Uber is coming for Instacart

Uber has rolled out updates to its Shop and Pay feature that address three of the most commonly raised courier issues: out of stock items, digital payments and order clarity before accepting a trip.

The ride-hail and delivery giant quietly launched Shop and Pay last year, a feature that lets delivery workers opt into receiving trips to do grocery or other retail shopping for customers before dropping off orders to the customer’s door. Basically, it’s Uber’s attempt to follow the Instacart model, which is working well for the incumbent grocery delivery company. Instacart reported a surge in sales and profits in the fourth quarter of 2022, buoyed by the growing consumer trend of buying groceries online rather than in-store.

Since launching six months ago, Uber says nearly 200,000 couriers are actively doing shopping trips each month in the U.S. For reference, over 600,000 people work for Instacart as shoppers, according to usage data from Business of Apps.

Uber sees a huge opportunity to scale that number up and beef out its grocery delivery pillar — just one part of the company’s plan to cross-sell customers across the platform, from food delivery to grocery delivery, grocery to alcohol, alcohol to experiences, experiences to rides.

(See: The Amazonification of Uber)

A crucial factor in this plan is ensuring drivers, or “shoppers” in this case, don’t absolutely hate the job — hence the app updates.

“Shoppers are a key ingredient to the success of Uber’s grocery ambitions, and we’re making great progress — but have a ways to go,” said Meghan Casserly, Uber’s head of communications for delivery. “…but framed against the more than 5.4 million drivers on the Uber platform worldwide, you can see the possibility for converting even a fraction of them to add shopping trips to the mix.”

Finding ways to make the experience of shopping for a customer as easy as possible is well within Uber’s interest to increasing usage of the offering. Shoppers not only have to deliver the orders, but they have to go into the store, ask customers questions, pay for orders and make decisions on what to do if there’s no more ginger lemon kombucha.

The first update gives shoppers a solution to out of stock items. Uber said this was consistently the No. 1 point of dissatisfaction in surveys, with as many as one in five grocery orders including at least one out of stock item. Figuring out a potential replacement is not only an annoying addition to a shopper’s mental load, but it can also lead to shoppers wasting time picking out a substitution. That’s a problem because shoppers aren’t paid based on how much time the gig takes — they accept the rate Uber gives them when they accept the gig, so time is of the essence.

Now, when a shopper tells the app they can’t find the originally requested item in the store, the app will show them a list of suggested substitutions based on similar brands or items to help speed up the decision making process. Shoppers can then send that suggestion to the customer directly in the app for review. Instacart has a similar feature, wherein a driver can choose between replacement suggestions prompted in the app, and the customer can approve the replacement on their end.

Uber has also found an apparent solution to giving its drivers a physical credit card that’s pre-authorized to cover the costs of orders they shop for. Drivers complained about their cards getting declined, putting them in the uncomfortable decision of either canceling the order and thus wasting their time, or paying out of their own pocket and rolling the dice on a reimbursement.

Now across the U.S., shoppers can activate a digital card on their phones using Apple or Google Pay. Uber said in a recent survey, 92% of shoppers found digital payments easy to activate, and 88% said it was easy to check out.

For comparison, Instacart launched a Mobile Checkout option using Apple Pay and Google Pay in 2020, but drivers have said they still need to use the physical card if the order exceeds the price tap limit.

Finally, Uber’s new update gives drivers more clarity over an order before accepting it. Shoppers will have visibility into the number of unique items in an order, rather than just the total number of items. The example Uber gave in a blog post was that it’s handy for a driver to know if they’re picking up one gallon of milk or five so they can decide if that order will actually fit in their car.

Soon, Uber said the “offer card” will also give shoppers information about the order, like whether it contains large, heavy or fragile items.

Instacart didn’t confirm what kind of information is on its offer card for shoppers, but based on a few YouTube videos from shoppers, it looks like shoppers are given the total number of items and total number of units (e.g. there are four items but five units because a customer ordered two of the same yogurts), as well as a brief preview of some of the items on a customer’s shopping list.

Uber is coming for Instacart by Rebecca Bellan originally published on TechCrunch