Two weeks ago, the Instacart Town Hall was resurrected and Instacart shoppers were able to join several members of the corporate staff for a video conference to cover the new changes to Tips and Fees. I was able to join the meeting live while out shopping. I’ve attend numerous Instacart Town Halls, but I felt this past meeting covered positive info and progressive change for the Instacart shopper. Last month, Instacart changed the 0% tip default to 5% and the notorious service fee was changed from the 10% to a fixed 5%. There were over 500 questions submitted by shoppers and these were chosen:
- What was the impact of the changes on tips? Is it good or bad for my earnings?
- Why does Instacart charge a service fee?
- Why did Instacart decide on a 5% default tip as opposed to 10% or another value?
- Some customers may think that the 5% service charge is still a tip. Is there a way you could make it clearer in the app that the service charge is not a tip for the shopper?
Earnings have increased since the change
Since the new tip default was implemented, Instacart claims that there has been a 2x increase in orders with tips. There are fewer zero dollar tips, and thus resulting in more consistent tip earnings for shoppers. Customers tend to go with a default, and since the default has been removed to from 0% to 5% Instacart shoppers are finding more consistency with tipped orders. There has definitely been a noticeable change for me as I’m finding nearly all my orders are now tipped, especially “delivery only” orders. I used to dread the DO orders because of low pay and high risk of not earning a tip, but now I gladly accept the batch especially when it’s a triple order!
Why does Instacart Charge a Service Fee?
The historical “Service Fee” has been a debate and epicenter of an Instacart shopper’s world for over two years. Below are some of the post that talk about each change in the past two years:
- Instacart Steal Tips, Implements Mandatory Service Fee
- Instacart Cuts Shopper Pay
- How Instacart Profits from Service Fees
For the first time, this issue has been addressed and we are somewhat being met in the middle with a 5% mandatory fee imposed, and a greater opportunity to earn a tip. I no longer have to explain the “Service Charge” vs “Tip” to customers or make copies and hand out the famous “Waive and Save” flyers explaining the difference. The question of “Service Fee” was addressed at this meeting and here was Intacart’s response: “Instacart covers the cost of completing every order by collecting money primarily from retail partners and customers. For customers, in addition to a standardized fee for delivery, we charge a percentage-based service fee to account for the varied size of each order; we think it’s fair for a customer to pay a higher service fee for a large order(and less for a smaller one.) The service fee supports our operating costs, including Shopper pay and Community Support call centers.”
In my opinion the Service Fee for a larger order should be going into the pockets of Instacart Shoppers doing the work instead of contributing to the record breaking profits of Instacart.
Why not default to a higher tip amount?
A question that’s been on all our minds is, “since the tip is now defaulted, why not default to a 10% or higher?” Instacart claims they want the shopper to make as much as possible, but they also need to make sure the service isn’t too expensive for customers. Data shows that when you factor in fee and tips, customers don’t order as frequently. Instacart felt that by splitting the original 10% “service fee” between a 5% service fee to cover their operational costs and a 5% default tip for shoppers seemed to be a fair compromise. However, I’d like to note that the 5% service charge is fixed and the 5% default tip can be changed to zero. Instacart claims that they will keep an eye on the data to make sure this continues to be a fair compromise for both the shopper and the company.
A question was also presented about other industries, like restaurants, where the standard is 15-20%, or other delivery companies where the default is often higher than 5%. Instacart’s response was that “grocery shopping and delivery is a new industry so comparisons to other industries are hard to make.” They continued with an example that in restaurants the servers are typically paid a lower wage per hour but an established tipping norm exists. As with meal delivery service a flat-rate tip is common. Grocery delivery is a new territory and there isn’t an established tipping norm. The size of the basket size/ order total is usually a lot higher than in meal delivery. They found that the 5% tipping default was a fair and transparent place to start for all parties involved. Also, the 5% default can be changed and increased.
So far I’m finding that when I shop larger orders, or for regular customers that consistently order, they will go back and increase my tip. On the flip side, some customers that usually tipped higher prior to the change, now go with the 5% default and I’m receiving a lower tip. Fortunately I’m experiencing less of the later and with the higher number or orders tipped the new change is still more profitable for me.
Service Fee Verbiage
One of the questions asked was in regards to the “Service Fee” Verbiage and if Instacart could make it clearer in the app that it wasn’t a tip. I actually agree with Instacart on this topic and I feel the deceptive verbiage has been made more transparent. Instacart’s response was, “To ensure this is not an area of confusion for customers, we made it extremely clear in the updated design. The tooltip on the service fee line item at checkout makes it very clear that the 5% service fee goes to Instacart and is not a tip. There is also a prominent “Driver Tip” line item, which further clarifies where a customer can tip the person delivering their order.” Since it’s stated as “driver tip” in the app, I begin each batch with a text to the customer letting them know I’ll be shopping and delivering their order today.
Call to Action
Make your voices and opinions heard on how this new system is working for you, or any other issues or concerns you may have with Instacart. Instacart claims that they read and look into the “comments” that we are able to leave after we rate our shift. If you want to complain or compliment, this will be a productive outlet to take advantage of. Also, we’d like to know here how this new tipping change is working for you? Please comment on this post and let us know.Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course! Driver Promotions