Feb 9
Shipt lowers payouts for shoppers significantly after citing “pay standard” in an email
Shipt is a grocery delivery service that was started in 2014 in Birmingham, Alabama by Bill Smith. The service quickly grew by launching in areas with few or no grocery delivery options. In 2017, Target Corporation announced it would acquire Shipt and within a few short months, Target began integrating Shipt deliveries as an option “Same Day Delivery”. The company greatly benefited from the 2020 Coronavirus Pandemic as customers stayed home and ordered their groceries for delivery.
As of February 9, 2022, Shipt has significantly lowered payouts given to their shoppers effectively paying them less than minimum wage in a lot of places. Shipt Shoppers are Independent Contractors (they receive a 1099, not a W-2) and have a higher tax liability for their income than regular W-2 employees. Previously, a Shipt Shopper could expect to earn at minimum $8–12 per order before customer tip (including smaller orders). The company sent the email below to shoppers on February 8, 2022 trying to highlight the pay change as a “positive” with an “hourly minimum of $16” as their standard.
Shipt Payments to Shoppers have been in a downward spiral
Under Shipts original pay model, shoppers would earn $5 per order + 7.5% of the gross receipt total. For a $300 shopping order, that would equal $27.50 and that’s not a bad amount for shopping an order. Unfortunately, Shipt changed this pay model around 2020 and refined it again in 2021.
Below is an example of pay from the second generation Shipt pay model. It’s curious in the number of items is different, but estimated shop time is the same and the pay for both orders is estimated to be the same with a minimum $12 payout.
Below is an example of the new shopper pay model. Similar amounts of items and different pay. One reason could be distance to customers home, but under all circumstances after deducting for gas prices, these pay under minimum wage.
Shipt massively under calculates drive times as well. Shoppers are not compensated for drives to the store or returning to the store for another order after completing one, so if you drive 15 minutes to drop off an order, theres a 15 minute return window to the store unpaid, effectively capping pay at a maximum of $12ish dollars. (Most Shipt orders quote a time of 35–45 minutes unless they’re unusually large or far away)
When comparing the average pay rate, Shipt went from paying $0.29 per minute to $0.26 per minute under this new pay structure. If you include the average gas price of $3.29 in the area for 1 gallon of gas, the shopper nets $5.24 from that $8.53 order before taxes, significantly under minimum wage.
When Shopper pay changed from the original model to the V2 model, shoppers started relying on several small orders vs. large orders to make enough money on deliveries. Customers seemed to pick up on this change, as order sizes on Shipt decreased per order and frequency of orders increased.
Shoppers have been in an uproar today calling on the company to reverse the change and vowing to not complete Shipt deliveries until they are compensated fairly. They also suggested that it is impossible to provide good service at these rates as they’d have to do multiple orders to equal what they would have been paid at V2 (and even more to get close to the original pay structure). Some shoppers have started apologizing to customers and declining substitutions and add-ons, citing inadequate compensation from Shipt for these tasks under the new pay scale.
Bundles lead to poor customer experience; Shoppers rely on tips
Shipt also began a practice last year of “bundling” multiple orders together which lead to lower pay per order. A bundle of two orders can often be in completely different directions with protracted drive times. Several shoppers I spoke to indicated that they avoid bundles because they feel too much pressure and an inability to deliver a good customer experience. Those same shoppers indicated that they’ve accidentally mixed up items when doing bundles.
A movement started in several online Shipt groups for “#banthebundle”, emphasizing situations where customers have reported bad experiences as a result of forced bundle orders. Most Shipt orders are bundled unless they exceed a certain quantity of items (larger orders).
Shoppers rely on tips to increase their income with each shop, however not every customer tips. Anyone who has worked in a delivery service knows that you have a range of no tipper to high tipper. In the examples above, if the customer tipped $5 (a common tip on Shipt) the shopper would still be at or near minimum wage in most locations. As gas prices nationwide have risen, Shipt pay should be INCREASING to compensate shoppers rather than decreasing.
Call to action for the customers
Shoppers have stated their intent to call for customers to boycott the service until they begin to be treated fairly and compensated appropriately. They feel it is inadequate for the company to continue to reduce their payout rates while increasing workload through bundles. All of the shoppers I spoke to for this article had a common theme of loving what they do, appreciating their regular customers and hoping that some kind of resolution could be found to prevent further harm to shoppers finances.
If you’d like to provide your experience as a shopper or as a customer since the pay change, reach out to davidjohnsonwrites@gmail.com.
Editors Note: All images in this article have been edited to remove identifying location or personal information.
Updated 2/10/22: Added information clarifying that Shipt shoppers are not W-2 employees. Added shoppers resistance to substitutions and add-ons as a form of protest under the new pay model. Clarified captions in article.
Updated 2/11/22: Corrected version 1 payout percentage.
