Amazon.com (AMZN) is adding a discount on Prime membership for Medicaid recipients in its latest move to win more business from lower-income shoppers at Walmart’s (WMT) expense.
In a blog post on Wednesday, Amazon announced that customers on Medicaid can now get Amazon Prime for $5.99 a month, or less than half the regular $12 fee for the subscription service. It comes on the heels of discounts introduced in June for shoppers on some forms of government assistance who use and Electronic Benefits Transfer card, an sizable part of Walmart’s clientele.
Prime offers benefits such as free day unlimited two-day shipping on tens of millions of products, as well as other services such as streaming of various entertainment offerings. The service counts tens of millions of Americans among its customers (the program is used by almost half of U.S. households by to some estimates.) It has made Amazon’s e-commerce site even stickier among members, who ramp up use as they look to get their money’s worth. Amazon also clearly hopes the discount will sway lower-income shoppers who may balk at the Prime membership.
“We hope to make Prime even more accessible,” said Cem Sibay, Vice President, Amazon Prime in the post.
Neither Walmart nor Target (TGT) have a membership program like Prime but instead have set order minimums ($35) for free two-day shipping. Many lower income shoppers still gravitate toward chains like Walmart and Dollar General where they can pay with cash and EBT cards.
At the same time, Amazon’s incursion works both ways too, with Walmart looking to attract more affluent customers than it typically has, with moves ranging from its recent launch of better apparel brands, to its acquisition last year of Bonobos, to the upcoming online store on its web site for department store Lord & Taylor. Walmart recently posted disappointing e-commerce growth, renewing concerns about its ability to compete with Amazon, which by some estimates accounts for about a third of U.S. e-commerce.
Medicaid is a government program that helps fund health coverage for low-income families and disabled individuals. Shoppers who want to sign up will have to apply and upload a photo of their Medicaid card to prove eligibility. Such shoppers will have to reapply once a year for up to four years.