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Washington, D.C. Attorney General Karl A. Racine claims the grocery-delivery company led customers to believe they were tipping delivery people through an automatic 10 per cent service fee. Racine also alleges the company owes the District “hundreds of thousands of dollars” in unpaid sales taxes. (The Logic)

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Talking point: Instacart has long been accused of misleading its contract workers and customers about its fee structure. Workers have staged protests every year since the firm changed its original tipping system in 2016. And in 2017, it settled a US$4.6 million class-action suit over claims it misclassified workers as independent contractors and failed to properly compensate them. Instacart’s business has soared during the pandemic, reaching profitability for the first time as it eyes an IPO. Before the pandemic, industry experts told The Logic that failing to address long-standing concerns around its fee structure and other labour issues could compromise its plans to go public.

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Instacart will offer a same-day delivery option at Walmart locations in four U.S. cities: Los Angeles, San Francisco, San Diego and Tulsa. (CNBC)

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Talking point: With grocery delivery and curbside pickup booming due to the pandemic, grocers are rethinking the services they provide to consumers—and Instacart is both benefiting and struggling in the process. Since March, it has added hundreds of thousands of new contract workers and raised US$325 million in new financing, giving it a valuation of nearly US$14 billion. Its new partnership with Walmart—Amazon’s primary rival, it has been trying to establish its own grocery-delivery network—could help both the retailer and Instacart fend off growing competition in the grocery wars. Amazon CEO Jeff Bezos acknowledged the competition in his testimony before the House Judiciary antitrust subcommittee last month: “We also face new competition from the likes of Shopify and Instacart—companies that enable traditionally physical stores to put up a full online store almost instantaneously.”

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Hundreds of thousands of the grocery-delivery app’s customer accounts could be affected, based on data—including names, the last four digits of credit card numbers and order histories—being sold on two dark-web stores. (BuzzFeed)

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Talking point: Instacart said it was unaware of any breach. “Outside of the Instacart platform, attackers may target individuals using phishing or credential stuffing techniques,” a spokesperson told BuzzFeed News. The company is, however, investigating the issue and said it has contacted potentially affected customers. The alleged breach follows a massive upswing in new customers for the company as grocery delivery gains popularity amid global lockdowns and physical-distancing guidelines. From February to mid-March, Instacart saw app downloads grow by 218 per cent.

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While the majority of California workers for the food-delivery company likely qualify as employees under a new state law, the company continues to classify them as independent contractors, thus avoiding paying them a “lawful wage” and providing benefits that come with full-time employment, according to a San Diego judge’s preliminary injunction. Instacart maintains it is complying with the law, and said it will appeal the ruling. (NBC News)

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Talking point: The injunction is the first win for gig workers of companies challenging the state’s AB5, which took effect on January 1. The rule requires companies to extend employee status to workers whose jobs are central to their usual course of business. Instacart is one of several app-based companies arguing the law doesn’t apply to them. Uber is leading a ballot measure, backed by Lyft and DoorDash, to allow exemptions to the law, which opponents argue erodes flexibility for gig workers. AB5, as well as successful challenges to it, could set a precedent for other markets, like Toronto, where gig workers are pushing for employee status or rights like minimum wage and sick leave. Instacart has faced several lawsuits over pay and working conditions—two ongoing points of conflict that some analysts say the company needs to solve before going public.

Correction: The judge in San Diego issued a preliminary injunction ruling that the company likely misclassified workers, but didn’t assert that it had. This item has been updated.

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The San Francisco-based grocery delivery company has stopped paying a US$3 quality bonus to couriers every time they receive a five-star rating from customers. The change affects “shoppers”—contract workers who collect groceries and deliver them to customers—in Canada and the U.S. (The Logic)

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Talking point: The change follows a 72-hour strike this week from shoppers demanding the company restore the default tip to 10 per cent after it was slashed in half. The bonus was introduced in October 2018 to incentivize better service, but in a note to shoppers Thursday, Instacart said it wasn’t producing the intended results. The company, which is planning an IPO, is expanding rapidly in Canada. It announced a deal to deliver groceries for Loblaw in 2017 and has Canadian partnerships with Walmart and Staples. But Canadian gig workers are also pushing for more rights. This week, Foodora couriers in Toronto argued for at the Ontario Labour Relations Board for their right to unionize, and Canada’s Supreme Court heard Uber’s appeal against a ruling in favour of an Uber Eats driver’s class-action suit aimed at securing better pay and benefits.

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Shoppers across Canada—excluding Quebec and the territories—can now order groceries on Walmart’s site and have them delivered that day in “as fast as an hour” by Instacart couriers. The partnership expands on the companies’ pilots, through which they’ve delivered groceries in the Greater Toronto Area and Winnipeg since September 2018. The service costs $7.99 per delivery, or $99 for a yearly Instacart Express membership. (The Logic)

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Talking point: The annual membership and same-day delivery model places Walmart in more direct competition with Amazon’s Prime service. Amazon has funnelled substantial resources into its own same-day delivery service—more than US$800 million in its latest quarter—and membership numbers have consistently grown. Walmart is wading into an increasingly competitive space, however. Loblaw launched grocery delivery with Instacart in 2017. And, Uber reiterated in its earnings call last week that it wants to expand in the grocery-delivery space after launching a pilot in Australia earlier this year. It also said in January it plans to prioritize grocery delivery at its new engineering hub in Toronto. Smaller players are also eyeing grocery delivery: last month, Inabuggy, a Toronto-based grocery-delivery startup, announced a new partnership with specialty grocer Starsky Fine Foods, its 44th retail client in the country.

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Karney Li has worked at Wealthsimple since 2015, during which time the company rapidly expanded its customer base, moving into the U.K. and developing investing platforms targeting segments like socially-responsible investing. Li’s Instacart team will build the products and APIs that help its partners launch and maintain their Instacart storefronts. (BetaKit)

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Talking point: This is the first major hire for Instacart in Canada, after the company announced last year that it would be expanding its Toronto office to 200 people to focus on research and development. Li will be responsible for the company’s retail engineering division, and should have a wealth of talent to tap into—Toronto is one of the top five markets in North America for high-quality tech talent, according to the CBRE. Instacart is set to open the new office this year as the grocery-delivery space heats up in Canada; the company has become a key delivery partner for grocery chains in Canada hoping to compete with Amazon, like Loblaw and Walmart, and it recently added luxury grocer Pusateri’s to its roster of Canadian partners.

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The grocery-delivery company said it has sold “tens of millions of dollars” in groceries since its launch in Canada a year ago. (Financial Post)

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Talking point: Instacart’s platform uses independent contractors that pick up groceries in-store for customers, and counts large grocery companies like Loblaw and Walmart among its partners in Canada. Domestic rival Inabuggy has mostly partnered with smaller, local chains, and operates in five cities. The Canadian grocery delivery market could heat up this year—Uber’s head of grocery job listing in Toronto last year sparked speculation that the company was looking at the food business beyond its Uber Eats offering. And then there’s Amazon, which sells packaged foods online, including store-brand products from its Whole Foods subsidiary, but has no immediate plans for its Amazon Go retail locations in Canada.

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The grocery delivery app will stop bringing customers bags from 76 locations in February. Instacart could lay off as many as 350 workers as a result. (Wall Street Journal)

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Talking point: Delivery is core to Amazon’s business, so the Instacart-Whole Foods partnership looked doomed as soon as the e-commerce giant bought the supermarket chain in June 2017. Instacart insisted the five-year deal it had signed with Whole Foods would hold up, but by this summer, the app’s branding was being removed from stores. But after Amazon acquired Whole Foods, retailers that had previously been slow to embrace delivery began partnering up with Instacart to compete with the online giant. Chains like Kroger and Canada’s Loblaw have since been added to the app, and Instacart raised US$600 million this October on its new momentum. Some of that money will go to expanding its Toronto office, where the company plans to add 200 employees and start doing research and development work.