retail news in context, analysis with attitude

The Chicago Tribune this morning reports that as a result of a changed payment structure to its independent contract “shoppers,” delivery service Instacart is facing boycotts from some of those contractors and calls for some sort of union organization because of what some call exploitive and unfair treatment.

Here’s how the Tribune frames the issues:

“Instacart, which boasts a community of 70,000 shoppers across the U.S. and Canada, has attracted $1.6 billion in funding since its founding in 2012 as investors anticipate a surge in consumers ordering their groceries online. Its CEO recently said an initial public offering is ‘on the horizon.’

“But the San Francisco-based company for years has angered some shoppers who say numerous tweaks to the payment model have resulted in pay cuts, prompting them to boycott and attempt to organize the loose network of independent contractors.

“Instacart has acknowledged the frustrations and over the last six months has ‘deepened our commitment to improving the experience’ of shoppers by ‘carefully and deliberately testing every new feature with shopper focus groups in cities of all sizes to gather their feedback along the way,’ the company said in a statement.

“But the company’s shoppers are pushing back against a recent change to the payment model … Since the new system rolled out in the Chicago market Nov. 5, some local shoppers have been boycotting low-paying orders, in hopes that if enough workers decline to take them the company will be forced to pay more. Leaders of the resistance are preparing form letters for shoppers to send to their state attorneys general and members of Congress asking them to take a deeper look at the potential exploitation of independent contractors, who lack labor protections like minimum wage thresholds and unionization rights.”

Instacart says there has been “no meaningful impact” on its service.

You can read the details here.
KC's View:
It is a fascinating story, and certainly points to changes in labor law that may be made necessary by the evolving “gig economy.” Transportation-centric services like Instacart, Uber and Lyft are showing a lot of growth, and, as the Tribune writes, “The labor strife that has accompanied the rise of online gig platforms has prompted some scholars to advocate for a new category of ‘independent worker’ that would get some protections currently reserved for traditional employees, such as the right to unionize and collectively bargain, though such proposals have not moved forward formally.”

I’m not sure that we’ll see any labor law changes in the near-term, but maybe down the road.

I do think that retailers using the Instacart platform - often because it is seen as an easy solution to the e-commerce challenge that doesn’t require the same emotional and financial commitment of other options - ought to be concerned about the fact that workers see Instacart as abusive … because those attitudes could find their way into how their customers are serviced. If things go bad because of a disgruntled worker, nobody’s going to blame Instacart - they’re going to blame the retailer that enabled the system.

Keep in mind - this is all about Instacart getting a big number in an IPO. This is not about providing superior service to a retailer’s customers. And retailers hoping that using Instacart as an e-commerce solution would allow them to be a little bit pregnant may find in the end that they - and their customers - end up being screwed.