Instacart is playing games with its workers’ pay • Hacker News Board

Re: Instacart is playing games with its workers’ pay

#121

Post by MegaButts » Wed, Feb 22, 2017, 5:11 AM UTC

thehardsphere wrote: post #116

hnarn wrote: post #10

Earlier quoted context omitted.

It makes a lot of sense if you know how perverse financial markets are. The difference between those millions and those billions is the perceived potential of the company. All you need is some investment banker becoming convinced that noone wants to visit physical stores anymore, and suddenly money starts pouring into companies supporting that view of the future, almost regardless of whether they are actually profita…

Right, so the question becomes "Why do enough people perceive the potential of Instacart to be billions when a back of the envelope calculation by a guy on Hacker News suggests that's not the case?" Presumably said investment bankers are capable of doing the same math as Hacker News readers, so why did they still fork the money over when they have many other crazy bets to choose from?

Here's a secret: most investors lose money.

Re: Instacart is playing games with its workers’ pay

#122

Post by misingnoglic » Wed, Feb 22, 2017, 5:12 AM UTC

grandalf wrote: post #29

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.…

Say the average wage is $10/hour. If it takes one hour to go and do that shopping, I break even by paying someone else that $10, if I value my leisure time as equivalent to my wage. More likely, most Instacart customers earn much more than $10/hour. For someone with a busy work schedule, there might be 2 hours of leisure time available per day during the week. This means that by using Instacart I increase my after-wo…

I'm the opposite - if I can impulsively buy a random snack on an app, I will. In the actual store, I'll feel bad about it during the checkout.

Re: Instacart is playing games with its workers’ pay

#123

Post by jasonpeacock » Wed, Feb 22, 2017, 5:14 AM UTC

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/

Re: Instacart is playing games with its workers’ pay

#124

Post by [deleted] » Wed, Feb 22, 2017, 5:15 AM UTC

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…

[deleted]

Re: Instacart is playing games with its workers’ pay

#125

Post by malz » Wed, Feb 22, 2017, 5:15 AM UTC

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.

Re: Instacart is playing games with its workers’ pay

#126

Post by zachsnow » Wed, Feb 22, 2017, 5:15 AM UTC

mikeash wrote: post #105

dawnerd wrote: post #94

Earlier quoted context omitted.

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.

There's a restaurant in my neighborhood that does this (no tips, built into the price) and I really appreciate it. It's so much "easier" that I'm more inclined to drop in.

Re: Instacart is playing games with its workers’ pay

#127

Post by purple-again » Wed, Feb 22, 2017, 5:24 AM UTC

pcurve wrote: post #61

dkarapetyan wrote: post #31

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

I hear you. My favorite delivery + service start up is this. https://www.enjoy.com/ You should see which VC are backing this ridiculous idea. https://en.wikipedia.org/wiki/Ron_Johnson_(businessman)#Enjo... I have no idea how they would every make any money. With every order, they bleed cash.

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.

Re: Instacart is playing games with its workers’ pay

#128

Post by thehardsphere » Wed, Feb 22, 2017, 5:28 AM UTC

virmundi wrote: post #72

tray5 wrote: post #39

Earlier quoted context omitted.

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.

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 fo…

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.

Re: Instacart is playing games with its workers’ pay

#129

Post by misingnoglic » Wed, Feb 22, 2017, 5:33 AM UTC

hn_throwaway_99 wrote: post #60

nashadelic wrote: post #58

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.

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

This is just an anecdote, but I have a 4.87 rating and have never tipped in cash unless the driver has done something extra for me.

Re: Instacart is playing games with its workers’ pay

#130

Post by misingnoglic » Wed, Feb 22, 2017, 5:34 AM UTC

myrloc wrote: post #88

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.

Are the tips determined after the user receives the order?