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What is Instacart really charging? the breakdown

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Re: What is Instacart really charging? the breakdown

#51

Post by jimmywanger »

brown9-2 wrote: post #48
tommynicholas wrote: post #42

Earlier quoted context omitted.

The price of their service was $140 for the groceries the customer selected. Hard stop. The grocery store doesn't tell you what the underlying cost of their food was, nobody does that. It's not a requirement. Now it could be something consumers DEMAND which would give a competitor an advantage if they did it (see Everlane with their transparent pricing) but it's not unethical or sleazy not to disclose the underlying…

It seems unethical for a company to tell you "our markup for this grocery store is 15%+" when in reality it was ~50%.

Is it unethical for stores to advertise "savings up to 50%" and have most items not be on sale for 50%?

Re: What is Instacart really charging? the breakdown

#52

Post by tommynicholas »

brown9-2 wrote: post #48
tommynicholas wrote: post #42

Earlier quoted context omitted.

The price of their service was $140 for the groceries the customer selected. Hard stop. The grocery store doesn't tell you what the underlying cost of their food was, nobody does that. It's not a requirement. Now it could be something consumers DEMAND which would give a competitor an advantage if they did it (see Everlane with their transparent pricing) but it's not unethical or sleazy not to disclose the underlying…

It seems unethical for a company to tell you "our markup for this grocery store is 15%+" when in reality it was ~50%.

That I agree with.

Re: What is Instacart really charging? the breakdown

#53

Post by enraged_camel »

chrisseaton wrote: post #46
Nullabillity wrote: post #32

Earlier quoted context omitted.

> Does this person also expect businesses to disclose their profit margins before he's comfortable doing business with them? Is that really such an unreasonable demand?

Why do you care what the profit margin is? Either the product or service is worth more to you than the money that they're charging, or it isn't.

>>Why do you care what the profit margin is?

Because not knowing it creates an information asymmetry and makes it more difficult to make a rational decision about whether to pay for the product or service, or look/wait for alternatives.

It's not just about what the product or service is worth to me. It's also about a sense of fairness. I'm OK with a 20% markup on bottles of water at ball games. I'm not OK with a 200% markup, because even if I'm really thirsty, on principle I don't want to pay several times more for it than I otherwise would. So if I knew the exact margin, I can make an intelligent decision between paying for it then, or waiting X hours for the game to end so I can drink the water I have in the car.

Re: What is Instacart really charging? the breakdown

#54

Post by maxerickson »

zaroth wrote: post #6

When buying commodity items like most produce but in particular packaged goods, there's still an unsolved problem of "how much should I be paying for this?" and oftentimes I see even unit prices which are straight up miscalculated. The problem seems compounded when shopping for this stuff online, when each individual item is so cheap, it takes too many clicks to realize how badly you are being ripped off. I find even…

It depends a lot on how many online orders you are filling.

In a lot of areas there wouldn't be the population density to support a pickup only location, but it's easy for an existing store to implement pickup and delivery services. A locally owned store here has done it using Rosie: https://www.rosieapp.com/

Re: What is Instacart really charging? the breakdown

#55

Post by IAmGraydon »

icebraining wrote: post #8
kinkrtyavimoodh wrote: post #7

I've never used Instacart but it seems to be a weird thing to outrage over, when apparently you are told the final payment upfront, and you know you are ordering from a premium service that is fundamentally a luxury offering. And I'd expect most people to have some basic ballpark idea of how much everyday groceries cost. Does this person also expect businesses to disclose their profit margins before he's comfortable…

While some people do get outraged by high margins, the main issue I see here is that they do pretend to publish their markup, but it's widely out of whack with reality. 63% may technically fit into "15%+", but it's highly misleading. They should just remove it.

I have no idea how you think "15%+" is misleading. You can't simply ignore the + sign to make your case. That says the markup STARTS AT 15% and goes up from there. Also, the markup on store items wasn't 63%. That was after additional fees, tax, tip, etc. The markup was 42.8%.

Re: What is Instacart really charging? the breakdown

#56

Post by meesterdude »

CydeWeys wrote: post #24
dasil003 wrote: post #17

Earlier quoted context omitted.

It's not just apps. Amazon is making it really easy to purchase on a whim via Echo or subscription to staple items. They even offer a 20% discount if you subscribe to a minimum number of items. However if you actually go and price this stuff out, it's often 30-50% cheaper at Walmart or Target. I get the convenience factor, but it really adds up when you're talking about daily necessities.

The Amazon pricing makes sense though, because Amazon is paying the cost of shipping it to your door rather than you paying the cost of time, money, and gasoline to go fetch it at a store and bring it back. Amazon's model is at least price-transparent.

but shipping is an additional charge - YOU are paying to have it shipped to your door, not amazon.

Re: What is Instacart really charging? the breakdown

#57

Post by coldcode »

I wonder how transparent they have to be legally, and who decides that. Saying your fees are 10%+ and having it be 60% seems highly misleading. Then again I saw a TV commercial that advertised free shipping and handling for a fee. I guess if no one notices and no one can force them to be reasonable, you can do just about anything.

Re: What is Instacart really charging? the breakdown

#58

Post by jasode »

true_religion wrote: post #9

If you rely on a lot of service companies like Uber & Instacart, appified dry-cleaning and maid service then it may actually be cheaper for you to hire someone for 8 hours a day to do your chores. This guy ended up paying $70 for a single grocery trip, do that and take Uber twice a day, and you're verging on "I can hire personal staff" territory.

> it may actually be cheaper for you to hire someone for 8 hours a day to do your chores.

Whatever math calculation one does, it has to factor in the hassle of becoming an "employer" which is a complication that most consumers don't want. E.g. If you pay someone more than $36 a week[1], a law-abiding tax payer would have to file a W2 to the IRS reporting the income. (Yes yes, most parents don't actually file W2 for their neighborhood babysitter but that's technically "tax evasion".)

You can legally circumvent the W2/employer relationship by using an agency and that staffing firm becomes the "employer of record." However, there's no such thing as a free lunch and that agency has its own 50% to 100% markup on the personal assistant's hourly rate. This gets right back into Instacart pricing territory or even exceeds it.

Without any survey data, I'm guessing that there's a huge market of customers willing to pay Instacart profit margins instead of becoming an "a W2 employer" or paying 3rd-party agency.

[1] http://www.usatoday.com/story/money/personalfinance/2013/04/...

Re: What is Instacart really charging? the breakdown

#59

Post by maxerickson »

curiousgal wrote: post #4

$150 for $80 worth of groceries, wow.

Another way to look at it is that it is $150 of groceries.

I'm sure not going to be using a service with such a high mark up, but I can see how someone with a high income might be willing to spend extra for the convenience.

Re: What is Instacart really charging? the breakdown

#60

Post by IAmGraydon »

notyourwork wrote: post #45
icebraining wrote: post #8

Earlier quoted context omitted.

While some people do get outraged by high margins, the main issue I see here is that they do pretend to publish their markup, but it's widely out of whack with reality. 63% may technically fit into "15%+", but it's highly misleading. They should just remove it.

Exactly. It is like saying this item only cost a few dollars. When in reality it is a $100,000. I didn't lie but it is surely misleading.

Wow.
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