Is Driving For Instacart Really A Worthwhile Side Hustle?

With so many app-based side hustles to select from, is driving for Instacart worth your consideration? For those not in the know, Instacart bills itself as the "The largest online grocery marketplace in North America." Instacart customers can shop online not only at grocery stores, but also at other retailers such as pet stores, pharmacies, and office supply stores. The company then sends a full-service shopper to collect your items and deliver them to you in a timely fashion using their own vehicle.

The earnings from being a "full-service shopper" — independent contractors working for Instacart that do both the shopping and delivery driving — depend on several factors such as what type of orders you choose to accept, tips, geographic location, and taking advantage of promotions to incentivize drivers. According to the employment website Glassdoor, the compensation range for Instacart drivers is $14 to $21 per hour, with an average rate of $17 per hour. The exception is Instacart drivers living in California, who receive 120% of the local minimum wage for the period beginning with order acceptance and ending with delivery. The distance between the store and the delivery address is also compensated at $0.34 per mile in California only.

Finally, note that Instacart recently lowered its base pay, which is the minimum compensation that a driver receives for an order, from $7 down to $4. The compensation rates provided by Glassdoor already reflect the new lower base compensation compared to higher figures from a few months ago.

Although you might never become a millionaire from the earnings generated working as an Instacart full-service shopper/driver, the good news is that there's little to no cash outlay to get started. According to Instacart's application page, there are only five requirements. Taken directly from the company website, the requirements are:

1. Be at least 18 years old
2. Be eligible to work in the U.S.
3. Have a bank account
4. Have consistent access to a vehicle and a recent smartphone
5. Be able to lift 40 pounds with or without accommodation

The company suggests that "If you already provide services as a personal shopper or are involved in the grocery or transportation industries (such as a courier, driver, truck driver, professional driver, taxi driver, food delivery driver), you might want to consider shopping with Instacart," but the reality is that anyone meeting the requirements can apply with a high likelihood of getting approved for the role.

Note that while it's not specifically mentioned in Instacart's requirements, the company also conducts a background check on its drivers to weed out applicants with certain types of criminal backgrounds and to make sure that your driving record is relatively clean. Regarding the latter, there does seem to be some degree of discretion over what's considered to be a clean driving record, with some applicants getting rejected over a recent speeding ticket while others applicants sail through under similar circumstances.

Of course, one of the biggest draws to gig work in general is the flexible hours. As a full-service shopper, you can work whenever you like with no advance notice to inform the company required. That said, there are some days of the week and times of the day when it's more profitable to work than others.

You can use information gleaned from searching the internet or Instacart's app to learn which times are the busiest in your area and plan accordingly. Generally speaking, weekends and weekday evenings tend to be peak times, which also dovetails nicely if you happen to work a regular Monday through Friday "nine-to-five" job as well. 

When there's a surplus of orders to be filled, Instacart may offer "Peak Boost" pay incentives on top of the base rate to motivate drivers to get involved. Savvy drivers may also be able to combine multiple orders, called "bundles," in the same relative area, minimizing the amount of driving necessary.

If you're considering driving for Instacart, you've also probably investigated driving for rideshare services like Uber and Lyft. Even though Instacart does require some customer interaction, it's definitely much less than driving for a rideshare company, where you'll share your car with passengers pretty much constantly, or at least while you're getting paid. 

Whether you're an introvert or prefer to work autonomously or just don't want the wear and tear on the interior of your vehicle from treating it like a taxi, delivering products might be a better fit for you than delivering people. You can listen to music or podcasts while driving and don't have to make awkward small talk or field complaints about taking the wrong route to a destination, which is always a hazard with rideshare passengers. Not to mention that some passengers can be intoxicated or even violent. 

Finally, as a full-service shopper, a significant amount of your time will be spent in stores shopping for the customer's items and not behind the wheel constantly driving, which is not only more economical but reduces your chances of being involved in an automobile accident. 

A pitfall of the gig economy is the lack of health insurance, matched contributions into a retirement account, or accumulating paid time off. If you're driving for Instacart as a side hustle, then you might be fortunate enough to have some of these benefits like health insurance as a perk of your full-time job.

Independent contractors — sometimes called freelancers or 1099 employees after the IRS Form 1099 — also don't typically have any income taxes withheld from their earnings. Therefore, you could easily find yourself owing some income taxes to the IRS at the end of the year, so do set aside some of the proceeds from your side hustle for this obligation. Also note that technically, the IRS requires quarterly payment of estimated income taxes in advance if you think you'll owe more than $1,000 per year in taxes from work as an independent contractor. Before starting any side hustle, you should consult a qualified tax expert for the legal requirements and best advice on your particular situation.

Finally, 1099 employees are responsible for paying a self-employment tax equal to 15.3% of income up to a certain point. Ordinarily, an employer would pay half that amount for you, but as an independent contractor, you're responsible for the full 15.3% in addition to commensurate income taxes. The good news is that there are typically many tax deductions available to independent contractors such as business-related mileage and smartphone expenses, thereby reducing your tax burden.

When determining if it's worth driving for Instacart, also consider the expenses of using your vehicle. Although the mileage and some maintenance costs may be deductible from your income tax obligation, it won't be enough to entirely offset the cost of fuel, insurance, and wear to the vehicle. Also, most standard auto insurance policies only cover personal use, so you'll probably want to alert your insurance company that you'll be using the vehicle for work and perhaps add some commercial coverage in case you're involved in an accident while making deliveries.

Fuel costs will take a chunk of your earnings. Last year, Instacart implemented a Fuel Assistance program that paid drivers an extra $0.40 per order which wasn't amazing, but it was better than nothing. Since then, the promotion has ended and no fuel reimbursement whatsoever is provided, so be careful choosing which orders to accept. Even though longer-distance orders can pay more in an absolute sense, it might not be enough to be worthwhile.

Depending on where you live, driving for Instacart might not provide income significantly more than your state's minimum wage, especially after deducting your expenses. Then again, it's easy to get "hired," you can work whenever you like, and driving groceries can be an attractive alternative to driving people.