Point Pickup, a delivery contractor used by Walmart and other major retailers, rolled out an app update that sowed confusion among drivers, some of whom say they are earning less money. This may be the result of a switch from a static pricing model to what the company's chief marketing officer said is a "dynamic market pricing technology that informs individual order pricing based on specific market conditions as they fluctuate.”
Before recent changes to the app, gig workers on the Point Pickup platform were shown a payout amount alongside their delivery offers. Tips were processed later and paid out separately.
But in recent weeks, Point Pickup drivers noticed that the company had begun to include tips in their payout amount. Now when a customer tips, Point Pickup shows something it's calling a "guaranteed minimum payout," an overall number that is inclusive of any customer tip, according to screenshots obtained by Motherboard. This change led some workers to believe that they were having their base pay supplemented by tips, because earnings have dropped since the change, they said. (DoorDash, Instacart, and Amazon Flex have also included tips in workers’ guaranteed minimum payouts, which has resulted in driver and customer backlash toward the companies.)
Point Pickup says that it is being more transparent with drivers by estimating the total overall payment they are going to receive when they accept an order, and says that the switch to dynamic pricing occurred before the recent app update. But the dynamic pricing model rolled out over the last six months, which relies on an algorithm to calculate parts of a driver's pay, is resulting in some drivers making less money, drivers told Motherboard.
Point Pickup tells Motherboard that base pay is calculated independently of any tip, but the change led to confusion among drivers, some of whom say they believe they are getting paid less under the new model.
“A week ago we got tips plus what they offered us,” a driver in central Wisconsin told Motherboard. “Now they’re being sneaky and using our tips in their offer.”
When asked by Motherboard whether the algorithmic pricing model has resulted in better or worse pay for delivery workers on a per-order basis, Point Pickup chief marketing officer Jeanne Logozzo declined to answer.
"We've already provided you with every detail of how our payment structure works along with our technology, but we're a privately held company and we are not at liberty to publicly divulge company financials and the related data,” Logozzo said. Logozzo said that a driver's base pay per order is calculated independently of any tip they receive, but workers still say they believe they are on average making less money per order than they used to.
Tom Fiorita, Point Pickup's CEO, said “We have actively been talking to our drivers to answer all questions on the payment structure and the updated Driver App UI is in direct response to their input. In fact, we've seen a record number of drivers accepting orders late last week as we've begun to launch holiday events and promotions with our partners.”
Point Pickup doesn’t have the same name recognition as gig economy companies such as Uber, DoorDash, or Instacart, but it has a giant national network of more than 350,000 drivers in the United States who ferry products from major retailers such as Walmart, Kroger, and other grocery stores to customers' homes. As independent contractors, they do not receive overtime pay, minimum wage guarantees, healthcare benefits, or reimbursement for costs accrued on the job.
Point Pickup isn’t the first gig economy platform to switch to an algorithmic pay model, and across the gig work industry, workers report that they feel they make less money when algorithmic pay models are used. DoorDash has said that the model leads to "inconsistencies in earnings" for workers, while Shipt workers who deliver for Target have previously gone on strike over a switch to an algorithmic pay model.
Point Pickup's switch to this model as well as a user experience change to the app caused confusion among drivers, who have been speaking out on social media in Facebook groups dedicated to the app about lower pay and the perception among them that their tips are being used to supplement their overall earnings.
"I am a widowed mother of a 22-year-old disabled daughter,” a Point Pickup driver in Azle, Texas told Motherboard. “This is my full time job. I depend on it. I was flabbergasted when they made this change because I love what I do. There’s been a dramatic drop in my earnings of at least $400 [per week].”
On a private Facebook group with 8,500 members, called “Point Pickup Drivers,” gig workers have written in recent days about losing hundreds of dollars in pay each week, and feeling as though they have to quit the app.
“Do YOU order from Walmart delivery?? I want CUSTOMERS to be informed about what is going on,” one driver wrote. “This is NOT okay, No company should be using YOUR tips to a driver to justify docking their pay.”
After Motherboard reached out to Point Pickup for comment, the company announced that it updated the app on November 8 to show that “guaranteed payouts” now include pay base, extra pay, and tips, and published a “clarifier” on what is included in extra pay.
A spokesperson told Motherboard that the company had recently begun “publishing a guaranteed rate prior to drivers accepting orders (includes base rate + projected extra pay).”
“Drivers were confusing the guaranteed rate for the fixed base rate (just a portion of the guaranteed rate),” she continued. “The confusion led drivers to believe that we were taking some of their tips. This is not true. DRIVERS HAVE ALWAYS RECEIVED AND WILL CONTINUE TO RECEIVE 100% OF THEIR TIPS.”
Point Pickup also partners with Kroger, Albertsons, Publix, GameStop, Sam’s Club, and Giant Eagle, but not all partners allow tipping, a spokesperson said. Point Pickup would not disclose which of its partners had disabled tipping, but drivers told Motherboard that Walmart uses tipping.
“Walmart passes 100% of tips to delivery providers for them to distribute to their drivers,” a spokesperson for Walmart said.
This story and headline have been updated to be more specific about the algorithmic pay model and to include further comment from Point Pickup about how pay is calculated.