The battle for low-income shoppers is heating up.
Amazon announced that individuals participating in government assistance programs can sign up for Amazon Prime membership at the discounted rate of $5.99 per month. The regular annual membership for Prime is $99 per year, or $10.99 a month for those who prefer to pay on a monthly basis.
To date, Prime's growth has largely been fueled by upper-middle and upper income shoppers. But with the new discount, Amazon is directly going after an audience segment that has long been a stronghold of Walmart: lower income customers.
“Amazon is not content existing within the confines of the more affluent customer base utilizing Prime today and is looking to expand into the lower income households that it has had trouble penetrating,” commented Matt Sargent, senior VP of retail at Magid, a global consulting firm. “Less than 25% of households making less than $25,000 subscribe to Amazon Prime, contrasting the fact that 60% of consumers making the same income regularly shop Walmart. Amazon recently announced the ability to engage with customers with poor credit through Amazon Cash and is now taking this a step further with a discounted Prime offering.”
At launch, customers will need a valid electronics benefit transfer (EBT) card to qualify for the Prime discount. (The card is commonly used to disburse funds for several government assistance programs, including Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Women, Infants, and Children Nutrition Program (WIC) EBT, however, cannot be used to pay for membership.
Amazon said it will add other ways to qualify in the future for customers participating in government assistance programs that do not utilize EBT. There is no annual commitment and members can cancel anytime.
“We designed this membership option for customers receiving government assistance to make our everyday selection and savings more accessible, including the many conveniences and entertainment benefits of Prime,” said Greg Greeley, VP of Amazon Prime.