Amazon is attempting to lure low-income shoppers from Walmart by offering a discount on its pay-by-month Prime membership for people who receive government assistance.
The typical Prime membership is $99 a year, but those who cannot afford to pay up front also have the option to pay $10.99 a month.
The giant online retailer said on Tuesday that people who have a valid Electronic Benefits Transfer card, used for programs such as the Supplemental Nutrition Assistance Programs, or food stamps, will pay $5.99 per month.
Amazon Prime benefits include free shipping, unlimited streaming of movies and TV shows and a rotating selection of free e-books and magazines.
Amazon is offering a 30-day free trail for qualifying customers.
“The online retailer’s move directly challenges Walmart — the biggest beneficiary of the Supplemental Nutrition Assistance Program (SNAP) — where at least one in five customers pay by food stamps.”
The Wall Street Journal adds:
“Walmart generated about $13 billion in sales last year from shoppers using the SNAP Program, accounting for around 18 percent of the money spent through the program nationwide.”
But not everyone is convinced that Amazon’s maneuver will pay off for the company.
The Associated Press reports:
“Internet consultant Sucharita Mulpuru-Kodali says Amazon’s move ‘seems inevitable’ because it’s saturated a good part of the affluent and middle-class sector — but describes it as a ‘head scratcher.’
” ‘These consumers have always indexed lower in online transactions, and their living circumstances are often not well-suited to package delivery, and many of these consumers don’t have vehicles to drive to a location to pick up packages,’ she wrote in an email. ‘Of the long list of businesses that Amazon could target, this doesn’t seem like the biggest one.’ “
Competition heats up
Amazon and Walmart each have been upping their game to cut into the other’s bottom line.
Walmart is pressing ahead with strategies to better compete against Amazon online. Last year Walmart announced it would acquire Amazon competitor Jet.com for $3.3 billion.
Last week Walmart announced that it would begin testing a program in Arkansas and New Jersey that would use store employees to deliver online orders at the end of their shifts.
“About 90 percent of the U.S. population lives within 10 miles of a Walmart, and the company is using those locations as shipping hubs to compete with Amazon on the last mile of delivery — the most expensive part of getting goods to customers. By using existing workers in their own cars, Wal-Mart could create a vast network with little upfront cost, similar to how Uber Technologies Inc. created a ride-hailing service without owning any cars.”
Walmart and Amazon are bending over backwards to make shopping easier for customers.
But low-income shoppers, and for that matter any online shopper, take heed: shopping with the click of a mouse can be trouble for your wallet.
The website CheatSheet.com recently remarked on two indications that you spend too much money on Amazon:
- your credit card statements are full of Amazon purchases
- your living room is cluttered with unopened Amazon boxes