swear the delivery charges increased substantially in the last couple of
weeks. Lots of places with $5.99 and $7.99 delivery charges attached to them.

------
robertcope
I'm unclear why I would tip my Instacart delivery person. I order A, B, and C;
my expectation is that A, B, and C show up, because that is what I paid for.
How can a particular delivery person do that "better" enough to deserve a tip?

~~~
valkea
Pick out better produce?

~~~
joncalhoun
It is hard to evaluate if the delivery person did the best they could with
what the store had or just grabbed random produce. So now we are ripping
drivers because the grocery store for a fresh produce delivery?

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.

------
spraak
It's the same story as with other similarly modelled startups like Deliveroo
and UberEATs (and maybe Uber itself), both of which have slashed their
groundworker's pay significantly

------
dkarapetyan
Why does startup after startup think they can make delivery a viable business?
The numbers never work out.

~~~
pcurve
I hear you.

My favorite delivery + service start up is this.

[https://www.enjoy.com/](https://www.enjoy.com/)

You should see which VC are backing this ridiculous idea.

[https://en.wikipedia.org/wiki/Ron_Johnson_(businessman)#Enjo...](https://en.wikipedia.org/wiki/Ron_Johnson_\(businessman\)#Enjoy)

I have no idea how they would every make any money. With every order, they
bleed cash.

~~~
purple-again
Hmmm...I'm confused. This is from their "How It Works" section on their
website:

"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.

~~~
mattm
AFAICT, you buy from their site so they are probably getting some kind of
commission. But they only have 20 products in total that you can buy from
their site. Plus they have someone spend up to an hour training you on the
product.

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](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.

------
Kiro
Coming from a place where tipping is nonexistent this whole debate feels
extremely ancient. I don't understand why a modern country won't just kill off
tipping culture.

~~~
nickez
This is great for everyone! Hopefully they will get a higher salary and I
guess the company will pay more in taxes and social benefits (or whatever it
is called in English). I don't get how tipping can be legal, or do you
actually pay taxes on tips in the US?

~~~
TheCoelacanth
> do you actually pay taxes on tips in the US

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.

------
brownbat
Instacart wants to fix grocery shopping by eliminating the drive the store.

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...](http://www.businessinsider.com/amazon-go-grocery-store-future-
photos-video-2016-12)

[1] [https://www.cnet.com/news/meet-amazons-busiest-employee-
the-...](https://www.cnet.com/news/meet-amazons-busiest-employee-the-kiva-
robot/)

[2] [http://www.businessinsider.com/walmart-is-expanding-free-
cur...](http://www.businessinsider.com/walmart-is-expanding-free-curbside-
grocery-pick-up-2016-4)

[3]
[https://en.wikipedia.org/wiki/Clarence_Saunders_(grocer)](https://en.wikipedia.org/wiki/Clarence_Saunders_\(grocer\))

~~~
tharibo
All big stores are doing it now in France (in large cities at least). It's
called "<store>-drive" (like you would have a "Walmart-drive" in the USA).
Some are doing it next to the shop, others try new warehouses at different
locations (because one of the incentives is to avoid traffic too).

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.

------
xiaoma
It's possible that pretty much any so-called "gig-economy" platform is
inexorably pressed towards first wooing, then commoditizing and finally
squeezing its workers.

~~~
eridius
This does seem to be pretty common, but it doesn't apply to 100% of gig
economy companies.

~~~
ajb
Counterexample?

------
inimino
The author totally lost me at this point:

"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.

~~~
wheaties
Once upon a time I made a UI where there were several things. One of them was
a gigantic text box with the title "Biography" and another a 2 character wide
box with a title "years of experience." We had to change that to a drop down.
Why? Read on...

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.

~~~
inimino
Yes, thanks, but I am already quite familiar with the idea that users will
break and misunderstand any UI in creative and unexpected ways. That's why we
do testing of any new UI designs. That's totally unrelated to my point.

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.

~~~
siranachronist
The way I read the article, the author is pointing out the sneakiness of 1.
conflating service with tipping, and 2. hiding an option people assume isn't
adjustable (who would think you could waive a service fee, and what normal
person would want to pay a ~higher~ service fee? note that service fee vs.
tipping has different connotations) behind a nav.

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.

------
xerophyte12932
There is a very interesting Podcast on the tipping vs service fee debate on
Freakonomics:

[http://freakonomics.com/podcast/danny-
meyer/](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

------
neom
I can understand wanting predictability in your business model, but if your
supply chain shakes when you add consistency, your business model probably
doesn't work.

------
krzrak
The real WTF is tipping in advance for the service when you make an order.

~~~
bluetidepro
Yeah, this is one thing I will never understand when apps do this. Especially
ones that FORCE a min % of tip when you make the order (most GrubHub/Seamless
restaurants). Just call it a fee if you're going to force me to do it before I
can even evaluate the service and tip accordingly, let alone if there is a min
tip %. It's incredibly frustrating, and ironically makes me tip less than if I
would if I could just tip after the fact. I don't want to risk an up-front
tip, so I tend to stay on the lower end, but since the service of these places
is usually pretty good, if I got to tip after, I would actually be tipping
more. But they screw up just enough times that makes me not want to take that
gamble.

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.

------
khallil
Seems like they're learning a hard lesson on unit economics. We're somehow at
a point where companies are burning cash to provide low service fees, and now
they need to become profitable.

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.

------
sebleon
Pooling tips is quite common place in the restaurant industry, this isn't
exactly a new way to f __* over workers. While this move will reduce the pay
for some shoppers, it will help many shoppers that earn less in tips for
structural reasons. Ie. servicing low-income neighborhoods, racism & sexism
from the tipper, etc

~~~
etjossem
I agree with you, but while the tip pool is sacred (employers shouldn't touch
it), a "service fee" is not. Describing it as a service fee allows Instacart
to keep a portion of it rather than distributing it all back to employees on
the ground.

~~~
sebleon
Ah right on - didn't realize Instacart would be taking a portion of it... and
it looks like it would be taxed, effectively making every dollar into a $0.70
tip...

------
alehul
Is Instacart paying significantly lower via this new system (aside from the UX
advantage like Uber)? Assuming they have a reasonable proportion of
couriers:orders and the pay change here is substantial, this seems like it
could backfire if many couriers stop delivering / delivering as often, given
how easy it is to switch to GrubHub, DoorDash, Postmates, et cetera.

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).

------
bkovacev
This feels like communism. It does not matter how hard you work, you will all
get paid the same. Why should someone that worked better be rewarded the same
as someone who did not work so hard?

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.

------
grandalf
I'm a customer of Instacart and a big fan of the service. It has saved me so
many hours.

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.

~~~
lloydde
> Star ratings allow Uber to compensate top performers without creating an
> inconvenient friction point for users.

Uber drivers with a high rating get paid more?

~~~
grandalf
If they don't it's a big mistake by Uber. But at least the infrastructure is
in place for collecting detailed ratings and feedback.

~~~
pshposh
Does Uber make efforts to increase star ratings for drivers or is it all up to
the driver? I was a quality manager for a call center and bad ratings can
happen to even the best people. We always worked with them to improve for the
future. We also did not rely exclusively on customer ratings and used internal
QA. Does Uber have internal QA for drivers?

------
myrloc
As a previous shopper who was intensely driven by high tips, I can guarantee
this will have a big effect on the levels of motivation the shoppers will
have.

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.

~~~
misingnoglic
Are the tips determined after the user receives the order?

------
lloydde
What problem was Instacart trying to solve here? I use Amazon Prime Now and
Google Express, but don't really factor in the tip when I think how much Prime
costs me. I don't make that many orders though, so maybe people feel it as an
additional cost over time.

~~~
wwalser
The positive spin would be that it reduces friction involved in ordering and
delivery payment. The original change didn't offer the ability to change the
service fee. Under that model they offer one less decision point for their
customers.

The negative spin is that they wanted to capture some percentage of the tip
money.

------
c3534l
How is this legal? They've been lying to customers in print about a service
charge being a tip (as well as lying about the cost of the service to begin
with by adding the charge to begin with) and basically stealing these people's
tips.

------
tjpaudio
Ugh tipping culture. Pay should be predictable and not guilted on the
customer. If the predictable pay is too low people can try to find better
work, but at least tension is removed from the time of transaction.

------
narsil
As a sidenote, returning something bought via Instacart is a pain, as I
learned. Target refused to accept a defective light-bulb without the original
receipt, but did exchange it for store credit fortunately.

~~~
muzz
You were able to buy a light bulb on Instacart?

I'm in Silicon Valley and it's just groceries here

------
popinman322
So does this mean that if I have sensitive information and travel that I
should just purchase computers in both inside and outside the US and never
travel across the border with any electronics?

------
mack1001
Pretty sure the day stores create their own delivery channel, instacart will
be done. Easier to pay Krogers or Costco for quick delivery than a service
like instacart.

------
free2rhyme214
Doordash added a "service fee" awhile ago. How is this news?

------
jnagro
it is still not clear to how the people actually doing the work get paid and
how much of the order they make?

------
hemantv
Instacart seems to be most overhyped company in delivery space.

------
tomcam
Despicable. That way of hiding the tip belongs in Wikipedia under Dark
Patterns. I hope Instacart burns.

------
verytrivial
This is not a fault of Instacart IMHO, but a symptom of the US's strange
relationship with minimum wage laws.

------
username223
I'm poor enough to buy my own groceries, but if you're rich enough not to do
that, then "tip"/pay your servants in cash.

~~~
chipperyman573
If you do that then only the driver gets the money, not the shopper. Plus, if
the tip button worked as intended, why would it matter how you tip?

~~~
username223
> why would it matter how you tip?

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.

