Target’s Shipt Pay Model Change Cuts Worker Pay, Shipters Say

Target’s Shipt Pay Model Change Cuts Worker Pay, Shipters Say
Photo: Gustavo Caballero, Getty

U.S. delivery service Shipt doesn’t command the name recognition of its main competitor, Instacart, nor the market share of Amazon Fresh or Walmart Grocery, for that matter. But unlike many gig work platforms, Shipt was transparent about pay and afforded its personal shoppers the chance to earn respectable wages.

That came to a crashing halt late last month, according to several Shipters who spoke to Gizmodo, when the company rolled out an algorithmic model to a new batch of metro areas that they claim pays considerably less for their services.

“For the last two-and-a-half years, up until January 20th, we had always been paid the same. The pay scale was: We earned a flat $US5 ($7) rate and 7.5 per cent of the store receipt total,” one Shipter, who requested anonymity, told Gizmodo. The old scale also included 100 per cent of tips, where rivals like Doordash have been criticised for subsidizing their wages with customer generosity. On an average week, each order took this Shipter around an hour to complete, and she said she would bring home between $US700 ($1,043) and $US900 ($1,342), though that income fails to illustrate the costs that are endemic to independent contracting work. “While it looks like I made a lot on paper—I didn’t. You’re automatically going to deduct 30 per cent [on taxes], and then don’t even start talking to me about the wear and tear on my vehicle and the amount of fuel I went through,” she said.

Still, the pay was generous compared to industry standards and afforded some Shipters a living. “I did this full time,” a Shipter named Jesslyn Redmond told Gizmodo. She’s since found outside employment but continues to deliver orders sporadically. “I was a stay-at-home mum and wanted some extra income and to get out of the house, because I was going stir crazy.” What started largely as a whim turned into a lucrative enough gig to help her not only lease the car she used to deliver orders but to buy a home, too. “I qualified for that mortgage and my car payment doing Shipt,” she said.

Where Uber drivers or workers on Amazon’s Mechanical Turk platform are often totally atomized from the rest of their ostensible colleagues, in small metro areas like Kalamazoo, Michigan, where the new pay model is being tested, Shipters often grow close with one another (their “Shiptmates,” one called them) and develop relationships with their regular customers. “I’ve made a tremendous amount of friends, both shoppers and people I shop for,” one Shipter said. “There’s a huge camaraderie in the whole thing.”

According to these shoppers, the switch to an opaque algorithm—like those that govern the majority of gig work companies—came without any advance warning. “Big news — based on feedback from shoppers like you, we’re debuting a new order pay structure,” emails from Shipt corporate, reviewed by Gizmodo, exclaimed. Rather than a flat fee, the new model promises to “take estimated shop time, substitutions, street traffic, and estimated travel time into consideration.” 

Shipt did not disclose how these metrics are calculated and how they impact pay, leading the type of informational asymmetry present in other gig economy apps—a phenomenon an International Journal of Communication paper referred to, in the case of Uber, as “fundamental to its ability to structure control over its workers.” And because the formula is not known, it can also be altered by Shipt at any time without shoppers’ knowledge.

A Shipt spokesperson refused to specifically disclose how pay is calculated now. Shipt was late to enter major coastal city markets, and she claimed the new structure better accounts for the costs and time associated with delivering within dense metro regions like Seattle and New York City, where it’s already in place. Although in emails to shoppers the company openly refers to this structure as “a test,” it’s not clear why lower density centres like San Antonio, Philadelphia, or Kalamazoo are part of the experiment. “None of us have been able to make heads or tails out of it,” one Shipter said. “What I can tell you is that every single person is losing money on the new pay scale.”

According to weekly earnings reviewed by Gizmodo, one Shipter earned over $US530 ($790) the week prior to the change; the following week, her net income fell by over $US150 ($224) despite her completing the exact same number of orders. Shipt also generates a report of average earnings per order, and those too plummeted nearly $US7 ($10) each. “It doesn’t take a rocket scientist to figure out what I would have made with the previous pay scale versus what I made now,” a Shipter said. “I lost on every single order.” Redmond contended that these numbers may even be rosier than others. “They’ve basically cut our pay by 40, 50 per cent,” she said.

In a bitter twist, nearby Grand Rapids—about four times bigger by population than Kalamazoo—remains unaffected by Shipt’s algorithmic testing for now, but even without the new pay cut in place the economics of driving 45-minutes each way don’t add up. This, unfortunately, is according to shoppers who have apparently attempted this gambit and found the results lacking.

“I guess I just want answers. Why Kamazoo? We’re just a little town. We’re not as big as Grand Rapids. I don’t know why they chose us,” one distraught Shipter said. All the shoppers Gizmodo spoke to affirmed their fierce dedication to the job and their customers but felt pushed out by the pay change. One noted that many orders no longer pay for the gas required to complete them.

Attempts by these contractors to get clarification have been met with robotic non-answers. “It’s all falling on deaf ears. They keep sending us these cut-and-paste emails,” Redmond said. “The exact same verbiage. The only thing they change is who the email is to and who it’s from. That’s it.”

One such response

“Our goal is to maximise our shoppers’ earning potential and ensure they get the best value for their time. We are testing a new pay structure in select markets to better account for the time it takes to complete and deliver an order, including regional factors like drive times,” a Shipt spokesperson wrote in a statement to Gizmodo. “We’ve seen pay levels remain consistent overall, and in some markets slightly higher. As always, Shipt Shoppers receive 100% of their tips on top of order pay.”

In part, Shipters seem to blame the erosion of the company—its economic viability for its workers and its commitment to customer service—broadly on its sale to Target, which bought the platform in late 2017 for $US550 ($820) million in cash, and specifically to the departure of founder Bill Smith. Smith has since started a new business, Landed, while Target’s former SVP Kelly Caruso has taken Shipt’s helm as CEO. “Ever since she took over, it’s like Shipt went into a more corporatized direction where it’s more about the bottom line and less about the people,” Redmond said.

Gallingly, two Shipters allege that at the company’s annual Beyond conference, Caruso took the stage to proclaim that shopper pay would remain the same. “They had the new CEO, Kelly Caruso, get up there and speak, and she told us at that conference that our pay would not be changed,” one of the shoppers said. Shipt contends the remark was more specific—that shoppers would continue to retain 100 per cent of tips and the company “will never change that”—though there appear to be no publicly available recordings of her speech.

Shipt believes the new system overall is working, but according to Redmond, the new system isn’t just hurting shoppers, it’s inconvenient for customers, too. “It’s getting to the point now where it’s past the delivery window and orders are getting rescheduled multiple times,” she said, with low pay being the main reason why she suspects shoppers aren’t assigning these jobs to themselves. When orders get close to or miss their window, Shipt often adds a “promo” bonus—extra money meant to encourage shoppers to snap up jobs languishing in the queue. “On Sunday there were more promo orders than I’ve ever seen in my life,” one Shipter, who has been with the company since it launched in her metro area, said.

“Same thing happened with every gig delivery service I’ve tried… Instacart, Doordash, Ubereats, Postmates… And guess what? I’ve left each one for the next,” a user identified as James said on a forum frequented by Shipt shoppers. The reply was to the most-commented topic in the site’s history, titled “Do NOT implement new pay scale nationwide.” Shipt competitor Doordash has received widespread criticism for its opaque and frequently changing pay model, which workers say has resulted in lower pay similar to what Shipters say they’re experiencing now. “When i started Doordash years ago, the pay averaged $US10 ($15) per delivery. Today for those same deliveries, they pay $US2 ($3)-$US4 ($6) dollars,” he wrote. “It’s as if there is a playbook somewhere out there that they all follow.”

And maybe that’s how it will be for Shipt, too, which under new leadership may feel it’s time to leverage the last six years of talent and goodwill into greater market share. “Last week—they hyped us up. They kept saying they had a big announcement for us,” Redmond said. The big announcement, as it turns out, was a corporate rebranding. “They went from a spaceship to—it almost looks like the Instacart logo.”

If you work for Shipt corporate or on the platform as a shopper, we’d love to hear from you. Reach out via email, Twitter DM, Keybase, or anonymously via SecureDrop.