Citing new ordinances recently passed in Seattle that aim to help gig workers, the Target-owned delivery service Shipt informed customers this week that it will pause operations in the city starting Jan. 10.
Birmingham, Ala.-based Shipt works like same-day delivery companies such as DoorDash and Instacart, employing gig workers to pick and/or deliver groceries and other items. Target acquired Shipt in 2017 for $550 million.
In an emailed statement to GeekWire, Shipt said action taken by the Seattle City Council will impose significant operational challenges that would impact its ability to be compliant and continue providing value and service.
The company said it has repeatedly expressed its concerns to the City over the policies.
The Seattle Times first reported the news.
The ordinances aimed at app-based delivery platforms include a 10-cent per-order fee for online deliveries in Seattle starting in 2025, approved by the Council in November. The revenue generated by the fee will help pay for the implementation and enforcement of the City’s “PayUp” gig worker protection laws in Seattle. One law sets minimum wage policies, another is related to regulations for the worker deactivation process.
Seattle Councilmember Lisa Herbold, who is departing her seat at the end of the year, was lead sponsor of the bill, CB 120706, that imposes the 10-cent fee.
“These vulnerable workers in this under-regulated industry are calling out for us to put our money where our mouth is and fund the enforcement of the protections we have approved as a council,” Herbold previously said.
Herbold said last month that the average customer will pay an additional $5.20 per year if companies pass the fee to customers — “which they don’t have to do,” she said during a Nov. 22 council meeting.
In a statement to GeekWire last month, Instacart said the bill “forces residents to foot the bill for an ill-advised ordinance amid record inflation and tightened budgets.”
GeekWire reached out to Herbold and the Council for additional comment on Shipt’s decision and we’ll update this story when we hear back. Update: Here’s a comment Herbold shared with GeekWire:
“Shipt had more than 18 months to figure out how to comply with the minimum wage requirements. While we hope they will comply with the law, the era of app-based companies paying workers less than the minimum wage is over. I’m proud to have co-sponsored this legislation. Seattle has become a national model in app-worker protections. New York City followed in our footsteps, adopting a similar law earlier this year.”
— Seattle councilmember Lisa Herbold
News of Shipt’s pause riled some commenters in the r/Seattle community on Reddit:
- “Really upset about this — I’m a university student without a car and I’ve been using Shipt to get groceries delivered as there isn’t a store near me.” — PicklePotomous
- “They haven’t figured out how they can successfully under pay their workers and over pay their executives here so they are shutting down.” — Slackerdc
- “Apparently service is only available where the company can profit off the backs of sub-minimum wage delivery workers, and/or avoid reasonable labor standards by delivering with contractors.” — Sea_Tack
Shipt operates its membership-based platform across the U.S., making deliveries from stores including Target, Petco, QFC, Fred Meyer, Safeway and more. At the end of 2022, Shipt was partnering with 200 different retailers — a much smaller operation compared to Instacart, which says it partners with 1,400 retailers.
Shipt cut 3.5% of its filled positions and eliminated many job openings during layoffs in October, citing a dramatically changed business and industry landscape.
