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Instacart Raises Fees And Lays Off Recruiters As Its Frenzied Growth Slows

After tripling in size this year, Instacart is putting the brakes on recruiting in 2016.

[Photo: Flickr user Krystian Olszanski]

Instacart is putting the brakes on hiring. After tripling in size in 2015, the on-demand grocery delivery company has laid off 12 full-time recruiters as it rethinks its priorities for next year, Re/code reports.

The cuts come as Instacart quietly tinkers with its business model: The company is raising its annual subscription fee from $99 to $149 and increasing the minimum delivery cost requirement from $4 to $6, suggesting that its margins aren't quite as healthy as its executives (and investors) would prefer. The startup was valued at $2 billion last year.

Earlier this year, Instacart shifted its model to put more of the financial onus on grocers rather than on consumers. Instead of simply marking up each item purchased and delivered by one of Instacart's contract shoppers, the company is letting grocers set their own prices in exchange for a fee paid directly to Instacart.

As one of the poster children of the so-called gig economy, Instacart has faced some of the same challenges that have plagued startups like Uber and TaskRabbit, which rely on independent contractors to carry out their services. Most notably, Instacart's labor practices have become the subject of lawsuits as the company—which uses contract workers to fulfill and deliver grocery orders—challenges the traditional concept of employment. Labor lawsuits like this are becoming increasingly common as the gig economy blossoms and companies land huge rounds of funding without sharing the wealth (or perks like health insurance) with their armies of contract workers.

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