Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Instacart is playing games with its workers’ pay

recode.net

Post reply on HN
Print view View original

101–110 of 371 posts

Re: Instacart is playing games with its workers’ pay

#101

Post by closeparen »

tyre wrote: post #8

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.…

>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 - Delivery fees and markup on everything you buy 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.

Re: Instacart is playing games with its workers’ pay

#102

Post by [deleted] »

babesh wrote: post #17
doctorpangloss wrote: post #3

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.

Costco and Trader Joe's workers supposedly get much more than minimum wage although not venture capital based. It isn't an economic law.

[deleted]

Re: Instacart is playing games with its workers’ pay

#103

Post by flukus »

closeparen wrote: post #101
tyre wrote: post #8

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.…

>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…

That sounds like a small market that's destined to shrink.

Re: Instacart is playing games with its workers’ pay

#104

Post by gkop »

robertcope wrote: post #85

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?

First, note that for each of your Instacart orders, a shopper picks out the food, and a driver delivers it to you. Two people.

To your point, I have noticed that Instacart users fall into two groups, those that care about specific replacements when an item is out of stock, and those that just want the shopper to use their best judgment. If you care about replacements, then you want your shopper to be responsive and well-mannered in working with you to resolve the shortfall.

Re: Instacart is playing games with its workers’ pay

#105

Post by mikeash »

dawnerd wrote: post #94
matt_wulfeck wrote: post #5

> 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 o…

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 b…

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.

Re: Instacart is playing games with its workers’ pay

#106

Post by vinceguidry »

nathanaldensr wrote: post #36

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.

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.

Re: Instacart is playing games with its workers’ pay

#107

Post by WhitneyLand »

tyre wrote: post #8

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.…

Regardless of how you calculate the valuation this is bad for business.

People don't like companies being disingenuous, and not realizing that treating employees fairly is actually an important part of building a healthy company (putting aside it's the right thing to do).

If they really needed to do this then don't play games. Just explain that revenue growth can make or break a company at this stage so we need to take these actions. Just being honest about the realities of business and your choices go a long way.

This week Uber and Instacart have damaged their brand due to nothing other than poor leadership.

Re: Instacart is playing games with its workers’ pay

#108

Post by closeparen »

flukus wrote: post #103
closeparen wrote: post #101

Earlier quoted context omitted.

>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…

That sounds like a small market that's destined to shrink.

In the very long run, maybe. I don't see NIMBYs losing steam and I don't see the migration into major metros slowing down either. Maybe when the self-driving car comes?

Re: Instacart is playing games with its workers’ pay

#109

Post by mikeash »

ontoillogical wrote: post #41
artursapek wrote: post #21

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…

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

That's the primary reason I'm reluctant to give Lyft a try.

Re: Instacart is playing games with its workers’ pay

#110

Post by rahimnathwani »

mrits wrote: post #67
hn_throwaway_99 wrote: post #60

Earlier quoted context omitted.

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

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

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