Instacart Cancels Plans To Scrap Tips Amid Threats Of Strikes
Angry workers threatened to boycott Instacart after it announced plans to replace their tips with an optional 10% service fee. Today, two days ahead of the planned strike, Instacart said tips will stay.
Instacart is adjusting planned changes to its pay structure for full-service shoppers, following threats of a boycott by the independent contractors who were outraged over the $2 billion grocery delivery startup’s plans to replace tips with an optional 10% service fee collected by the company.
"After announcing this change we heard from shoppers that they liked most of the changes but wanted to retain the ability for customers to tip online," Instacart explained in a Friday blog post. "We understand their concern and have decided to continue to accept tips."
Instacart's move comes just two days ahead of a threatened October 16/17 strike organized around a "Let's get our tips back" call to action.
Instacart had maintained that planned changes to its pay rate for independent contractors — which involved raising their base pay rate and replacing tips with an optional 10% “service amount” paid directly to Instacart — were intended to benefit workers by reducing reliance on tips.
“I get a lot of big tips. That’s what I rely on."
But shoppers who did some back-of-the-envelope math following the company’s announcement worried that the changes would reduce their overall income. “I get a lot of big tips. That’s what I rely on,” said Matt, a shopper in Chicago who planned to boycott Instacart on Sunday and Monday. “I knew it wasn’t going to be in my best interests.”.”
Josh, a shopper on the East Coast, agreed. “Right now on an average week I make about $750, and I've made up to $1100 if I really work hard all week and things aren't slow,” he told BuzzFeed News via email. “So, with the changes I’m looking at making between $500 and $700 for the same amount of work.”
As independent contractors working in different cities, Instacart shoppers don’t have a central method of communicating. But by sharing their frustration on social media —via Facebook groups, Instagram accounts and #wheresthetipinstacart on Twitter — the beginnings of a movement started to congeal. Over email, Instacart shoppers in different cities orchestrated a plan to #boycottinstacart on October 16 and 17, the day the pay changes were set to roll out, hoping to slow service on what are typically two of the company's busiest days.
When a widely shared blog post critical of Instacart's plan to scrap tips fueled further outrage online, Instacart published a rebuttal on its blog. But some shoppers were even more frustrated by the way that post was written, arguing it intentionally clouded the issue of just who collected the “service amount." While it’s true that 100% of the fee does go to shoppers it won’t necessarily be given to the person doing the shopping and the delivery. Instead, the service amount is pooled and redistributed by Instacart, which is where some in-store shoppers had a problem.
“Instacart is not being fully transparent to shoppers or customers,” said Liz Temkin, a shopper in Los Angeles, who isn’t planning to participate in the boycott. “They are telling customers that the service charge goes directly to the shopper, but that's not the truth. It goes into a general pot, so that Instacart can pay us a higher delivery charge. It makes no sense to pay me the same for a small order of groceries versus the same number of items from Costco. And what about my mileage & loading stuff up from the car to deliver to an office building?”
Some Instacart shoppers who spoke with BuzzFeed News said they were worried about participating in the strike for fear of being removed from the platform for “reliability issues.” Many declined to share their names fearing Instacart might deactivate their account.
But some felt taking a risk was the only way to have an impact on Instacart’s policies. “Fear is going to keep [shoppers] from doing much outside of social media and talking. What we want is action,” said Matt, who estimated as many as forty shoppers in Chicago were prepared to join the boycott. “The only thing that’s going to get us what we want is what affects customer service and profit.”
The threat of a strike has had an impact. Following Instacart’s announcement today, the changes to base fare and addition of a service amount, charged by default when customers checkout, will remain as planned. But customers will have the option to add a tip on top of that in app if they so choose.
Given the adjusted rate and new fee, it’s unclear how many customers will be willing to also add a tip. Though Instacart says 20% of customers already don’t tip at all, and 40% of tips average around $2, top shoppers say big orders or deliveries that involve heavy lifting or lots of stairs can earn them much more than that. Whether the October 16/17 strike will still occur also remains to be seen. But if shoppers have something to say about the update, it seems that — for now at least — Instacart is willing to listen.