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The Spoon

Daily news and analysis about the food tech revolution

Instacart

Amid Strikes (and Holidays!), Instacart Cuts Bonuses for its Shopper Workforce

One would think that Instacart, a startup that has raised nearly $2 billion in funding, would not want to do anything that could be perceived as particularly Grinch-y this time of year. But evidently Instacart has no such holiday hangups.

Last week, the online grocery delivery company cut bonuses for its Shoppers, the contract workers who go out and do the actual work of getting and delivering groceries to customers. The cut came just days after those Shoppers instituted a three-day work stoppage to protest previous changes to their pay.

According to The Mercury News, on November 8 Instacart cut the $3 per order quality bonuses its Shoppers received for getting a five star review. The Mercury News writes:

“Over the last several years, we’ve experimented with numerous versions of the quality bonus, in addition to other boosts and incentives,” Instacart said in a message informing shoppers of the cut. “During the last year, we offered a new version of the quality bonus and found that it did not meaningfully improve quality.”

Vanessa Bain is an Instacart Shopper who helped organize last week’s work stoppage after the company changed the default tip and service fee structure. After Instacart eliminated the quality bonus, Bain wrote a post on Medium saying this latest move could mean a pay cut as much as 40 percent per order.

Quick sidenote, as if all that weren’t enough, evidently after Bain first posted story to Medium about the quality bonus cut, Instacart reportedly had it taken down for violating Medium’s rules. The post was since reinstated without addressing individuals.

For its part, Instacart told The Mercury News that the quality bonus cut was “not a form a retaliation.” Whether or not Instacart’s motivations were legitimate or not kinda doesn’t matter. The optics on it are really bad. Does it really want to antagonize its workforce as we enter the next Thanksgiving, where people will be shopping for all kinds of food? Especially since Amazon now offers free grocery delivery for Prime members and Walmart rolls out its Delivery Unlimited service nationwide.

Maybe don’t be a mean one, Instacart?

Instacart’s Gig Shoppers Strike to Protest Pay Structure

The gig economy so far seems to be great for companies that want to scale but lousy for workers that want to make any money. As such, gig economy workers have been rising up in protest over the past year, with the latest example being Instacart, as its “Shoppers” (the people who actually get and deliver the groceries) launched a three day strike yesterday over how tips are implemented.

An Instacart strike has been looming for a while, with the reasons for the protest spelled out by Instacart Shopper Vanessa Bain in a blog post published last month. In said post, Bain writes:

On November 3–5, thousands of Instacart Shoppers will be holding a workers’ protest. We are demanding that Instacart restore the default tip amount to at least 10% and to remove the confusing “service fee” which the company pockets for themselves.

Bain goes on in the post to describe the ways Instacart has changed its payment structure over the years. Net/net, Bain and other protesters are looking to raise the default tip amount from 5 percent to 10 percent. According to a different blog post from “Instacart Workers” directed towards Instacart Founder and CEO, Apoorva Mehta, this is the fourth consecutive year for Shopper walkouts. That post too goes on to provide a litany of ways in which Instacart Shoppers’ pay has been futzed with, seemingly to the detriment of workers each time.

Right now we don’t know how many people are participating in the protests. Fast Company reports that there are 130,000 Instacart Shoppers in North America, and doubted that this protest would cause the company much harm.

But the issue over gig worker pay is a recurring one in the world of food delivery. In August, DoorDash announced a new pay structure for its Dashers after public backlash over its tipping collection policy. And in May, Postmates faced protests from its couriers after they said a corporate change in payments resulted in incomes being slashed by 30 percent.

All of these protests come at a time when California passed AB 5, a law looking to reclassify gig workers, giving them additional rights and benefits. Companies like DoorDash and Uber, both built on gig labor, are looking to be exempt from the new law when it takes effect in January.

Food delivery is only going to get bigger, so it’s more important than ever for consumers to educate themselves on all of the costs associated with this new convenience.

Market Map: Booze Tech in 2019

From countertop devices used in the home kitchen to delivery services, the number of avenues in which companies can get booze to customers has expanded in recent years. And since it’s still the time of year when drinking on patios is a popular sport, we decided to focus our latest market map on all the tech out there currently changing the alcohol space.

In the U.S., alcohol consumption has actually stagnated, according to IWSR, but part of this is due to consumers now seeking quality over quantity when it comes to their drinking. Which might explain the rise in the number of companies offering recommendations apps that rate beers, wines, and spirits as well as at-home devices for the kitchen countertop that give the user a little more control over the quality of their drinks.

For The Spoon’s Booze Tech in 2019 market map, we divvied the market up into several categories where technology is making the biggest impact on the way people get, create, and consume beer, wine, and spirits. That’s everything from apps that update you on the best craft beers available to at-home bartending devices that let you release your inner mixologist to the many ways in which companies are making it possible to get the booze delivered right to your doorstep. We’ve narrowed the companies down to a collection of startups and major corporations alike. As with any post that outlines a market, this list isn’t exhaustive. So if you have thoughts and tips for who else you’d like to see here, feel free to drop us a line.

While we’re on the subject of maps, be sure to check out our 2019 Food Robotics market map and our Food Waste Innovation in 2019 map.

Booze Tech in 2019

New Feature Lets Instacart’s Shoppers Immediately Cashout Money Earned

Instacart is reportedly set to announce a new feature tomorrow that allows shoppers (the Instacart workers who go into the stores on behalf of customers) to have immediate access to money they’ve earned, rather than having to wait a week to get paid.

We say “set to announce” because it looks like TechCrunch published an embargoed story today, a day before Instacart was going to announce the new feature. But enough inside baseball. The new option is called Instant Cashout, and it was created in partnership with payment processor, Stripe. With Cashout, Instacart’s shoppers can choose to have the money they earn transferred immediately to a debit card rather than waiting for their payment. Cashout will be available at first in Boston, MA and Bend, OR, and will reach all shoppers by June 2019.

As TechCrunch points out, the move comes after a tumultuous time in labor relations between Instacart and the workers it brings on as shoppers. The delivery startup had to reverse an earlier policy that counted tips towards base wages, and prior to that in 2017, Instacart settled a class action lawsuit over how it classified its shoppers.

Instant payment isn’t a new concept, however, and Instacart is behind the times compared with other gig economy startups like Uber, Lyft and Postmates, which already offer a similar feature. Outside of startupland, a company called (appropriately enough) Instant, helps restaurants like McDonald’s (franchisees) and Outback Steakhouse create a daily paycheck plan for their employees.

Instacart has raised nearly $2 billion dollars, and being so tight-fisted with money earned by the workers on the front line of its service isn’t a good look. This is especially true as the delivery space gets more heated. DoorDash is delivering groceries, Postmates has an IPO planned and grocers like Kroger are testing self-driving cars, which would eliminate the need for a delivery person at all.

If Instacart wants to stay competitive, it’s going to have to make working there competitive as well. Instant cashout a lets puts the company on par with its rivals.

Postmates Files to Go Public

Delivery service Postmates has confidentially filed for an initial public offering (IPO). Bloomberg broke the news this morning, followed by an announcement from the company.

Postmates is the first of the major national delivery services to test the public market, beating out rivals like Instacart and DoorDash. All three services have individually raised hundreds of millions of dollars in venture funding: Instacart raised $1.9 billion, DoorDash raised $972 million, and Postmates raised $678 million.

Postmates just snagged $100 million last month, which valued the company at $1.85 billion. The startup will be a bellwether for the rest of the industry: if it pops, then that will clear a path for Instacart and DoorDash to do the same. If it tanks, well… that will make going public that much harder for other food delivery giants.

While we work to remain objective here at The Spoon, we can’t help but be a little excited for a potentially successful Postmates IPO for one reason: it will mean more robots.

Startups! They’re Just Like Us! Amazon and Instacart Break Up

Like Ben and Jennifer, Brad and Angelina, and Cardi B and Offset*, Instacart and Amazon have broken up. In a blog post today, Instacart announced that it was winding down (consciously uncoupling?) its grocery delivery relationship with Amazon.

Like with so many other power couples, this breakup wasn’t entirely a surprise. Instacart and Whole Foods first hooked up back in 2014. The two then put a ring on it, as it were, with a five year deal signed in 2016. But then Amazon came in and bought Whole Foods in 2017. Totes Awk!**

Amazon has it’s own delivery service, so we kinda knew Instacart was going to be on the outs soon enough. The split will begin in earnest in February and continue ramping down over the months that follow.

The news itself has been extensively covered already, but what we are most interested in is: How is Instacart taking this, and what will they do next?

For its part, Instacart seems to be doing just fine. Whole Foods had been playing an increasingly smaller role in Instacart’s overall business. Whole Foods reportedly represented just 5 percent of Instacart’s revenue, down from 10 percent of revenue the previous year.

At least Instacart can sleep easy at night on its giant pile of VC money. Throughout 2018, Instacart has raised $950 million. So it’s got some runway to get out there, and meet new people. Actually, it’s been doing just that, expanding its relationships with Sam’s Club and Kroger.

Despite all that good news, I’m still a little worried about Instacart falling into the same patterns of relying on others. Sure it’s got some new partners, but where is the innovation? Team InstAzon announced their breakup on the same day that Postmates unveiled a shiny new delivery robot that it built in-house and will be scurrying around neighborhoods next year.

Kroger, too, is showing signs that it may not be Team Instacart 4EVR. It’s started building robot-powered smart warehouse and distribution centers (no need for Instacart’s human shoppers there) and testing out self-driving grocery delivery vehicles with Nuro in Scottsdale, AZ.

Hopefully, this break up will give Instacart the “me” time it needs to figure itself out, maybe finally take up robotics (or drones) and get to a place where it can live its best life.

*I’m too old to know who Offset is, but my millennial colleagues assure me that it’s worth putting him in there.

**Again, my millennial colleagues assure me that this is how the kids talk. Though I’m not sure why they had to stifle a laugh when telling me that.

$3.5 Billion Invested in Food Delivery Startups This Year

Investors have a big appetite for food delivery companies this year. The Wall Street Journal reports on Pitchbook data revealing that $3.5 billion has been invested in food and grocery delivery startups so far in 2018.

If you follow The Spoon, then this news shouldn’t come as any real shock. We’ve been covering big money deals in this sector all year long. Here’s just a sampling:

And those are just pure play delivery services. We aren’t sure exactly how Pitchbook is defining a food delivery company, but there’s also been plenty of investment in services that boost delivery:

  • Ordermark, which provides software and hardware to streamline delivery orders to restaurants raised $3.1 million in March, followed by another $9.5 million in September.
  • Starship and Marble, two companies building delivery robots, raised $25 million and $10 million, respectively.
  • Though never confirmed, it was rumored that Softbank was looking to invest $750 million in data-driven pizza delivery startup Zume back in August.

These types of venture investments also don’t take into consideration the money existing delivery and grocery players are spending to bulk up. Uber Eats will cover 70 percent of the U.S. population by year’s end. Grubhub just bought Tapingo to capture the college food delivery market. Walmart is building out its own delivery service, Amazon has its in-home and in-trunk delivery service, and Kroger is experimenting with self-driving cars for delivery.

And all of the delivery-related investments and moves in this story are just for North America. That doesn’t even take into consideration Europe, where nearly half of the €6.5 billion (~$7.5 billion) invested in food tech since 2013 has gone to food delivery startups.

The WSJ article raises the issue of whether this frothy investment puts delivery in overhyped bubble territory. The paper likens all the excitement to that of the meal kit investment craze a few years back. Meal kits are still around, but they are moving into retail, and it’s probably best if you don’t look at Blue Apron’s stock price.

To be sure, valuations are sky-high for these companies: Uber Eats is valued at $20 billion, Instacart $7.6 billion, DoorDash $4 billion and Postmates at $1.2 billion. That’s a lotta billions.

But the counter-argument to the bubble talk is that there are a lot of hungry people in this country. Even more to the point, there are a lot of hungry busy/lazy people in this country who would love to have their lunch or dinner magically appear, ready-to-eat, multiple nights a week. As the CEO of Ordermark told me, “Convenience is not a trend.”

In other words, investors’ eyes may not be bigger than their stomachs in this case.

Sam’s Club and Instacart Expand Same-Day Delivery Nationally

Warehouse chain Sam’s Club announced today that it is expanding its partnership with Instacart to bring same day delivery to more than half of all Sam’s Clubs across the country by the end of this month.

According to the press announcement, Sam’s Club grocery delivery via Instacart will be available from roughly 350 stores by the end of October, up from the current 238. The two companies launched their partnership in February of this year with 61 clubs.

In addition to groceries, customers can also get gifts and small appliances delivered through Instacart in as fast as an hour.

A lot has changed since the start of the year for both Sam’s Club and Instacart. In January, Sam’s Club abruptly shut down 63 of its stores. But while Sam’s Club shrank, Instacart has grown, raising nearly a billion dollars in new funding ($600 million of which was just this week!).

Today’s announcement also comes around the same time the TABS Analytics 6th Annual Food and Beverage Consumables Study revealed that just 17 percent of respondents regularly shop for groceries online (six or more purchases per year). That figure is a 4 percent bump over last year’s survey, however.

And it’s that growth that retailers are preparing for, as online grocery shopping is projected to hit $100 billion by 2022. Instacart, Postmates and DoorDash have all raised hundreds of millions of dollars to facilitate last mile delivery logistics. At the same time, retailers are getting into the delivery game themselves. In addition to expanding its own relationship with Instacart, Kroger is testing out self-driving delivery vehicles while Walmart has launched its own delivery service.

Retailers are focusing on fast, convenient grocery delivery now to grab early market share. Once they’ve got a customer hooked, as the entire space grows, so too will the revenues.

Instacart Bags Another $600 Million in a Bid to Be Your Grocery Delivery Service

Grocery delivery startup Instacart announced today that it has raised another $600 million in a new funding round led by D1 Capital Partners. According to Crunchbase, this brings the total amount of funding raised by Instacart to $1.6 billion (with a b).

This latest mega-funding round comes after Instacart had raised $150 million in April, which followed a $200 million round in February. But Instacart isn’t alone, as money has been poured into grocery delivery companies this year. Just during the back half of this summer, Postmates raised $300 million and DoorDash raised $250 million (which followed a $535 million raise back in April for the company).

Phew! With that much money, all these startups should be delivering groceries in warchests instead of reusable totes.

The online grocery space is expected to hit $100 billion by 2022, and all these startups are ramping up to grab your business now so you’ll spend more with them then. In its press announcement, Instacart said that it will be using this new money for “further expansion in North America, marketing investments to increase awareness of Instacart at our retail partners’ stores, and recruiting world-class engineering and product development talent.”

Instacart recently signed a deal to provide grocery delivery for 1,600 Kroger stores by the end of this month. Last year the company signed a deal to be in 1,800 Albertsons stores. But as I noted previously, while Instacart is expanding at a rapid clip, it’s not really innovating.

Kroger has been on an innovation tear this year, ramping up investments in Ocado to do robot-driven smart warehouses, and piloting tests of autonomous delivery vehicles. DoorDash is experimenting with robots. And Walmart is launching its own delivery service.

Hopefully we’ll see some innovation announcements come from Instacart in the near future. At the very least, ideally all this money means any bananas I order from them won’t arrive in a deep shade of unripe forest green.

Kroger Continues Aggressive Delivery Moves with Expanded Instacart Deal

Kroger announced yesterday that it is expanding its same-day home grocery delivery service through a renewed partnership with Instacart. The move will make Instacart’s service available in more than 1,600 Kroger stores by the end of October.

The deal builds on an existing relationship between Kroger and Instacart that started in the fall of 2017 and subsequently expanded in March of this year. For Kroger, the partnership is also another step in what has been a year of consistent, forward-looking steps the company has taken to get groceries to your front door.

To recap, so far this year Kroger has:

That doesn’t even cover the non-delivery moves Kroger has made with shoppable recipes, in-store meal kits and the innovation lab it just formed with the University of Cincinnati.

When you take a step back, it looks like Kroger’s expanded relationship with Instacart is almost like spackle, filling in the gaps and covering its bases until some of these other technologies Kroger is working on come to fruition. Grocery delivery is a ruthless business right now, and Kroger has to remain aggressive to fend off rivals like Walmart, Amazon/Whole Foods, Albertsons and Target — all of whom are ratcheting up their own home delivery plans. Expanding with Instacart keeps Kroger in the game while they work out robot warehouses and autonomous vehicles, ideally without losing market share.

Instacart, on the other hand, seems to be going more broad than deep. Last year it signed a big deal with Albertsons, and a quick Google News search for Instacart shows the startup is rapidly rolling out new partnerships across the country with a bevy of retailers. What you don’t see is any type of innovation, at least publicly announced innovation. Peruse the Instacart corporate blog and you see there’s no update since April (which was about making tipping easier). This horizontal thinking could wind up hurting the company.

Instacart has raised $1 billion in funding, including a fresh $150 million in April. They are hopefully working behind the scenes to create some differentiating technology, because it will need it. Delivery competitor DoorDash raised $250 million of its own this month. It’s also expanded its grocery delivery business with Walmart, is using robots and is actively working on moonshot projects. Additionally, giants like Amazon and Walmart are expanding how grocery can be delivered, including to your car trunk or inside your home when you aren’t there (with permission, of course).

For its part, Kroger is playing the long game, and there’s still a full quarter of the year left for it to make even more announcements. While 2018 has been a busy year for Kroger, look for 2019 to be even more action-packed as the moves its making now roll out for real.

Walmart, Amazon and Target Make Same-Day Delivery Moves (on the Same Day)

Walmart announced yesterday that it was partnering with Postmates to expand the retailer’s online grocery delivery ambitions. This new delivery option started in Charlotte, NC, as of yesterday, and will expand to more markets “in the coming months.”

The news comes less than a month after Walmart announced plans to expand its online grocery delivery service to more than 100 U.S. metro areas by the end of the year. Walmart has existing delivery partnerships with Uber and Deliv, which have been delivering groceries already in select markets. Same day grocery delivery from Walmart carries a $9.95 delivery fee and requires a $30 minimum purchase.

Not to be outdone, Amazon announced yesterday that its Prime customers in Los Angeles can now get free, two-hour delivery from Whole Food stores there. That the two announcements happened on the same day illustrates how fierce that battle is between Amazon and Walmart to bag your grocery business. The two have been locked in a tit-for-tat arms race (in-home delivery, anyone?) ratcheting up features and services to become your grocer of choice. Perhaps feeling left out, Target too announced yesterday its plans to expand its Shipt same day delivery service across Arizona and New Mexico later this month.

The added twist to the Walmart/Postmates announcement is that Postmates had reportedly discussed the idea of merging with restaurant delivery service DoorDash, according to Recode. Though nothing came of any such discussions, and Postmates denied the report, that move was supposedly motivated in part by Postmates and DoorDash wanting to fend off the ever-growing, all-consuming Amazon.

And if all that weren’t enough, last week Instacart confirmed that it had expanded its Series E with an additional $150 million to expand its same day grocery delivery ambitions. Instacart has partnerships with grocery retailers such as Albertsons, Kroger, Costco, and even Whole Foods.

All of this activity points to just how hot and important the same day grocery delivery space is for everyone involved. It’s hits the sweet spot where human laziness and hunger intersect. We’re always going to buy food, and if one of these players becomes our go-to grocer, they’ll reap a recurring weekly revenue source.

Instacart Takes Home Another $150 Million

Instacart, the grocery delivery startup, has raised an additional $150 million in funding. This new cash is part of its existing Series E round and in addition to the $200 million the company raised in February. Axios broke the story this morning with the company later confirming it.

This new money brings the total amount raised by Instacart to more than a billion dollars. According to Bloomberg, the additional funding raises the company’s valuation to $4.35 billion.

Instacart is going to need all the money it can get as it works to fend off Amazon, which started rolling out two-hour deliveries from its subsidiary Whole Foods earlier this year. Instacart actually has its own delivery partnership with Whole Foods, but obviously with Amazon’s latest moves, that deal is not long for this world.

To make up for this expected loss, Instacart has been busy signing up additional retailers like Costco, Kroger, Albertsons and Sam’s Club. That last one is of particular interest as Walmart owns Sam’s Club. Walmart shut down 63 Sam’s Clubs in January, but if the Instacart partnership bears fruit, it could lead to bigger opportunities for for both companies as they look to keep Amazon at bay.

Having a variety of large partners is good for Instacart, but it will have to battle Amazon on the technology front as well. Just today, Amazon announced expanded smart lock compatibility for its Key service in a bid to bolster its in-home delivery capabilities. Whether or not people will ever be comfortable with letting strangers into their unattended home is TBD, but the point is that Instacart will need to use this money to both expand and innovate.