Here at RSG, we try to cover what’s important to drivers (rideshare and delivery), which is why when some of you emailed to let us know DoorDash/Instacart might have been doing something shady with tips, we had to investigate. It’s now become national news, but are DoorDash and Instacart really stealing delivery drivers tips? Senior RSG contributor and deliverer extraordinaire Dash Bridges takes a look into this claim and more.
Over the last couple weeks, we’ve seen a lot of outrage over allegations that Instacart (and DoorDash, AND Amazon Flex) has been stealing your hard-earned customer tip money. Is this true?!?
Technically, no. Not really.
Eh. It might depend on how you define ‘tip’.
A topic that’s been discussed in Facebook Group pages for a while, allegations of tip-stealing went national when Buzzfeed broke the story about an Instacart contractor who was paid $10.80 for a 69-minute batch order. The specific outcry resulted from knowledge that the customer tipped $10.00, leaving Instacart to pay only $0.80 for over an hour of work. Per the article, when confronted with this shocking lack of compensation, the customer support rep said, “…the reason that your batch incentive was low for this particular order was because of the tip amount.”
I’M OUTRAGED! ARE YOU OUTRAGED? BECAUSE I’M OUTRAGED!
Set your pitchforks and torches aside for a moment as I go back through my Instacart shopper experience. And note, Instacart did end up reversing this policy but it wouldn’t surprise me if more delivery companies moved to this system in the future.
Oh and check out Harry’s 1 second clip on NBC Nightly News talking about this issue! 🙂
Instacart’s Commissions & Tips
In early 2018, I tried my hand as an Instacart shopper. At that time, Instacart used a different pricing strategy than the one publicized recently. Per my article, here are two examples of what I earned my first day on the job:
Smart & Final is a value grocery chain with locations here in Northern California. Instacart guaranteed me $5.45 for the order itself, and then paid $0.40 per item (11 items x $0.40 = $4.40) as a recognition for the length of the grocery list, then added the customer tip at the end.
In a second example, I received instructions to pick up & deliver already-bagged orders from Whole Foods. The flat commission for the three separate orders (picked up from the same location) was $2.85 each.
Instacart dutifully showed my $2.85/delivery commission for each of the grocery pickups, and then broke out my tips per order, which were added on top of my delivery options. In this case, customers for Orders A & B offered tips while the customer for Order C stiffed me! I didn’t earn anything more than the Instacart-guaranteed $2.85.
Consider that earnings model: From my initial delivery notice to completion of the three deliveries, it took 55 minutes. $21.61/55 minutes = $23.57/hour. Pretty good! BUT…that’s based on the tips provided. With only a $2.85 commission for each pre-bagged order, Instacart must expect a certain amount of tip to supplement their labor costs. While Instacart is responsible for (or at least takes the blame for) driver earnings, think of the gap of driver earnings solely based on customer generosity:
Potentially $35.35 vs. $9.33…all as a variable totally outside Instacart’s control.
Until late 2017, DoorDash had a similar model.
DoorDash’s Flat Fee + Tips
When I started DD in 2015, they had a straightforward per delivery rate of a flat fee + 100% of tips. While very transparent, this structure had some volatility:
These are my real earnings from the same region on consecutive Sundays in November 2015. At that time, per delivery payments were $6.50 each + 100% of tips. The first week I earned $3.53/order in tips. The following week it was $8.45. I didn’t do anything differently. I just got lucky.
Realizing this inefficiency, I (and thousands of other Dashers) naturally began selectively declining low-tipping orders (fast food) in favor of hitting the tipping jackpot with a $150 order from a nice restaurant. As a result, smaller orders went unclaimed and DoorDash corporate had a delivery consistency issue.
For both Instacart and DoorDash, do you see where these payment systems create pretty wild fluctuations in earnings potential?
DoorDash and Instacart Transition to Guaranteed Pay
So the delivery companies tried to fix it. They tried to smooth out pay peaks and valleys by going to a ‘guaranteed pay’ model. This model offers an upfront pay guarantee for deliveries, and almost always for an amount higher than what you’d make on with the basic flat commission.
DoorDash moved to the Guaranteed Pay model in later 2017. For DoorDash, the formula looks like this:
$1 + pay boost + 100% tips
Out of the $6.36 guaranteed payment, DoorDash pays the first $1. After that, they add a certain ‘pay boost’ considering a number of factors, including driving distance, traffic, parking, anticipated wait time, etc. Then, they add 100% of the customer tip.
DoorDash spent a considerable amount of time rolling the new system out and communicating the benefits of the change. However, the vibe on the Facebook groups is that drivers HATE this payment program. As with any direct labor/management pay issue, there’s always an amount of suspicion. And when a company moves from a straightforward pay system to a more complicated one that includes a mysterious variable… it invites distrust. That distrust is further inflamed with stories from similar companies skating payment rules.
In my experience, 90% of the time your eventual payout is the amount guaranteed at your initial acceptance. Once in a while you’ll earn more than your guarantee. Sometimes it’s significantly more, which I assume means a customer left an unusually large tip. To put it simply, DoorDash probably decreases their ‘pay boost’ on orders with large tips, and increases their pay boost on orders with small tips. It smooths out the per order earnings disparities.
Imitation is the Sincerest Form of Flattery
Undaunted by the moderate (but ultimately powerless) dasher complaints of the DD program, I think Instacart liked DoorDash’s system and copied it. I haven’t shopped for Instacart during this current Batch Pay era, but it appears that my previous example of the Order A, B, & C was no longer subject to individual commissions and transparent tips. Instacart wrapped it into a $10.00 minimum guaranteed batch, which in theory MIGHT be a good deal.
Remember my experience? It was only $2.85/delivery. This shopper was guaranteed $10.00, not the $8.55 he’d earn from three no-tipping customers. And who knows, maybe he gets more. It’s a higher pay floor.
In the specific case, the shopper’s customer tipped $10.00. The guarantee was $10.00, so Instacart’s algorithm likely saw that it had no minimum to cover. However, it did NOT see the potential for bad corporate optics and viral social media outrage, so it only spit out $0.80 for the shopper’s trouble. The shopper received $10.80 after agreeing to a $10.00 order. The algorithm thinks it did him a favor!
However, after the breakout of that order went viral, Instacart quickly backtracked and promised to create safeguards for what it considered an ‘edge case’ (extremely unusual circumstance), and immediately instituted a $3.00 minimum Instacart payment per order. Under the immediately-instituted system, the shopper would have earned at least $13.00. POWER TO THE PEOPLE!
Are Instacart and DoorDash Really Stealing Your Tips?
Answer: HARD NO. I’m 100% confident you receive every penny of the tips you’re given. I’m also highly confident DoorDash adds their minimum $1/delivery and Instacart adds their minimum $3/batch. The legal and PR catastrophe that would result from that reporting/reveal would be hard to survive. HOWEVER, you’re limiting yourself when you ask that question.
The real question is, are DoorDash and Instacart using a variety of opaque policies and programs to minimize their labor costs?
My tinfoil hat and I say yes. Unquestionably yes.
Thanks for reading. Remember, you can find Dashing-related wisdom and whining on Twitter @DashBridges.
Drive safely, everyone!
Drivers, what do you think of the model DoorDash and Instacart have moved to? Do you think this is a more fair system?
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-Dash @ RSG