Instacart cutting 1,900 jobs as company ramps up scale, adds new service model
Moves come as shopping service preps for its IPO
Instacart will cut 1,900 jobs -- including 10 workers who recently formed a union -- as the company begins to increase the scale and accessibility of its pickup services in 2021.
COSTCO TESTS CURBSIDE PICKUP THROUGH INSTACART AT THESE LOCATIONS
Instacart will begin offering its retail partners a new Partner Pick model, which will allow stores to rely on their own employees to utilize Instacart's technology and fulfill orders for customers.
"As a result of some grocers transitioning to a Partner Pick model, we’ll be winding down our in-store operations at select retailer locations over the coming months," an Instacart spokesperson told FOX Business in a statement Thursday. "We know this is an incredibly challenging time for many as we move through the COVID-19 crisis, and we’re doing everything we can to support in-store shoppers through this transition."
The company noted that it will transfer impacted shoppers to other retailers with available roles, work with retail partners to hire impacted shoppers, and provide shoppers with transition assistance as they explore new work opportunities and separation packages based on their tenure at Instacart.
Some Instacart retail partners will also be given the option to continue utilizing the company's in-store shoppers with its In-Store Shopper Pick model. In addition, Instacart will pilot a new feature in select markets that enables the platform's full-service shoppers to pick, pack and stage orders with no delivery required.
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According to Vice, the layoffs include 10 members of the United Food and Commercial Workers Local 1546, a union for Instacart workers established in February 2020, who work at Mariano's grocery store in Skokie, Illinois.
"Instacart firing the only unionized workers at the company and destroying the jobs of nearly 2,000 dedicated frontline workers in the middle of this public health crisis, is simply wrong, UCFW said in a statement. “As the union for Instacart grocery workers in the Chicago area and grocery workers nationwide, UFCW is calling on Instacart to immediately halt these plans and to put the health of their customers first by protecting the jobs of these brave essential workers at a time when our communities need them most.”
According to the union, the company confirmed that it expects to eliminate the employees no sooner than mid-March 2021 and will be providing "as little as $250 to the workers they fire."
However, Instacart said that the union employees had no role in its decision, citing the layoffs being broad-based.
In addition, the company said it has been negotiating in good faith with the UCFW and will continue to negotiate with the union regarding the announcement's impact on the in-store shoppers in Skokie.
Still, one data research firm estimates that the company now has some 500,000 employees, the majority of which are "independent contractors" as stipulated in Instacart's job application terms and conditions.
Instacart joined Uber Technologies Inc., Lyft Inc. land Door Dash last year in funding a successful $200 million campaign to pass a California ballot measure Proposition 22 exempting them from a state law declaring workers were employees.
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The updates to Instacart's business strategy comes as the platform is preparing to go public on the New York Stock exchange. In November, Reuters reported that Instacart picked Goldman Sachs to lead the company's initial public offering. Instacart's IPO, which could happen later this year, is reportedly expected to value the company at around $30 billion.