The Biggest Grocery Delivery Myth
Ever wonder if grocery delivery is worth it? Curious about how Instacart prices grocery delivery? Are you intrigued by never having to go grocery shopping again? Look no further, I’m going to give you some insight into the grocery delivery market, and I’m going to tell you what the biggest myth about grocery delivery is. I’m also going to show you how to save alot of money when it comes to grocery delivery.
Before we get to the myth and savings, let me remind you that while companies like Instacart, Lyft, Uber, Postmates, DoorDash, etc., tell you tips are optional, that they are an integral part of the income derived from those services. If you don’t tip, you really shouldn’t use the services. I know that seems rather matter-of-fact, but why would you pay for premium services and not pay a …well, a premium?
The Grocery Delivery Myth
The most significant grocery delivery myth is that the fresh fruits, vegetables, and melons you order won’t be as good as you would have picked. This has been voiced to me many times both in the grocery store and some neighboring condo owners who eye you suspiciously when a delivery person arrives. You think the strawberries might look a little long in the tooth. Or the apples bruised and bananas brown with decay. You will be sure that the avocados could be reused as a doorstop or that the grapes were soft enough for fermentation.
You are wrong. I would even go so far as to tell you that the fresh fruits, vegetables, and melons you ordered maybe even better. They should be–that’s why you tip.
Why? Because of grocery shoppers, pickers, and or packers, are intent on improving their own feedback. How do I know this? I deliver your groceries. As the speed of picking is tantamount to achieving the most efficient income, getting five-star reviews are almost as good as a tip. I say almost. Customers dissatisfied with their groceries become part of a shoppers history when they leave negative feedback or say an item was damaged or missing. Did you know you can insist on a refund for any item delivered? You can if the shopper and delivery person was one in the same! Instacart calls it a full-service shopper. In some stores, they have In-store shoppers and contract delivery personnel takes care of the back end (delivery) of the service. When that happens you use your account to report damaged or missing items. How do you know which to use? If your groceries arrive in bags tagged with your name and bag counts then more than likely the delivery person did not shop your groceries so use the application to report damaged or missing groceries.
Over the past few months, I’ve delivered over $19,000 worth of food to 260+ customers in and around the Atlanta Georgia region and driven over 4000 miles. Mostly Marietta and north Atlanta. Mainly from Publix and Kroger with a smattering of Aldi, Target, Whole Foods, and Costco sprinkled in for fun. Oh, and once from Petco. The $19k I mention represents the debit purchase each time I shop for a customer because you don’t get the receipt, I do–I’ll get to that in a moment. I collect data from the receipts and other information to help me understand how to maximize my time.
I know that an average 20 hours a week might get a contractor about 20 orders (full service) and that the average contractor shopper cost (this would be shopping and delivery) for my zones is probably about $16.73 an hour. The Atlanta region has about 19 (Instacart) zones as of this writing. Marietta (1 zone out of 19) has about 130` shoppers. I can’t speak for other contractors because each region and zone adjusts for various attributes outside the scope of this post (although I am insanely curious). There are times, 59 to be exact when I get multi-orders. That means I’m shopping for 2-3 customers in one batch, in that one hour. That’s the most efficient way of handling grocery delivery and Instacart does try to commingle orders in that way. Shipt, on the other hand, allows the contractor to choose delivery windows and if they can complete 2-3 combo shops then they schedule them.
If there are multi-orders obviously that also is the most efficient way to pay for contract shoppers. (Cost means to Instacart; what the contractor makes basically comes down to speed, commission, tips and an odd bonus here and there.) I know that my vehicle depreciation cost is $0.06 per hour, cellular data $0.04 per hour, and I drive an average of 10 miles per order (to store, to residence). In my particular vehicle, I spend on average $1.60 (adjusted for gas rate fluctuations) per hour on gasoline while working and maintenance costs. My average order is $78, and I know that there are about 120 other full-service shoppers who work the same zone. Basic math says that a very rough calculation for the Marietta zone alone is about $27k in profit per month for Instacart. (That number was lowered on April 24 when Instacart changed its policy concerning service charges.) That’s profit from markup, delivery, service fee, etc., but doesn’t include marketing kickbacks, analytics sales, and the other digital age products that are less tangible and few know about. That’s after contract shopper/delivery has been paid.
Just so you know, my professional experience is in analysis, and although I like using the shopper application in all its grocery scanning glory, it is only a mechanism to gain a delivery fee, an item commision fee, and (prayers up) a healthy tip. I left my last corporate job because I needed to find purpose and value and boy did I shake things up! I‘ve also found it very challenging with a long resume to find an exciting career here in Hotlanta.
Instacart is one of the things that helps me make ends meet while navigating this new life in Atlanta. It allows me autonomy and activity while developing purpose. While Instacart provides me with mechanisms to measure performance, I collect every single point of data on my own so that I can back up my statements. You may believe my data not empirical, but it has already helped me decrease my gasoline costs by almost $100 in April. The comments that follow are based on the collection of aforementioned data. The method includes using end-of-day miles, grocery receipts, locations, notes about the delivery, the Instacart mobile application, and general observation. I don’t speak for any grocery delivery service and other contractors results could be wildly different.
There is only one point of data I do not collect and that is the seconds per item and checkout speed time. There are too many variables in grocery shopping that impact those numbers, too many other shoppers who have found ways around it, and I can tell by my number of orders per hour/day that my efficiency is increasing. That said, my average is 91 seconds per item. That’s due to shopping many different store layouts, out of stock causing constant communication with the customer, and deli orders. A fast shop is 43 seconds (I just learned today that Kroger’s Clicklist employees average 40 but their system is more advanced) and a slow shop (because I won’t give up until the Publix employee has combed the back stockroom for applesauce pouches) is over 100. The faster I shop and deliver, the more money I make. I have to weigh asking a Publix employee to help me look or just mark it out of stock and get it delivered as fast as humanly possible with the benefit of a hopeful tip. As long as the trend of 33% customers not adding a tip then marking out of stock and moving on makes the most financial sense. (Tip percentage updated end of April results.)
Especially when the notes for delivery say, “Just leave groceries on the porch.”.
Before I tell you the most important fact, let me say that grocery delivery to the elderly, infirmed, disabled, and hungover, is a crucial benefit and purpose of being a personal shopper. I like knowing that I may have helped someone get fresh groceries where otherwise they are having to order out and pay the price. I’ve delivered groceries to senior living centers and apartments specifically designed for the disabled. I’ve delivered groceries from a mother to a daughter who was having a rough week and many children of aging parents.
While there is a sense of purpose in a smattering of services, for the most part, it’s down to this one fact you need to know. So for the rest of this post know that I am entirely excluding those individuals (although I don’t think they should have to pay delivery fees or get deep discounts). Okay, maybe the hungover were asking for it. That, business orders, and those deserving of food delivery are outside the scope of this post. Also, if you are an Instacart contractor, your earnings will be wildly different from my post here because you work different regions or complete more/less orders than I do. (But I would love to hear what you have to say in the comments!)
Here’s one fact I need you to know: While delivery services already let you know there is a small surcharge on groceries it’s really between 10-25% on most items. Instacart and Shipt pay their contract full-service shoppers and deliverers differently. Instacart pays a delivery fee and a per unique item fee if there was a full-service shopper. Shipt pays a whole amount advertised when contractors attempt to claim orders. Both services have some sort of bonus program to few orders. Tips, if you get them, are on top of each. Kroger, as of this writing, charges a small service fee for pickup and then another fee for (Shipt) delivery. I learned today how wildly popular Kroger’s Clicklist and pickup are and remember you pay advertised prices with no markups. You also still get to use your loyalty member card at Kroger and cash in on those great gasoline discounts. If you get full service (via Shipt), the Shipt shopper uses their own loyalty card.
I know how convenient delivery is. I understand you are busy, your kids have events, Atlanta traffic is a nightmare, you are working 50-60 hours a week, and maybe there just isn’t enough time to shop. For food. Or rather, you just like the convenience because you work night-shifts and you can’t get to the grocery store. Or, you have sick children.
I fully recognize that you, who know the costs, are willing to “pay a little more” for the convenience. What I find incredibly odd, is that those who will “pay a little more” for the convenience do not attribute that same thinking to tipping.
Out of 260+ shops I’ve completed and delivered, 33% of my customers do not tip. Until this April 21, 2018, Instacart didn’t suggest tipping. I show the before and after screens in another blog post. While it appears Shipt marks up groceries higher, Instacart adds service fees at checkout. I don’t know which I like better but it’s less visible with Shipt. Unfortunately, many customers feel as if they are already paying enough for delivery because of subscription fees. Those fees and markups should cover shopping and delivery. I cover tipping and a living wage in another blog post!
Let’s Talk About Those Receipts
If you noticed the blog image, it’s a stack of receipts that I have collected over the last few months. I have one for every full-service shop I completed on behalf of Instacart and Shipt. So, while it may appear those receipts are yours, they are not. Those are receipts for groceries I purchased on behalf of Instacart or Shipt for you, with their company debit card, and delivered to you. It’s an important point: groceries purchased under the direction of Instacart or Shipt and delivered to you. You used the Instacart website or mobile application to ask Instacart or Shipt to go get them and then, as a contractor, I used the Instacart shopper’s app to find customers who wanted them. We both pay Instacart to match us up. The interesting thing is that Instacart’s electronic agreement you signed when initiating service tells you that they aren’t buying groceries and Shipt’s agreement is in opposition to that. You should carefully read those before joining.
It’s similar to Uber and Lyft, building an empire from contractors who provide the services while taking a cut.
What happens between you and Instacart is the part I never see. But I’m bored, I live in a new city, I love data analysis, and I want to help you. In fact, I know I can save you $700 per year if you continue to shop at Publix or Kroger!
Let’s Develop a Hypothesis!
So let’s build a basic scenario: We’ll be a small family and spend $86.40 every week on food at Publix for (26) items (I’ll get to why that amount in a moment). Our budget is about $90 because we’re thrifty like that. That’s our annual scenario food spend of $4,492.80 for your groceries.
Along comes Tim, your neighbor, and espouses the greatness of grocery delivery and how Connie (that’s me!) delivered all his groceries, air cushioned his produce, kept the ice cream frozen, and even got that Chipotle Chicken sliced extra thin that Publix Deli is famous for! You decide to jump on the Instacart grocery delivery bandwagon!
You run to the computer, create an account and use the first free delivery to test the system. Trust me, you will like it. It not only saves you Atlanta (or any city) traffic, but now you might even be able to plan your meals! Your groceries could even be delivered while you are at work! You install the app on your phone or use the Instacart website and wait in suspense. Soon you are getting notifications that your shopper had to substitute Vigo brand breadcrumbs for Progresso. You approve it, it’s only $.12 more.
Item after item, you can see what the shopper has completed or if they need additional info they text you, “Hi Jane, this is Connie, your Instacart contract shopper. It looks like the strawberries were used in a tennis tournament and I don’t recommend – shall I grab some fresh raspberries? They look awesome!“. You consider the premise and then send back, “Yes! Thank you!”. One time I had Customer Josh who let me know he was in New York and was buying groceries for his mother in Marietta, I think my message to him said, “Oh Josh!!! You are buying groceries for Mom!???“. He replied, “Yea, it’s getting more difficult for her to get around.” See? Purpose.
Don’t worry. They (shoppers/deliverers) don’t know your phone number and only get first names. They do, however, know your address otherwise they can’t use whatever mapping system they have to find you. Just so we’re clear here, I use Google to track my every step. While I don’t want Verizon or Facebook listening to my conversations, I do want a digital footprint of my locations. All of them. Your house included. Instacart also tracks every footstep I make.
Back to our first Instacart order! Finally, you see that the shopper is checking out and no further changes can be made. Rats, you could have added that half a gallon of mint chocolate chip ice cream. Next week for sure.
Your shopper is on their way, and you eagerly await the arrival of your food. (This is a complete dramatization; I’ve only had 13 out of 260 customers waiting in anticipation.) The (26) items you purchased from Instacart that the contract shopper acquired at Publix are now safely stored in your kitchen and all is well with the world because you saved about 45 minutes of shopping and 15 total minutes of driving. Have you the necessary data points to understand what that hour cost you or how it’s now costing Atlanta (or any given city)?
Since you are now procuring your groceries through Instacart (or Shipt), you check the inventory against the list and are satisfied that grocery delivery is for you and from now on you will spend that hour wisely. I think that’s a grand strategy! I’ve had my own groceries delivered so I know how truly convenient it is.
Let’s Look at the Grocery Delivery Details
Oh, wait, not so fast. How much was the grocery total now? From our scenario I chose (26) items that I have actually shopped for (in a Marietta Georgia Publix) in the last 170 orders. I took the price of the item as purchased directly from Publix and recorded it, then, as an Instacart customer, added to my shopping list via the website. I recorded the date and tried to avoid gimmicky sales items this week. Refer back to our original cost of $86.40 if you went to Publix yourself. That grocery cost is now $98.67 because Instacart (in my regions) marks each item up to an average of 12%. They tell you prices are different from the store on the website when you join so this is not a complete surprise to you. At least I hope not. I gather that while you know prices are different you haven’t thought about the impact, and that is why you are still reading.
Sixteen items seem to be the average number that my customers shop for with an average bill of $78.26. The main source of income for an Instacart shopper in my region is the item commisions and tips. The delivery fee paid to contractors from Instacart pales in comparison. As the number of items increases, so do the average hourly income. If a shopper makes $.40 cents per unique item and there are (26) unique items then that is a $10.40 commission (on that day–those numbers change daily). If you order (10) Publix fat-free milk, the item commission is $.40 cents. When you find that Instacart already marks up groceries an average of 12%, then you understand how they pay item commisions. Riddle me this: If Instacart upcharges you 12% on (10 each) fat-free milk but only pays the shopper a total commision of $.40 cents, then that commision stays with Instacart along with part of the delivery charge.
Okay, so that’s not too bad right. It’s only $12.27 markup and totally worth the convenience and time saved! I’m sorry, but we still have to add the delivery fee, today is $5.99, and we need to add the Instacart mandatory service fee of 5% or $5.00. There are two kinds of ways to join Instacart and the annual $149 subscription method is another one but we’ll stick with the $5.99 each time because as you read this it’s leaning towards anti-subscription. An annual $149 subscription would mean no limits on delivery. You could have fresh produce delivered twice a week with no visible additional costs.
Prior to this week you could waive the service fee AND be really obnoxious and refuse to tip your shopper. For this scenario, we are adding 10% no matter where it goes because Instacart and Shipt can change things overnight. I’ll remind you that almost 87 out of my 265 deliveries have not tipped so they have saved already. I’ve shopped a full hour, delivered fresh food and groceries, to the tune of less than $10. You might say I’m a horrible shopper and that’s why you miss 33%. I can tell you, in a word, that after 20+ years sitting behind a computer and now driving purpose even in grocery delivery, that I’m an awesome shopper.
I won’t keep beating the tipping point down, but I will about your annual savings. Remember I said I could save you $700 per year? Our groceries, (the grocery scenario) Instacart delivery fee and the service charge or tip are now at $115.06. (That is what you would pay Instacart in Marietta Georgia for your typical delivery of our sample items). I would like to think you would add more for the investment into the relationship with food delivery personnel but I’d be beating that point within an inch of its life. I don’t want to muddy the waters with demonstrating how a full-time Instacart contract shopper cannot live (they can exist) on that income with the discussion of tips- I’ll save that for another post.
Let’s get to that savings!
Simple: Remember I budgeted $86.40 per week for groceries? The annual budget for food went from $4,492.80 to $5,983.07. (Stares at you waiting in suspense.)
So why did I say I could save you $700 a year and not the $1,490.27 that we demonstrated above?
Because you would not have believed me. In fact, you doubt it now. You are probably thinking, “Well, I don’t order every week…I use it once per month.” This is why I only promise a savings of $700 because eventually, the fees, the service charges, the subscriptions, are all going to wear you out and Walmart is going to wait until that happens. Then, they will call Uber, Postmates, Doordash, and all the other delivery type services to complete the backend of the delivery (they are still working on how they will fulfill the backend of delivery). They aren’t going to let any service upcharge their groceries, and they aren’t going to make contractors meddle in their savings (smiling). Until then, Instacart and Shipt will make a killing in the hopes they are acquired with corporate billions before we’re all singsonging the virtue of autonomous delivery.
Let’s review: Your weekly budget for groceries: $86.40 is now $115.06 so that you can reap the rewards of 52 extra hours a year to do better things. You can paste this into excel: =SUM((115.06*52)-(86.4*52))
If an insurance agent called you tomorrow and said she could cut your home and auto insurance in half this year what would you do? While I am not going to cut your grocery bill in half I’m going to add this:
If you forgo the grocery delivery services and use the new pickup services from both Kroger and Walmart, you could save even more. I took those same (26) items from Publix, checked Kroger’s and Walmart’s pricing and found even more savings. With Kroger, I only found $139.41, but with Walmart, I found a $533.10 savings. But who needs $500 bucks? As I was comparing prices I found Walmart didn’t always have the lowest price but for the most part, they did. I myself, don’t even shop in Walmart, and have no plans to do that, but being able to add what I need to the online cart and just pick it up without ever leaving my car? It’s worth looking into!
K-cups. I compared one K-cup coffee price. Publix, Instacart Publix, Kroger, and Walmart.
|Starbucks Kcup PER POD||$0.97||$1.10||$0.90||$0.75|
If that doesn’t get you riled up, I don’t know what will.
I know what you are saying and thinking. Walmart does not have all the brands I want. Like Diana’s Banana Chocolate Ice Cream desserts. How about organic? Publix has Greenwise and Kroger has Simple Truth. Walmart is adding organic produce and goods more each day, you really need to check their online ordering system. But customer service at Publix is awesome! It truly is, and I’ve been in Publix 205 times since February 11, 2018. I’ve seen Publix in the morning, afternoon, and evening. Also used the deli counter many times and I’ve even had lunch/dinner there. Some of the times asked employees to help me and used the Publix app to find things, and I’ve also put deli orders in online. I’ve also tried a few of the Greenwise products and really like them. Quite frankly, knowing how driven they are to customer service I’m not surprised they let Instacart upcharge their prices. It is, after all, about convenience to the customer.
I would, however, worry that the customer service touch is now lost because they will see customers less and less. Honestly, if I could get delivery free, I would never shop for groceries another day and I’m not the only person who feels that way. While wafting in the perfumery of Whole Foods is an experience in itself, I cannot afford their products even though media would have you believe the Amazon purchase drove their prices down. I compared just one thing this week between Publix and Wholefoods. It was the Seventh Generation disinfectant spray. I purchased (2) bottles on behalf of an Instacart customer. They were $6.49 and Instacart doesn’t markup Whole Foods but you can be sure I checked those products in Publix (because I didn’t know they carried that brand) and they were $4.99 a bottle in the store and $6.09 on the Instacart app. You can thank me later. Or order some groceries and tip me in cash.
Another fact: You cannot choose which Publix your groceries are coming from. Instacart uses slick inventory integration, shopping algorithms, and designated stores from which to deliver or provide In-Store Shoppers. As an example, in the Smyrna Georgia Jonquil Plaza, you will rarely, if ever, find Instacart shoppers. They use the South Cobb or Cumberland Parkway to get your groceries. Even if you live 3 minutes from the Jonquil Plaza. So you see this shakes up even location-based marketing and store-to-store competition! Shipt uses the closest store to the customer in my experience (and I love the Jonquil Plaza Publix).
Ultimately grocery delivery will become the norm. But you can save money on the brands you want by using online resources to compare and contrast. If companies like Amazon and Walmart are going to warehouse foods for delivery then use it to your advantage and maximize your savings. Or, at the very least, admit you are paying premium prices for your groceries and tip the service people who are delivering them!
I’ll end with the (26) shopping list I used as an example. Remember that you may never even buy one single thing on this list, but it is representative of the savings you could achieve by ordering online and picking them up yourself!
|Date||Item||Publix In Store||Instacart Publix||Shipt Publix||Kroger In Store||Shipt Kroger||WalMart|
|4/11/2018||Kellogg Froot Loops||$3.50||$3.89||$4.29||$2.99||$3.59||$2.58|
|4/11/2018||Entemans Lil Bites Choco Chip Muffins||$4.69||$5.19||$5.59||$4.69||$5.59||$2.98|
|4/11/2018||Tomato on the vine||$1.69||$1.89||not found||$1.49||not found||$1.78|
|4/11/2018||French Bread (Bakery)||$2.49||$2.75||$2.99||$1.99||$2.39||$1.00|
|4/11/2018||Arnold Health Nut Bread||$3.99||$4.75||$5.09||$3.19||$3.69||$2.98|
|4/11/2018||Granny Smith Apples||$1.99||$2.69||$2.19||$1.99||not found||$1.77|
|4/11/2018||Catfood Tin FF||$0.59||$0.65||$0.69||$0.60||$0.79||$0.54|
|4/11/2018||Oscar Meyer Center Cut Bacon||$7.26||$8.19||$9.99||$6.49||$7.69||$5.48|
|4/11/2018||Egglands Best doz eggs||$2.75||$3.05||$3.29||$2.79||$2.99||$2.67|
|4/11/2018||Store Brand Milk FF gal||$2.99||$3.35||$4.09||$2.79||$2.59||$2.68|
|4/11/2018||All 2X Free & Clear||$12.99||$14.39||$11.79||$13.59||$15.69||$12.87|
|4/12/2018||Marie C Chkn Pot Pie||$2.36||$2.65||$2.89||$2.39||$2.59||$2.08|
|4/12/2018||Goya canned coco milk||$2.19||$2.45||$2.19||$1.99||$2.39||$1.78|
|4/12/2018||Tidy Cats Litter 35 lbs||$13.45||$14.99||$19.49||$13.59||$16.09||$13.74|
|4/12/2018||Starbucks Kcup PER POD||$0.97||$1.10||$1.18||$0.90||$1.07||$0.75|
|4/12/2018||Goya Red Kidney Beans||$1.39||$1.55||not found||$1.19||$1.49||$0.84|
|4/12/2018||Green Giant Riced Veggies||$2.99||$3.35||not found||$3.29||$3.89||$2.48|
|4/12/2018||Sunbeam Giant Bread||$3.15||$3.49||$2.99||$3.19||not found||$2.98|
|4/12/2018||Prego Traditional Sauce||$2.17||$2.39||$2.79||$2.19||$2.59||$1.96|
|4/12/2018||Little Debbie Zebra Cakes||$1.99||$2.19||$2.39||$1.99||$2.39||$1.68|