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Instacart is playing games with its workers’ pay

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Re: Instacart is playing games with its workers’ pay

#221

Post by mansigandhi »

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.

I'm with you on that. The whole tipping business is out of control in the US! I only tip outside the US if I feel like incredible service has been provided, else expect my fees to cover the cost of the service.

Re: Instacart is playing games with its workers’ pay

#222

Post by IanCal »

chii wrote: post #220
IanCal wrote: post #162

Earlier quoted context omitted.

For value, yes. If not, perhaps you don't really value your leisure time at $1000/hr.

your value isn't set by your own standards - your value is what someone else will pay you for your time! I.e., the opportunity cost of leisure is the value of leisure.

That's true for the value someone else gets from my time, this is about how much value I get from my time.

Re: Instacart is playing games with its workers’ pay

#223

Post by gearhart »

tomcam wrote: post #147
grandalf wrote: post #29

Earlier quoted context omitted.

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…

> More likely, most Instacart customers earn much more than $10/hour. Why do you think that?

The average US hourly wage is twice that, seems like a fair statement.

http://www.tradingeconomics.com/united-states/wages

Re: Instacart is playing games with its workers’ pay

#225

Post by beachy »

grandalf wrote: post #189
WhitneyLand wrote: post #107

Earlier quoted context omitted.

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 ta…

I agree that companies like Uber and Instacart should be doing a lot more to foster employee loyalty. Who knows, maybe the future of these semi-infrastructure businesses is actually as co-ops, with workers earning a stake that can be worth more in the long term. I'd like to see one of these companies create a special class of stock and award one unit for every dollar of business each employee participates in.

I'd guess that none of them want that to happen, and it would only be a new entrant who would ever be so disruptive. I hope you're right though, that could be a truly superior business model. You can't underestimate the power of a radically engaged workforce.

Re: Instacart is playing games with its workers’ pay

#226

Post by coldtea »

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…

>People who live in the suburbs without cars.

All 10 of them?

Re: Instacart is playing games with its workers’ pay

#227

Post by edent »

timcederman wrote: post #205
ben174 wrote: post #154

Earlier quoted context omitted.

The way I read this is "the service fee is a way to give us more money, so we have more money to pay to everyone who works for us". So then why not just raise your prices and pay your employees more? If the service fee was split across everyone who participated in your individual transaction, I could understand. Otherwise this is just a way of them saying "a service fee is a way to tip the company, so we can maybe pa…

Because their basic fee is just the delivery fee. They don't set the prices - the supermarkets do. The service fee is a consistent way for them to generate enough revenue to pay their shoppers and drivers, compared to the variability of user-provided tips before.

That doesn't make much sense to me. There's no difference in labour cost for buying a single roll of toilet paper or a bottle of Champagne.

Re: Instacart is playing games with its workers’ pay

#228

Post by mattmanser »

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.…

Well, you can look over the pond to find out why.

In the UK, which is much less car focused, we've had a successful instacart equivalent, Ocado, for a decade. They're presently turning over about £1 billion per year ($1.25 billion) [1]. Market cap on today's market is £1.5 billion ($1.85 billion)[2].

Now all the major supermarkets home deliver and have for 5+ years. There's been a massive shift in the big chains' store building, they now build small "express" stores in town centres and near offices allowing people to pick up minor things without having to do a full shop. As far as I know, no-one's building large stores at the moment.

And the American market is potentially worth more a lot more than the UK one.

[1] http://www.bbc.co.uk/news/business-31108569 [2] https://uk.finance.yahoo.com/quote/OCDO.L?ltr=1

EDIT: Other interesting note, in the UK, the markup for delivery is free or a fairly nominal charge (£5/$6), but only if you pick a slot in a few days. If you want it sooner, or in a prime-time slot, you have to pay more for those delivery slots. The supermarkets are building the costs into the prices.

Also, here gas costs a lot more and it's almost cheaper to pay £5 than it is to drive to the supermarket.

EDIT2: I should add the small stores have a regulatory reason they're small, UK law means only stores under a particular size can be open more than 7 hours on Sundays.

Re: Instacart is playing games with its workers’ pay

#229

Post by qqg3 »

mattmanser wrote: post #228
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.…

Well, you can look over the pond to find out why. In the UK, which is much less car focused, we've had a successful instacart equivalent, Ocado, for a decade. They're presently turning over about £1 billion per year ($1.25 billion) [1]. Market cap on today's market is £1.5 billion ($1.85 billion)[2]. Now all the major supermarkets home deliver and have for 5+ years. There's been a massive shift in the big chains' sto…

What you might not know? Ocado has built the backend for a lot of those major supermarkets offering online shopping. Another revenue stream for them as they are shopping the technology abroad too

Re: Instacart is playing games with its workers’ pay

#230

Post by grandalf »

beachy wrote: post #225
grandalf wrote: post #189

Earlier quoted context omitted.

I agree that companies like Uber and Instacart should be doing a lot more to foster employee loyalty. Who knows, maybe the future of these semi-infrastructure businesses is actually as co-ops, with workers earning a stake that can be worth more in the long term. I'd like to see one of these companies create a special class of stock and award one unit for every dollar of business each employee participates in.

I'd guess that none of them want that to happen, and it would only be a new entrant who would ever be so disruptive. I hope you're right though, that could be a truly superior business model. You can't underestimate the power of a radically engaged workforce.

True, I think Uber and Lyft are very unlikely to do it. As a consequence, drivers are extremely disloyal and many have two phones, one running each app and they pick on a ride by ride basis which app to use.

I think it's getting easier and easier for a new entrant to disrupt the market by offering a platform that better incentivizes driver loyalty.

It's not necessary to force drivers to switch, only to put the new app on one of the phones they are already using.

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