Technology is transforming how people buy just about everything. From people shopping for books and, well pretty much everything on Amazon, to car buyers shopping online before they ever go to the dealership, and electronics shoppers price-comparing while standing in the store, retail has changed forever.
Now, there’s a company trying to change how people buy groceries. You no longer have to go online to a store’s website or call ahead and place an order. Customers in covered areas can call Instacart and “hire” someone else to shop for them. The groceries are purchased based on the order, and the worker then delivers the groceries directly to the person making the order.
Instacart works in 35 markets presently, though the parent company says they plan to expand to at least twice that many in 2017. Revenue comes both from delivery fees and from partnerships with, at this point, 135 different grocery retailers nationwide. These partnerships offer Instacart a share of each basket delivered.
As with Uber and other on-demand service businesses, Instacart has faced some ups and downs with workers. When they opened the app offered a tipping option for delivery drivers. After some complained that pay was unfair because of tipping, the company added a flat fee that was then pooled and distributed at the end of the month. That frustrated the workers who enjoyed higher tips … so the tipping function re-appeared on the app … but the other fee option stayed too, confusing some customers.
Then came the all but inevitable lawsuit, something nearly every on-demand business model has faced. Employees felt they were working as full-timers but being treated as contract workers. The tipping issue resurfaced here as well when workers said the fact that the company controlled when and how much they could be tipped meant Instacart thought of workers as employees, not contractors. Instacart has not commented publicly on the pending litigation.
Regardless of the outcome of this lawsuit, Instacart will have to figure out a way to keep their workers happy as they take advantage of a ready market full of people who love the convenience offered by the shopping service … and are willing to pay for it.
This is the challenge all on-demand startups face, finding a happy medium between delivering for the customer and keeping workers content. The former want convenience but are not willing to pay too high a premium for the privilege, and the latter want compensation that they see as worth their time. Like Uber, Lyft and others … Instacart will have to crack that particular code if it wants to achieve projected growth.
Ronn Torossian is the Founder and CEO of the New York based public relations firm 5WPR: one of the 20 largest PR Firms in the United States.