The roller-coaster ride of working for Instacart has taken another twist.
Instacart is cutting worker pay again in at least four cities
More changes at the $2 billion grocery delivery startup.
Denver Post Photo by Cyrus McCrimmon
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.
The grocery delivery startup, valued by investors at $2 billion, is cutting pay for some workers in at least four cities, according to pay rates viewed by Recode. The pay reductions mark the second time in the last 10 months that Instacart has cut wages.
Screenshots from workers’ Instacart apps viewed by Recode showed pay decreases ranging from 11 percent to 19 percent both for workers who shop for grocery orders and deliver them. Pay reductions for delivery-only workers ranged from 6 percent to 21 percent. These cuts are being made in parts of Seattle, Atlanta, Chicago and Portland, Ore.
Instacart spokeswoman Rebecca Silliman confirmed some pay reductions, but also said that pay was increasing for workers in some cities. She could not immediately say which cities were seeing increases, or how many.
The changes come three months after Instacart overhauled its pay structure in a controversial move that replaced default tips for workers with a default service fee that Instacart collects and says it puts toward worker pay. At the time, the company said the changes were designed to even out pay between workers and to make sure their income wasn’t tip-dependent.
The company ended up adding the tip option back after outrage from some workers and customers, but the service fee is still the default option.
“The way that we have structured the pay is with the express intent of hitting a range in each market that is fair and competitive,” Silliman said on Monday evening. “As we’ve been assessing that, we’ve had to set rates accordingly.”
In a city like San Francisco, the range is $15 to $20 an hour. It could be lower in other cities.
The changes also come less than a year after Instacart slashed the pay of some of its workers by 30 percent to 45 percent. At the time, some workers said that they understood the cuts, but were angered that there was no advance notice from the company.
That sentiment has resurfaced again with these cuts, with some workers telling Recode that the only notice they received was seeing the new numbers in the app. Another worker took to Twitter on Monday to air a similar complaint:
The San Francisco-based company was founded in 2012 and quickly became a popular way for young professionals in urban settings to get on-demand grocery delivery from name-brand grocers.
The startup operates a network of workers in at least 18 cities who pick up groceries from partner stores and deliver them to customers’ doors in as little as an hour. Some workers only pick groceries off shelves, while some only deliver. A third bucket of workers do both.
The startup has raised more than $270 million from top Silicon Valley investors like Andreessen Horowitz and Sequoia Capital, but also from one of its largest partners, Whole Foods. The Whole Foods funding reportedly valued Instacart at the same $2 billion number it secured in a 2014 investment.
Investors believed that Instacart could have a different outcome than Web 1.0 delivery startup busts Webvan and Kozmo, in part because Instacart doesn’t carry inventory.
The startup, run by CEO Apoorva Mehta, makes money in a variety of ways, including through delivery fees, subscription fees and revenue-share agreements with grocers. Mehta said last year that the company was making money on average orders in 10 of Instacart’s markets, but was unprofitable overall.
This article originally appeared on Recode.net.
