This article explains how Instacart makes money and its business model.
Instacart is an American company that is into grocery pickup and delivery. The company operates in the United States of America and in Canada. You can make use of Instacart’s services either by using their mobile app or website.
One of the perks that come with using Instacart is that a personal shopper is assigned to you. Meanwhile, Instacart was founded in 2012 by a group of people. And to better understand Instacart and its operations, there are a couple of things you should know.
Maybe you want to work at Instacart and you’ve been asking yourself “how does instacart make money?” Well, we’ll be reviewing how Instacart makes money alongside other things you might want to know about the company.
How Does Instacart Work?
During the outbreak of the coronavirus pandemic which led to a lockdown, businesses that focused on pickup and delivery made a lot of money since they were allowed to operate (and ensure they keep up with the sanitation and social distancing procedures).
And in that period, Instacart was one of the companies that got the attention of so many people because they needed to eat.
That aside, for you to access their services, you either have to use their website or download their mobile app. And after you have set up your profile, a personal shopper will be assigned to you to help get your orders and get them delivered to you on the same day.
Instacart, unlike other companies who operate in the same niche, doesn’t have any warehouse where they stock up groceries. Whenever Instacart gets an order, they forward it to one of their closest part-time workers who then shops in either Kroger, Shaw’s, or Costco and sends it down to the client.
Where is Instacart Available?
As a growing company in the United States of America, their services have spread across all states. Therefore, to know if their services are fully available in your city, these are the things you should do:
- Visit Instacart’s location page
- Get your city’s ZIP code and input it in the space provided.
After following the aforementioned steps, then you will be shown if Instacart is in your state and city.
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How Does Instacart Make Money?
If you have been pondering on this question, we’ll explore the different ways instacart makes money by picking up and delivering groceries to their clients.
But also keep in mind that Instacart makes a lot of money from their business which is not only in the States but also in Canada. So, here’s how Instacart makes its money:
Commissions
Instacart earns huge money from receiving commissions for every product they sell on their platform. These products come from shops like Kroger, Shaw’s, Costco, etc. And they pay commissions to Instacart for every product they sell on their behalf.
This is why Instacart does not have any physical warehouse. Sometimes they intentionally increase the price of some products so that the company will collect the markup.
Delivery Fees
Delivery fees are another way Instacart makes money. Whenever you make an order from Instacart, you are charged for services and delivery. The delivery fee for Instacart ranges from $3 – $10 while their service fee ranges from 5%-10%.
However, other charges can be incurred while accessing other Instacart services such as heavy fees for goods that are above a particular weight threshold and bag fees which are for packaging your groceries.
Instacart’s operations are just like the operation of companies like Uber, Lyft, and Bolt. And as demand increases their delivery fee also increases.
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Instacart Express
This service is used by many companies to bring in more customers. In this type of service, subscriptions are made by regular clients of Instacart either yearly or monthly. The yearly subscription is around $100 and the monthly subscription is around $10.
When you subscribe to this package there are benefits you get. Such benefits include no surge prices on such occasions, their service fees are reduced, any delivery above a certain amount will be canceled.
Also, note that the time for delivery doesn’t change even with the surge period just because you opted for the special package.
In-app Advertising
For so many people out there, Instacart is seen as a place where everyone (such as retailers, buyers, and shoppers) makes money.
Instacart also makes money by selling ad spaces to other companies and this generates heavy revenues for the company. Charges for this service depending on the kind of business you run and the audience you want to reach.
Other companies that run ad services like Instacart are Amazon, Etsy, or the Wish app. Meanwhile, the top companies that patronize Instacart’s ad system are Coca-Cola and Mars.
How Does Instacart Work For Shoppers?
As an Instacart client, you can place orders with any of your devices like laptops or mobile phones.
After you have placed the order on Instacart, they will assign a shopper who will shop and deliver those items to you. This process takes a few hours or less to make the order and get it delivered to your doorstep.
As a customer, these are the things the customer will have to do from their end:
- Download the Instacart app into your device or visit instacart.com on your device.
- When you have carried out the first step, you get started by creating an account using your email account.
- Use the city ZIP code to check the available shops in your area.
- After you have chosen a store, choose the products you want into your cart. You will also be allowed to add an alternative item to your cart in case of an unforeseen circumstance.
- You will also be given the chance to write a message to your shopper on how your grocery shopping should be done.
- After you have chosen the items you want, go to the checkout and choose a day and time for your items to be delivered.
- Then add your card details for payment and then your order will be processed.
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How do Instacart Shoppers Get Paid?
There are two types of shoppers in Instacart; in-house shoppers and full-service shoppers. These shoppers are paid every week to either their checking account or savings account. There are also perks of being a full-service shopper in Instacart.
One of them is that, as a full-service shopper, you can withdraw up to five times as long as you have up to $5 in your wallet with a $3000 daily limit.
But the part-time workers pay taxes from their earnings, unlike full-service workers who pay quarterly taxes.
Difference Between Full-service Shoppers and In-store Shoppers
When you use Instacart to place orders, some of them are given to a full-service shopper while some are given to an in-store shopper.
But why is it done that way? Let’s look at their differences:
- A full-service shopper is an independent shopper while an in-store shopper is a part-time employee of Instacart.
- Full-service shoppers work when they feel like it or when it is convenient while an in-house shopper works about 15-20 hours every week.
- The role is always open for full-service shoppers. Whereas for in-house shoppers, their jobs are only temporary and it lasts more when there is a surge.
- An in-store shopper also has the benefit of having 401(k) savings.
What You Need to Work as an Instacart Shopper
As a big company, there are requirements to meet before you can work for them whether as a full-service shopper or in-house shopper. These requirements include:
- You must be up to 18years. Some products require you to be 18 years old and above before you can deliver them. These products normally generate big tips for the shopper. Such products are alcohol, sex toys, etc. and in some states, you must be up to 21 years.
- Able to lift 30 pounds. Your stature may not matter so long as you are capable of lifting heavy goods as much as 30 pounds to 50 pounds. This is because, while delivering you will be tasked with loading and unloading the items from the vehicle.
- Have a good smartphone. For you to be able to work effectively with Instacart, you have to possess a good smartphone that can connect to the internet quickly because your work is time-sensitive. Your phone must have an iOS 9 or an android 5.0.
- Pass a background check. Instacart like any other business carries out a background check on their shoppers for security reasons. This check takes about ten working days to complete but it all depends on your location.
- Have a working bank account. Any person who works anywhere needs a bank account to collect their earnings. So, before you start your first day as an Instacart shopper you will need to submit your checking account or savings account.
- Drivers license. This is an important thing an Instacart shopper must possess because you will be required to deliver goods to clients all over the city depending on the orders.
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How to Sign up as an Instacart Shopper
It is one thing to have all the requirements to work as a shopper for Instacart but if you don’t apply, the requirements are as good as useless to you.
There are steps needed for you to sign up as a shopper on Instacart. Here are the steps:
Download the shopper app.
When you get this app, you will be asked to provide your name, location, and permission to have your background checked.
After this phase of registration, you will then have to set up your profile and be able to track your daily earnings. If you encounter any issues then report them to Instacart’s help team.
Attend an orientation.
You will be required to attend an orientation hosted by the company for in-store shoppers only. It is one of the requirements for in-house shoppers.
Fill out the paperwork.
Independent contractors or full-service shoppers are meant to sign an agreement and a tax form. But the part-time employees will just sign an offer letter and also a tax form.
Register your Instacart payment card.
Instacart has this payment card that is already loaded when they want to check out or carry out a customer’s order. But new shoppers receive theirs within 5 days or 7 days at most.
How Much do Instacart Shoppers Make?
For the in-house shopper, the pay per hour is fixed and also depends on your location. Then for the full-service shoppers, their pay depends on the kind of order they get.
Therefore, for delivery only work, they earn at least $5 per delivery while a shop and delivery will earn $10 per delivery.
The amount you are paid per delivery depends on the number of items, distance, the shopping, and delivery. Whereas, a heavier item will give more earnings and the pay is higher when there is a surge.
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Frequently Asked Questions on How does Instacart Make Money
It is possible to make up to $25 per hour. So if you happen to work for a day, then it is possible to earn $100 per day or even more.
You can earn around $5 at least and $10 at most per delivery and most times you earn $17 per hour excluding tips.
This was just introduced in California and you will be paid $.30 per mile when you take time shopping and delivering.
Shoppers know that door dash pays more than Instacart through their hourly wages are the same.
As long as you are a full-service contractor, all expenses are on you while making deliveries.
Conclusion
Instacart as a grocery delivery service has partnered with so many grocery stores to make their work better for their clients. They provide a smooth delivery for their clients on a normal day and even on surge periods.
It is beneficial for both their buyers, shoppers and also the company and they all make their money respectively. If you are searching for a good grocery delivery company then consider Instacart. And I believe you now know how Instacart makes money.
References
- productmint.com – The Instacart Business Model – How Does Instacart Make Money
- seoaves.com – Instacart Business Model | How Does Instacart Make Money?
- nerdwallet.com – How To Make Money as an Instacart Shopper
- fourweekmba.com – How Does Instacart Make Money? Instacart Business Model In A Nutshell
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