A topic of interest to readers of Forbes is the grocery industry and especially Instacart. It’s easy to write about Instacart due to the increased amount of press the company is receiving for its missteps in managing its workforce.
The poor treatment of its contract employees has been a consistent problem for Instacart. Many of Instacart’s gig workers have contacted me and provided me with proof of how hard they work and how little they’re paid. I am constantly asked “Can’t you work for Instacart and help us? Instacart doesn’t have a single executive with your experience or brain power. We trust you.”
Out of professional courtesy to Instacart, I have not provided consulting or other support to Instacart’s gig workers.
To Instacart’s credit, the company recently reversed course on confiscating a workers tips to achieve a designated hourly pay rate. Amazon and DoorDash announced they plan to continue using the same tip policy that generated so much bad publicity for Instacart. The best word to describe the policy of confiscating tips is sleazy.
Another interesting topic to write about is whether or not Instacart will become a competitor to the grocery retailers it serves. Despite denials to the contrary, I remain convinced Instacart has every intention of eventually becoming a competitor.
At some point, Instacart will apply all that it has learned from its grocery customers to create its own retail experience. (Instacart founder Apoorva Mehta was working for Amazon when he came up with the idea for Instacart. Did Mehta immediately share the idea with executives of Amazon to benefit his employer? No. Mehta chose to create a company and become a competitor to Amazon).
Since grocery retailers willingly gave Instacart access to their data and willingly taught Instacart their business, there is nothing they will be able to do once Instacart decides they’re expendable. I can’t stress this point enough: Grocery executives at the largest grocery retailers foolishly, and I do mean foolishly, allowed Instacart to learn their strengths and weaknesses. Are we truly to believe that Instacart isn’t going to leverage that knowledge to its advantage? (I encourage Instacart to leverage the data and knowledge its gained from its retail customers to the benefit of Instacart).
I have discussed this topic with grocery executives, retail analysts and consultants and all are in agreement that it doesn’t make sense for Instacart not to expand its business model by becoming a retailer and a competitor to the retailers it currently serves.
Instacart’s future shouldn’t be focused on enabling online grocery fulfillment, Instacart’s future should consist of creating an innovative grocery retail model. The retail industry can use all of the innovation it can get and that Includes Instacart either opening its own stores, acquiring a grocery chain, moving into private label manufacturing, becoming a distributor of groceries similar to Amazon FBA and so forth.
I have written additional in-depth articles about Instacart where I outline a series of arguments regarding Instacart’s intentions and future. A recurring theme is that Instacart has tremendous potential as a company. Instacart also has a growing list of issues. Specifically, Instacart’s business model doesn’t work for everything its grocery and warehouse club customers want Instacart to provide. Here’s what I mean.
A Square Peg In A Round Hole
To illustrate why I believe Instacart doesn’t have the right business model to meet the needs of all of its customers, see the pictures below. The pictures are of online orders being fulfilled at Sam’s Club and Costco locations. I could have also posted pictures from grocery retailers showing large amounts of groceries being picked. However, the majority of complaints I’ve received from Instacart’s gig workers have primarily taken place at Sam’s Club and Costco locations.
Instacart does a good job of picking and fulfilling individual online orders at grocery stores and delivering the groceries to customers. However, Instacart is a foolish choice for fulfilling bulk orders. Frankly, using Instacart’s gig workers to pick and deliver large bulk orders is asinine and inefficient. The pictures I have posted don’t lie. (I have received hundreds of pictures similar to the ones in this article).