June 22--Instacart, the grocery delivery service, is hiring staffers to shop as it focuses on improving service and getting customers to place more orders.
The fast-growing San Francisco-based company said it plans to hire part-time staff to serve as its shoppers in Chicago, rather than using independent contractors. That way it can train them on everything from how to pick a ripe avocado to the best way to store ice cream before it is delivered.
When Instacart started in 2012, it hired independent personal shoppers who used their own cars to make deliveries. In recent months, it has started to place some contractors inside stores to collect groceries while other contractors handle the deliveries, in order to improve customer service. It has about 7,000 contractors around the country.
The company found that some contractors were not as sharp as others when it came to the shopping task.
"Picking groceries is surprisingly hard," said founder and CEO Apoorva Mehta.
The company plans to train shoppers with its own curriculum and incorporate training details from the stores it shops from. The change will increase Instacart's short-term costs but should help improve its long-term results.
The increased costs will be due to expenses like workers' compensation and payroll taxes. The company, which declined to say whether it is profitable, said it has no plans to change prices because of the switch.
Chicago is only the second market for Instacart's part-time shoppers. The switch comes on the heels of what Mehta called a "fantastic" test in Boston. The pilot showed that employing shoppers can help the company retain more customers.
"We found that shoppers continue to get better and better, and customers were able to notice a difference," Mehta said.
Instacart said it plans to introduce the change in some of its other cities in the coming months.
Instacart's delivery fees start at $3.99, and there is a $99 annual service called Instacart Express that wipes out delivery fees for all orders of $35 or more.
Other grocery delivery companies are making their own tweaks as they try to attract and retain customers. Peapod, for example, is adding features to its app like a filter for gluten-free or other nutritional details, while also storing past orders to suggest future purchases. And Google Express delivers from stores ranging from grocers and drugstores to Barnes Noble and Kohl's to entice shoppers to use the service for more of their purchases.
Instacart said that based on its Boston run, it expects more than 75 percent of its contractors to switch to part-time status. Those who want to remain independent contractors will handle deliveries, the company said.
The change highlights one of the issues facing companies that have independent contractors serving critical roles in their business models. Just last week, the California Labor Commission ruled that a driver for Uber was a company employee, not a contract worker, a decision the ride-hailing company plans to appeal.
jwohl@tribpub.com
