![\"\"](\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/02\/instacart-map.png\")
<\/a><\/p>\nRecently the model has shown cracks, however. In 2016, Instacart cut pay for frontline workers by up to forty percent [3], while simultaneously warning workers that it reserved the right to further cuts. They simultaneously removed tipping from their billing options, replacing tips for a standard 10% service fee which they claim is redistributed to shoppers (this claim is contested).<\/p>\n
Since eighty percent of shoppers received tips prior to the change, the switch put significant strain on Instacart\u2019s relationship with its shoppers, who have many alternative homes for their on-demand labor. Workers believed the change was a straight-forward attempt to make the business more profitable, but the change could also reflect the need to create revenue growth. Whereas tips cannot be reported as revenue, service fees can.<\/p>\n
Meanwhile, despite piling tons of cash into the space, Instacart has hardly gained a competitive edge. For customers, Instacart\u2019s service is essentially undifferentiated from other options. In Boston, for instance, the same basket of 10 groceries can be\u00a0delivered by Peapod, Amazon Fresh, or Instacart for about the same price, at about the same time. Each service offers grocery-store prices, a $5-10 service fee, and delivery within 24 hours depending on the day of the week. This is especially notable because Peapod has been around since it was founded in 1989 [4], and Amazon Fresh is an entirely new service still in its infancy. If Instacart cannot differentiate itself from long-standing incumbents or recently upstarts,\u00a0it is unclear what its $220M investment is worth.<\/p>\n