Saying “we charge markups, but we won’t tell you what they are” is still not sufficiently transparent, in my opinion. Yes, Amazon and grocery stores do the same thing (at face value, anyway) by not disclosing their COGS. But the key difference is that my next-best alternative to Instacart is to just go to the grocery store myself. My next-best alternative to getting something delivered from Amazon isn’t to get it more cheaply from a brick-and-mortar Amazon store, or to buy it directly from their suppliers - it’s to get it from a different retailer entirely, and I can trivially compare all-in prices between other retailers and Amazon. So I can easily assess whether it makes sense from a cost/benefit perspective to buy something on Amazon, but I can’t make the same assessment for Instacart.

I do think the service creates value. But I still hope that, at the very least, it soon faces enough competition that it’s at least forced to be fully transparent about the cost of its service. I want to see one number - the difference between what an order of groceries costs me on Instacart all-in, and what it would cost me to go to the grocery store and purchase the same items myself. As long as I can’t trivially find or calculate that number, I won’t use Instacart again.

i am very confused why you have a higher bar for this than other services. would you actually create a spreadsheet that values your time (against other alternatives), gas/lyft/train fare to and back from the store, the extra costs associated with actually being in a retailer (and seeing the specials in store etc) and compare that against our offering?

and again, we aren't the ones doing the markup -- those are coming from the retailer directly, who may (or may not) mark up prices, which is their prerogative. we put all of our costs in the checkout screen transparently.

>> and again, we aren't the ones doing the markup

So you claim, but since you refuse to list what the IC markup is then it's impossible for us to tell. You're essentially using the retailer markup as an excuse to hide instances of when you do it yourself.

Thus the lack of transparency.

In any given transaction, I have NO idea what the actual % that was added by IC. I do not have this problem with Amazon Prime.

again, in 99.99% of the cases, we aren't doing the markup.

and, in the one case where we do not have a signed relationship with the retailer, we do explicitly note the percentage.

we aren't hiding anything. and, you have that precise problem with amazon prime -- what markup are they charging?

If any markup exists, and if Instacart splits some of that markup with the retailer, it seems like obscuring the facts to state that Instacart does not charge a _separate_ markup.

> again, in 99.99% of the cases, we aren't doing the markup.

I find that hard to believe. That's the retailer markup? So you're just relying on the 0.01% (I know, arbitrary) where you do, and the opt-out $10 Service Charge to make money?

Are you responding to the same screenshot that tfehring is commenting on? https://imgur.com/a/j47ls It says:

> "A mark-up is added to item prices at this retailer to cover the cost of the Instacart service. Prices are based on data collected in store and are subject to delays and errors."

There is no good, ethical reason why a delivery service should show me an item price that's different from what's in the store. It's completely ethical if the company wants to say, "The service fee for this store is X% (as a percent of item prices)", or "This store has an additional $X service fee". That is honest and reasonable. I expect a delivery service to quote me the same item price as the retailer quotes in its store.

The reason I have this preference is because of a delivery service's value proposition: shopping in my store, on my behalf. I have access to the same products and can buy them directly. So I want to directly consider the service's value proposition, by considering the service fee I'll need to pay versus buying things myself. (EDIT: Simplify)

as i have noted elsewhere in the thread, that is a message -- from the retailer -- that the prices are different from in-store (and again, online pricing is their prerogative).

instacart is not marking anything up.

edit: it seems clear that we can do better in terms of communicating this, so i've passed that feedback on to the team.

That's in no way relevant. I want to know how much more it costs to use Instacart vs going to the store, and I don't care what their costs are just what mine are for using the service.

some constructive feedback: i had no idea that the markups were from/by the retailer, as opposed to instacart.

consider changing the messaging there? until now, i was under the impression that the markups were just another way for y'all to make some money off of me.

Why is it that grocery stores charge an Instacart shopper more than a regular customer? What extra work does the store have to do for the Instacart shopper that they wouldn't for a regular shopper?

Intuitively it seems like the store should be more incentivized to offer lower prices to Instacart since they provide a steady stream of business, reliable payment, etc.

Shh, its the cost of the kickback they are trying to talk past. Its just another fee.

Eh, their shoppers sound dumb from the anecdotes here, are likely tending to be picking up larger orders a lot, and generally plugging up the store at a higher rate than other shoppers.

Thanks for the clarification. I always assumed that this markup was from instacart and not the retailer. I guess I always found this very frustrating because instacart always says “we’re super transparent” but they never actually tell you what the mark up is. I guess instacart doesn’t even know what the markup is, which would explain why it isn’t communicated.

Excellent - so it's not a lack of transparency, but bad copywriting/marketing.

The paragraph reads like IC is responsible for the increase, not the retailer itself.

No, I wouldn’t perform that calculation exactly and explicitly - but I absolutely think about my purchasing decisions in that way. I can give you ballpark estimates of how valuable my time is, how much time it takes and how much it costs to physically go to the grocery store, etc., and give you a ballpark breakeven point. I’d probably pay $20 for a grocery delivery, but I probably wouldn’t pay $50. But I have no idea where the all-in cost of the service actually falls, so I can’t compare. And I do hold other products and services to that same standard - for example, I regularly compare prices between retailers, except for trivial purchases for which comparison shopping isn’t likely to be worth my time.

As for the source of the markups, that really doesn’t matter to me. I care about the total difference in cost between using Instacart and going to the grocery store myself, irrespective of who that additional money goes to.

thank you for context, and sorry if i sounded snippy in my response.

i was mainly noting the source for markups as we cannot tell you that delta -- it's up to the stores to tell us what they want to charge online. we do want to be as transparent as possible! ("possible" being the operative word here)

No problem at all - thanks for sharing your perspective. It’s helpful to know that grocery stores themselves are responsible for those markups, not because it affects the value that the service creates for me now, but because it impacts how the service could evolve in the future. If Instacart is currently subject to higher-than-retail prices, there’s even more room for it to potentially benefit from setting up its own warehouses, relationships with wholesalers, etc.

Never used Instacart, but your link to show transparency, doesn't actually state what the mark up is.. 2%, 10%, 25%, order minimum or there's fee..

Transparency to me, would mean I place order and know how much it will cost, instacart mark up, service fees and if a tip is included.

we used to provide specific percentages, but phased that out over time as it was obvious that wasn't providing real value -- where on amazon.com do you see their markup?

additionally, for virtually all stores on instacart.com now, we are simply passing on the pricing that the retailer has given us (which may or not be marked up from their internal prices -- but we do not control)

edit: to be crystal clear, that means that you are getting exactly what you are asking for -- the prices are simply what the retailer sets (which may be marked up from in-store -- that's their prerogative), and then we show our fees on top of that on checkout. we aren't "hiding" anything, and it's your decision whether the fees are worth your time.

>additionally, for virtually all stores on instacart.com now, we are simply passing on the pricing that the retailer has given us (which may or not be marked up from their internal prices -- but we do not control)

IC is responsible for signing the contracts they have with retailers, IC is also the most visible partner for the end-user. As you can see from this thread, attempts to kick the blame down(up?) the supply chain will only fall on deaf ears.

I don't think it's comparable to Amazon's mark-up. The alternative to Amazon is walmart.com, ebay.com, etc., all of which can be directly compared. Instacart provides a delivery service. It's comparable to Uber Eats or Eat24. I agree with the others that it seems shady to provide a delivery service but obfuscate how much you're charging for delivery.

I know Uber Eats bans restaurants from marking up orders placed through them. You can look at your phone and decide exactly how much extra the delivery costs and then decide if it's worth it to not have to go pick up the food yourself. I've never used instacart but if you're telling me that the price of the service is a secret from me I have a problem would that and would not use it. I don't want to pay $50 to have someone pick up my groceries. But I'd gladly pay $10 on certain days. But I have to know beforehand. I'm not going to sit around and hope Instacart doesn't screw me over today.

My concern is the price of getting the product at the store verse instacart delivering it.

If you can get a discount directly from the store, great! You are providing value to them.

I agree. There are really only three things I can imagine caring about:

1) Receiving the exact items I ordered. 2) The time it takes to show up at my door. 3) The total price beyond what it would cost me in the store.

I know what I pay at the store, I know the value of my time, and I know the cost of driving my car. All I need from Instacart is the total cost for the service presented as simply as possible.

There are a subset of users on HN that can be hyperbolic. I've worked at a few well known companies and every time they come up here you get some vocal minority outraged about the product/pricing/culture/tech/anecdotal experience etc. I think it's truly toxic (yet entertaining) and definitely deflating as an employee. There is a lack of empathy for other people, companies and a deep inability to disconnect the two. I've noticed a hyper-rationalism here that reduces every company and product into the sum of it's parts and deems it outrageous- which to me comes across as unhealthy (reminds me of going to lunch with an engineering team that optimizes the route, their orders, seating, etc).

Congrats on the raise and good luck with everything.

Overall I really like Instacart and quite frankly, I've come to depend on it. Shopping with kids is difficult... it's much easier to plan ahead and shop when I have a little free time. So congrats on the funding!

I understand some of the frustrations about replacements. Originally the shoppers were pretty good about calling. Recently the app was updated for 1-1 chat and interactive replacement choices. However, it seems the shoppers are to busy to use the feature... I've had a few notifications for replacements, only to click on it and find the shopper has already checked out.

Personally, I accept that limitation of the platform and make sure I choice "no replacement" if there's any chance I'll be disappointed.

thank you for the kind feedback -- we love to hear from customers who we help like this! and, we are constantly trying to improve the experience (especially the replacement experience!)

Isn't it illegal to offer a "store credit" instead of a refund in cases where IC forgot my items and I paid debit? Seems like a really shady way to bring customers back.

Don't get me wrong, I enjoy the whole concept of online ordering but the IC UI forces users into choices that benefit IC by default.

I believe when the refund is not the customer's fault (though some choose to do it then), that the refund is typically "by the medium paid" (with some waiting, or such, for things like uncleared checks, etc.), but I'm not sure if that's a product of merchant regulation, consumer law or 'policy'.

My experience with Instacart has been pretty great so I was shocked at the GP vitriol as well. In my case, Instacart has been a huge help - my brother, who is unable to drive for medical reasons, uses your service considerably to get his weekly groceries. Once I figured out the substitutes scheme, it worked like a charm.

I don't have stake in this one way or the other, but will you argue in favor of Instacart's '$10 service fee' (as mentioned by parent commenter)?

i am not entirely sure what they mean by that. the service fee goes 100% towards the shopper fleet and is an essential part of a reasonable compensation structure for all of our shoppers -- if we switched entirely to tips, the folks that (e.g.) actually picked out your groceries, checked out & staged your groceries at the store, would not be compensated. this is because tips have to go 100% to one person, which would only be the delivery person -- and in our case, any one order is handled by many people to be efficient.

This is a blatant lie combined with omissions.

I’m a “full-service shopper” in a zone without any in-store teams, meaning that I do the shopping and the delivering. Since I’ve started, I have only seen the order commissions steadily deteriorate to the point that they are now about half of what they used to be a year ago.

I can assure you and anyone else reading that the so-called service fee is not going to any of us in the field. And many customers have stopped tipping assuming that the service fee is a tip.

I suppose OP's point wasn't that a service fee wasn't justifiable, just that it's a bit odd to make it optional and have it auto-selected, though given someone else's comment it seems like now it's mandatory.

i know there has been a lot of changes with that recently -- i agree also that is odd. there are a ton of legal nuances here that i do not want to get into, but suffice to say we want to be clear and transparent to customers while at the same time providing a compelling wage to all the folks who touch your order during any part of the lifecycle.

It is really hard to believe that instacart wants to be clear and transparent as possible (although I'm sure you do, personally).

If "service fee" was renamed "instacart fee", people would no longer assume it is the driver's tip. But instacart would never do that, would they?

Which is why Instacart is going to get crushed. Fee exists because instacart is not an integrated service. Supermarket margins are thin. They will only shrink more.

There's no reason why grocery store employees cannot fill orders - in fact grocery stores that do their own deliveries do exactly that. What those grocery stores lack is a platform to synchronize active inventory in a store and what is displayed which is exactly what Amazon brings to Whole Foods in addition to "intelligent" order routing:

There are three whole foods in Manhattan that are convenient to downtown - however, during the rush our one needs to be an idiot to send an order to the one on 7th Ave rather than the one in Tribeca, which is definitely not the case during the late afternoon.

What really amazes me is that both executives and people who work for companies like Instacart simply stomp their feet and say "But we are different! Why do you hate us?!" rather than address deficiency of the business model. Want to have a shot at competing with AmazonWF? Become a sub of Ahold, Kroger, Albertsons or SuperValu. Otherwise you die.

P.S. I dislike Amazon. I do, however, have to admit that buying WF was a brilliant move.

You’re right, this was a bit harsh. I’m sure lots of good people work at instacart, and this was not intended to seem like I’m excited for anyone to lose their job.

I guess a more accurate statement would be “now that I’ve discovered amazon prime now is available in my area, I’m excited for the competition between these services to offer me a better quality product at a better price”.

Sorry if I offended. Cheers.

just saw this -- no worries, and thank you for your response. i think that is very reasonable and we are excited to go head-to-head with amazon on all fronts (delivery experience, quality of jobs offered, retail offerings/selection/etc).

In order for instacart to survive, it needs to partner with regional grocery chains by providing them with the 'ecommerce' side while the grocery chains provide delivery. I live in a metro area where a local chain now provides excellent delivery service (and the employed delivery people won't accept tips) and hope they succeed long term. I don't use Amazon for groceries although it might be available, and I never shop at Whole Foods because their stores are way too large. Whole Foods would dominate if they roll out 'whole foods Express' stores which would be much smaller (think 7-11) so that people can get in and out without feeling like they are walking through the Natural History Museum. Families buy the most groceries and are the most time constrained, but I'll never use instacart until they drop the whole gig-economy frontline workers as contractors bullshit.

>> why do you think that there can only be one victor here, and that is has to be amazon?

Historically, online businesses have 1/2 winners that "take all". That's assuming the winners could build a warehouse near each city. seems possible.

So the question who will be the one besides Amazon?

From one point of view. Walmart will likely win in the low-cost grocery pickup business. And on top of that they will do deliveries. The way Walmart will choose that delivery is: is it cheaper than delivery costs for Walmart(for chilled deliveries)? and can it scale ? . Does instacart fit ? it seems not.

So it's hard to see how instacart wins.

groceries are unlike pretty much every other online segment, which is why it has resisted being moved online (until very recently). the model of having a warehouse simply "near" a city is a model amazon has tried for 10+ years without success -- you must have many warehouses within the city to make it work.

i am not entirely clear how you arrived at "Does instacart fit ? it seems not.", so it would be good to understand that. we have spent 5 years with hundreds of engineers building a fulfillment/logistics network just for groceries that any grocer can just leverage off the shelf.

I think he's saying a customer will ask "is Instacart cheaper than Walmart" and the answer is "no", so there isn't a place for Instacart to fit, assuming Amazon owns the high-end side with Whole Foods (although I wouldn't assume Amazon would settle for just that).

Walmart already has grocery warehouses with their stores, so bolting on pickup/delivery to those makes sense. I don't know how much pickup/delivery could potentially negate the need for the store, but I'd assume the pickup/delivery load of a store has huge room for growth before you start questioning why the store needs to be open to the public.

I haven't used their grocery delivery service but their pickup service is well-executed and convenient, in my experience, so I'm assuming they can figure out how to be competent in delivery as well.

right now, whole foods is something like 1 or 2% of the grocery market in the US. we plan to be the partner to the rest of the nation -- my initial question was how on earth you can just assume amazon (by default) owns the rest of the high end market, and, why you think "bolting on delivery" is easy/trivial.

>> why you think "bolting on delivery" is easy/trivial

For someone in the position of Walmart, and with the many startups that doing delivery, it seems realistic.

As for why do i think Amazon will win the high end? really, the biggest reason is that it's Amazon. But yes, that's not a good enough reason, but still, they win an awful lot.

But maybe there's a chance for instacart to win the higher end, especially by offering the largest variety any merchant can offer.

I appreciate you as an engineer, and to weigh in against an Amazon troll, but like please keep hn neutral

i am not entirely sure what you mean by this -- sorry. i was not trying to be divisive and offer a personal perspective as an engineer. can you clarify please?