Has Instacart Dropped their Prices?

Instacart recently announced that they were dropping their prices.  Naturally, I was instantly on the task of checking what exactly dropped.  I’ve been working on a consulting gig, so I’ve stepped back from the grocery delivery, but I am actively engaged in the discussion.  I believe that the service provides benefits far beyond the most obvious and those individuals who are housebound appreciate the assistance. I also think that once a person who detests shopping has their groceries delivered that they’ll never go back to bothering.

This article won’t go into the details of Instacart Shopper pay because there are both good and bad to lowering prices – which both Instacart and Shipt have to do before Walmart decides to invest in delivery fully.

If you aren’t an Instacart user yet then you don’t know that just like Shipt, there is an annual fee to join.  In the beginning, both services are going to allow you a few free deliveries, but this comes down to how much you are paying per item versus $3-$6 USD per delivery and the %0-15% tip you may leave.  In the big scheme of things, if you spend $1000-$5000 USD on groceries, a $50-$150 annual membership pales in comparison.  You really should consider the price per item.  Remember back to my original post where I demonstrated one typical grocery list based on over 270 shop and deliveries I completed this past year.  I showed the store price, and then Instacart and Shipt prices.  The markup on items was always 10-20%.  If you spend USD 4000 per year on groceries, the Instacart (visible) profit is about USD 600 and then add tips, 15%.  So you see when Walmart jumps in the fray the entire game changes.  If two hundred people order groceries from Instacart that are marked up at the typical rate, are annual members, and pay their shopper/delivery people 15%?  You can see how smoothly Instacart is going to infiltrate every corner of the globe.  That is until Walmart plays their card.  Let’s say you order groceries every two weeks and the bill is about USD 150.  If you get the annual membership at USD 99 (or sometimes use the express fee for one-hour delivery), then that’s about $3-$4 per delivery.   We’ll go with $3 because both Instacart and Shipt are offering end of year type sales.

So you can see the annual fee is nothing compared to the markup and tips.  And you know I always suggest a good tip!  If you don’t tip, obviously there is a good saving.  Unfortunately, those gig economy contractors rely on tips to break even.  Not only that, but Instacart shoppers can now see what they are going to make on a gig, so if you don’t at least drop 5% on top they can easily refuse the batch.

When Instacart announced they were lowering their prices naturally some shoppers when batsh*t crazy.  Although Instacart has promised this doesn’t affect the shopper pay they are insisting it has.  The timing couldn’t have been any worse:  Instacart sends notifications to their contractors about transparency in pay per batch, and then a few days later announces new pricing for customers.  Sadly, many shoppers now believe they are making less and are less concerned with providing five-star service instead using social media to voice their concerns.  My best advice is to focus on going beyond customer expectations, narrow your zones on those where you get the most tips, and remember that the app only shows what tip is in the app.  I’ve been adding %5 to the app, and when my groceries are delivered then add %10 cash if the service conditions were met.  Another way to add to the contractor pay is always marked five stars, so they get an extra $3.

Back to my list – is Instacart (IC) still marking up the same way even though they have lowered fees (which we’ve already shown aren’t the largest costs)?  Yep.  Here’s the November check:

So you can see that while the price of groceries fluctuates; (pork bellies anyone?) Instacart still makes a $12 profit + whatever (annual or hour) fee you paid.  If you are a shopper, you can see that squeezing your sample .40 cents per item and mile(s) pay can get equally pinched.  As a shopper, you need to consider these numbers and understand that your profit is related to the customer service and speed of completing many shopping and deliveries as possible in one shift.

Of course, let’s not understate the value of the analytical information (big data) that Instacart is providing stores like Costco, Publix, Aldi, etc.  We also don’t know what kind of discounts Instacart receives.  I’d go so far as to say data is more profitable than the $12 profit I just shared with a gig economy worker.  Now I’ve got a very detailed vision into the customer’s desires and where they live.  I know exactly what to prepare for in a few weeks because they’ve been ordering baby food, so I’m going to serve advertising to entice them into a baby food brand that I’m getting advertising kickbacks and deep discounts on.  <——this is the meat of the thing!  Another middleman facilitation of service and the service is not groceries–it’s a connection to the place you usually buy groceries.

If you want to take advantage of the premium service or want to give it as a gift this holiday, it can be a life-saver for shut-ins, the house-bound, infirmed, aged, and limited mobility.  Use Instacart when needed, and for those who need the service, the price is worth it!