how does instacart make money

It took me a while to warm up to the idea of having my groceries delivered, but after reading positive Instacart reviews, I decided it was time to give this on-demand delivery service a try. I was surprised by how easy it was to place my order in the Instacart app, and I now regularly use Instacart to save time.

My experience using Instacart has been really positive, but not all Instacart reviews are the same. Some customers experience issues with substitutions, and you will pay more than if you shopped in-store.

If you're thinking about placing your first Instacart order, learn how it works, what it's really like shopping through Instacart, how much they charge, and whether not it's worth the added cost.

Instacart Review | Is Instacart Worth the Cost in 2021?

How does Instacart work?

Instacart is an on-demand grocery delivery service that's available in over 5,500 cities across the U.S. and Canada. It has an estimated 9.6 million active users with over 500,000 shoppers delivering their orders.

Instacart primarily delivers from grocery stores, and you place your order online or in the app, and an Instacart shopper shops for the order. You can have the order delivered to your home or possibly pick orders up from the store yourself, but this depends on the market and store.

You can track your Instacart order through the entire process — from when a shopper accepts it, what items they've put in the cart, when it's been paid for, and when they're on the way to your house.

Instacart shoppers are trained on how to pick good quality produce (this was a concern of mine), and they'll notify you if they need to make any substitutions. You'll be able to confirm and approve any substitutions that are made.

You can place Instacart orders for as fast as an hour — there might be some limitations depending on the time of the day and shopper availability — or up to a week in advance. And delivery windows start at 9 am and can run as late as midnight depending on the store.

Ready to try Instacart?

Sign up for Instacart today and order online or in the app. An Instacart shopper will shop for your order and deliver it to your doorstep.

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How much does Instacart cost?

There's no simple formula to tell how much Instacart costs. You can place the same order at different times and have a slightly different total. That's because what you pay is based on three different factors:

1. Delivery + service fees

You get your first order delivered for free, but after that, Instacart delivery fees start at $3.99 for orders of $35 or more. You pay a delivery fee based on the size of your order and when you want your order delivered.

The fees can go up quite a bit if you order during busy times, but Instacart makes this clear when you place your order. Sunday is the busiest day on Instacart. During the week, between the hours of 3-6, can be really busy too.

If you do pay extra for an order placed during a busy time and it ends up being late, Instacart will refund the extra fees.

Here are a few more fees you may see with your Instacart order:

Service fee: This starts at 5% of your order with a $2 minimum. Instacart says the service fee covers a broad range of operating costs.
Heavy fee: You may be charged this fee if you've ordered heavy items like cases of soda or dog food. You're charged the fee if the combined total weight of your items is 50lbs or more.
Alcohol fee: You're only charged this one if you order alcohol, and it covers the costs of "ensuring compliant delivery of alcohol products."
Pickup fees: Some retailers charge a pickup fee, which is equivalent to a delivery fee if you were having your order delivered.

You'll see all of these fees when you are choosing the delivery window for your order. It's only an estimated fee because if your shopper has to make any changes to your order, Intacart may change the fees.

If you think you'll use Instacart regularly, you can pay $9.99/month or $99 when billed annually for Instacart Express. There are no delivery fees for orders of $35 or more and no extra fees when you order during peak. Express also lets you place orders for more than one store at a time and receive free delivery on your entire order You'll most likely make your money back in just 2-3 orders.

Free delivery on your first order of $10+

Get your groceries and essentials delivered in as fast as 1 hour via Instacart. New customers can have their first order of $10+ delivered for free. Terms apply.

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2. Grocery costs

Instacart does not set the prices on the items you see in their app; the grocery stores set those prices. Sometimes those prices are the same in-store, but stores generally charge more for items on Intacart to cover the cost of their partnership.

It's also important to note that in-store sale prices or coupons are typically not reflected in the app. Instacart occasionally runs sales pricing, but they only honor coupons you find in the app. All of those deals are automatically applied to your order, so there's no need to enter a sales or coupon code.

Instacart Grocery costs

Instacart also warns you that the total you pay might be slightly different than the total you see in the app. That's because they might need to make substitutions as they shop. In my experience, the order total is always slightly different, sometimes more and sometimes less.

3. Tipping

Even though tipping isn't required, Instacart strongly encourages you to leave a tip for your shopper, and shoppers get to keep 100% of their tips. The app defaults tips to 5% of your order total, and there is a minimum tip suggestion of $2 (same structure as the service fee, but tipping is different).

Instacart shoppers rely heavily on tips for their side hustle income, so it's recommended that you tip your shopper well when they've done their job well.

Interested in what it's like for Instacart shoppers? Read Instacart vs. DoorDash: Which One is Better for Drivers?

Which stores does Instacart work with?

Instacart delivers for hundreds of major and local grocery stores throughout the country, including Costco, CVS, and Target. I live in Houston, TX, and they deliver for local favorites like H-E-B, Kroger, and Aldi.

The only noticeable store missing from Instacart is Trader Joe's, and they don't work with any delivery services. In 2020, Trader Joe's VP of marketing said in the company's podcast that they would rather invest their resources in their people rather than invest them in the cost it would take to plan and implement delivery services.

Related: 9 Meal Prep Tips & Ideas to Help You Save Money

What can I order from Instacart?

You can order groceries, pet supplies, essential items, and alcohol (only in some markets). Pre-COVID, Instacart was just groceries, but they've expanded their offerings to help people get the food and supplies they need to stay at home.

Heads up: If you do order alcohol from Instacart, you'll need to be home to accept the order and show your ID. I made this mistake once and got a bunch of notifications that Instacart was trying to deliver my order when I wasn't home. Fortunately, I was right around the corner, and the shopper was super patient with me. I tipped well for their time.

How to start using Instacart

Step 1: Sign up for your free Instacart account

You just need an email address and password, and you will be asked if you want to do the free 2-week trial of Instacart Express.

Step 2: Select the store you want to shop at.

You can see what the average order time is for each store. As I'm writing this Instacart review, most stores in my area have a 2 hour delivery time.

Step 3: Start adding items to your cart.

You can browse by department, sales, popular items, and even local products. You can click on the + sign to quickly add things to your cart, or click on the item to add special instructions or see the ingredient list.

Below you can see the instructions I gave when ordering deli cheese — sliced thin and with an approved substitution.

Ordering Deli Cheese at Instacart

Instructions When Ordering Deli Cheese at Instacart

You can even scan barcodes to pull up the exact items you want instead of browsing the app. And Instacart saves previous orders in the app so you can reorder the same things in the future. Both of these options can save you a ton of time.

Step 4: Review what's in your cart

Your shopping cart is in the top right-hand corner, click on it to review what you've added to your cart. You can make any last-minute adjustments and see your total.

Instacart - Review What's In Your Cart

Step 5: Head to the checkout

This is where you'll add your delivery address or select your pickup location and time. You can add delivery instructions, like "leave on the porch." You'll also need to add your mobile phone number and payment information.

You can also see the total for your order, with a 5% tip added in (you can change your tip now or up to 24 hours after receiving the order), plus the service fee and estimated sales tax.

Instacart Checkout

Just click the "Place Order" button and your order will be handed off to an Instacart shopper.

Step 6: Wait for your order to be delivered

The app will notify you when someone accepts and starts shopping for your order — make sure you enable notifications when you download the Instacart app.

Your shopper will notify you if they need to make a substitution, and most shoppers are pretty responsive if you need to make a last-minute adjustment to your order. Instart shoppers are given a prepaid debit card to pay for your order, and you'll receive a notification when they checkout.

You can adjust the tip after your order has been delivered. I like this option because I've had some shoppers really go out of their way to make sure I get exactly what I want, and I like to tip them a little extra.

How to make the most with Instacart

Since we know that ordering from Instacart will cost you a little bit more, this wouldn't be a good Instacart review if I didn't give you some ways to save money with Instacart:

Connect your store loyalty program to the app: Most store's rewards or loyalty programs transfer the Instacart app. The app will prompt you to fill that information out when you log in and select the store for the first time. It's saved in the app after that.
Refer your friends: You and your friend both get a $10 credit when they sign up through your referral link. Your credit goes through once they complete their first order, and you can refer up to five friends.
Take advantage of Instacart coupons: Even though you won't see all of the same sales you would if you went into the store, Instacart automatically applies manufacturer's coupons when you select eligible items. It's worth looking through the coupon section of the app to see if you can save money on any deals.
Switch to Instacart Express: If you're using Instacart regularly, you can reduce the amount you pay in delivery fees by becoming a member of Instacart Express. You receive free delivery on orders of $35 or more, and it's cheapest if you pay for a full year upfront.
Use the pickup option: You can still have a shopper shop for your groceries, but instead of having them delivered, you can save a significant amount by scheduling a pick-up window. You drive to the store and an Instacart shopper loads your groceries in your car.

But here's a big one: use the time you're saving.

Instacart saves you the hour or so it takes to go to the store, so consider using that time on something worthwhile. Some days it really might be sitting on the sofa drinking a glass of wine and scrolling through Facebook — we all need a break like that sometimes. Other days you can spend that extra time on your side hustle.

Instacart Review: My experience using the service

Full disclosure: I didn't start using Instacart until COVID. My wife was pregnant, and we were trying to stay home as much as possible.

The first time we used Instacart, I was surprised at how much more expensive it was than going to the grocery store. On our $150 order, it easily cost an additional $20, maybe more, once you factored in the delivery fee, tip, and in-app pricing.

During high-need times, like at the start of the pandemic, it was hard to find delivery windows that weren't 2-5 days out. A lot of people I know were experiencing the same thing. But between an additional influx of Shoppers and more people feeling comfortable returning to in-person shopping, you can easily get same-day orders now.

One thing I've heard in Instacart reviews from some of my readers is that you can save money because you aren't tempted by impulse purchases when you order through Instacart. We've all been there: you make a grocery list, try to stick to it, but you end up with 10 extra items in your cart.

Depending on how good you are at sticking to your grocery list, reducing impulse spending could more than negate the costs of using Instacart.

Honestly, my biggest complaint about Instacart is that they bag all of your produce in individual produce bags. It's a lot of waste and feels and feels unnecessary.

Tip on substitutions:

I highly recommend spending the time to put substitutions in the app when you place your order. You should also stick close to your phone when the Instacart shopper is shopping for your groceries so you can advise on substitutions. If I'd learned this earlier on and it could have saved me some money.

For example, on one of my orders, the store didn't have the blueberries I wanted, so the shopper selected the organic blueberries, which cost $5 more. The shopper tried to ask if I was okay with the substitution, but I wasn't paying attention to my phone. A similar thing happened when I ordered the generic version of Cheez-Its. The store was out and the shopper substituted with brand name ones, costing me $2 more.

Had I been shopping, I either would have found something close to the cost of the generic ones or left that out completely.

More Instacart reviews

I've done my research for this Instacart review, but the reality is that you're only hearing about my personal experience using the app as a shopper. So I've dug through tons of Instacart reviews online that customers have left on sites like Consumer Affairs, Trust Pilot, and Site Jabber.

Here's what Instacart reviews have to say:

"100% of my orders had correct order and correct replacement. Not charged for higher priced items by shopper. I prefer to say no replacement to avoid back and forth correspondence."
"If you are a choosy shopper, it definitely won't save you any time. There are so many fees, and most items are up-priced, so it's hard to know what the actual cost of the service is. They also put a generous hold on your account when you complete an order, so it requires a lot of checking and follow-up to be sure the final charge is accurate."
"I consider Instacart as one of our nation's first responders. I've used Instacart for almost 7 years and never had an issue. They are consistently on time and the quality of groceries I receive are excellent."
"In spite of all the negative reviews, I have to say that my recent experience was excellent. My order was placed, shopped and received within 3 hours. The store was out of some items, mainly produce, and the shopper refunded all. He also replaced a few items, after texting me for my approval."
"Your satisfaction will very much depend on your shopper. Yesterday i had a horrible experience with them. I am very careful to type in big, bold letters, 'no replacements or substitutions' in the box marked preferences which gives you that option."
"I really enjoyed using Instacart until I found out that they were charging more money for items than the stores."
"My experience has been hit or miss with Instacart and I say this as far as their ability to select produce / fresh items / meat / poultry / etc. Sometimes they'll grab you the pick of the litter, other times you'll end up with a sad bruised peach. Instacart is usually good about refunding when this happens, and truly the company has been a lifesaver during this whole pandemic. The shoppers are on the front line literally putting their lives on the line to get us our food, so they deserve more than their usual pay during this time."
"I love the convenience of Instacart, but their markups are really substantial. I received a store receipt with my order. I was charged $408 by Instacart (not including the tip for the shopper) for $319 of stuff from Costco (based on the store receipt — I paid damn near $100 for this delivery). Gasp. Oh well, lesson learned — time to get my lazy butt out there and do my own shopping."

Pros and Cons of using Instacart

Pros

Convenience: Instacart makes it easy to order groceries from the convenience of your home. The app allows you to order in advance and it saves past orders.
You can Instacart more than just groceries: Now that Instacart also delivers from drugstores and warehouse stores, you can order essential items, medicine, and even pet food.
Instacart wants to get your order right: Besides shoppers asking about substitutions, the Instacart app will also tell you if the store appears to be running low on something in case you want so you can approve substitutions in advance.

Cons

Cost: It costs more to get your groceries through Instacart. You are paying a delivery fee, a service fee, a tip, and slightly more per product.
A slight learning curve: The first order you place with Instacart is going to take the longest — you need to figure out how to search for items and leave notes for your shopper. It's like learning where everything is at a new grocery store.
Unable to select items: Instacart shoppers are trying their hardest to make substitutions and pick produce, but sometimes they miss the mark. You can leave notes in the app, and be ready to check the app in case your shopper has questions about substituting items.

Instacart Review – Is Instacart worth it?

I'm really happy to have Instacart as an option for when I'm busy or don't want to go to the store. It's not something I will use for every trip because I don't really mind grocery shopping. However, I will continue to use Instacart in the future.

If you want to save time grocery shopping, Instacart can definitely help. Just be aware that it will take a little longer than average on your first order, but you'll quickly get the hang of it.

Thinking about time as money, what is your time worth? Is it worth more than the $10-$20 extra you might pay for groceries? Is the in-store stress you're saving more valuable? If your answer is yes, then Instacart is definitely worth it.