Instacart begins adding real employees

A notable shift is underway at crowdsourced grocery delivery company Instacart where an evolving business model means some independent contractor workers have gained part-time employee status.

After experimenting with converting independent contractors to part-time employees in Boston, the company also has made the shift in Chicago. Other cities are expected to follow given what Instacart says is a favorable impact on customer service and business results.

"When you look at the difficulty of shopping, picking and delivering items such as fruit or eggs that need to be carefully selected, you realize that grocery shopping can be complicated. For this reason, we want to provide supervision and training, which can only be done with employees,” said Instacart founder and CEO Apoorva Mehta. "We began experimenting with part-time employee roles in Boston and the data from our pilot showed that this change improved the quality and efficiency of order picking and made for a better customer experience. We're excited to be able to expand this option to other cities."

The shift to part time employees is noteworthy given Instacart’s origins with significant implications for the crowd-sourced economy and its long term viability in the retail space. Founded in San Francisco in 2012, Instacart was part of a new breed of asset light on-demand service providers that leveraged the connectivity of smartphones to create a new platform to connect demand with supply.

The company’s personal shoppers pick and deliver items from stores such as Whole Foods, Costco, Petco, Fairway and others in 16 U.S. cities. Instacart contends it has fundamentally changed the traditional grocery delivery space by connecting customers with shoppers and drivers who shop for and deliver grocery orders providing their own transportation in as little as one hour.This eliminates the need for costly infrastructure such as inventory, warehouses and trucks, according to Instacart.

What the company’s business model doesn’t eliminate, is the need for employees who are reliable, sober, honest and capable of interacting with the public in a professional manner. This challenge has existed for retailers since the dawn of the industry.

As Instacart shifts from a workforce of independent contractors to part-time employees picking orders in stores it will face the same challenges as retailers. Those part-time employees will be prone to turnover, will want to work more hours and their expectations for wages and benefits will elevate as they work alongside and become indistinguishable from employees of the retailers in whose stores they are embedded.

This is especially true since another change to the Instacart business model involves splitting the role of driver and order picker. In the past, an Instacart worker picked and delivered a customer’s order. In recent months, Instacart divided those roles, so in-store shoppers pick and prepare orders which are then handed to drivers to execute the delivery. The embedded shoppers are the ones are becoming part time employees while drivers will remain independent contractors.