Amazon.com Inc. (NASDAQ: AMZN) announced Wednesday morning that the company is expanding its program offering discounted pricing for an Amazon Prime membership to include the 35 million adult Americans who receive Medicaid benefits.
The company initiated the discount program last year with an offer to people with electronic benefit transfer (EBT) cards issued by state welfare agencies to those who qualify for the Supplemental Nutrition Assistance Program (SNAP or, formerly, food stamps) and the Temporary Assistance for Needy Families (TANF) programs.
Consumers must have a valid EBT or Medicaid card to qualify for the discounted monthly Prime membership fee of $5.99, less than half the standard $12.99 monthly membership and less than the $99 one-time fee for an annual membership. The Prime membership can be renewed annually for up to four years and customers can cancel at any time.
Amazon Prime has been a hit with more affluent customers, but the membership fee likely has been a hurdle for the less affluent. Using Prime and all its benefits as an enticement to the less affluent is not only a generous offer, but another shot at Walmart.
According to a report in The New York Times, Walmart accounts for about 18% of all spending through the SNAP program. If Amazon can chip away at that number, so much the better.
Whether EBT or Medicaid cardholders will be willing to spend even a few dollars a month of their limited resources on a Prime membership probably depends on more than just the money. For example, lower income Americans are less likely to have a credit card. Amazon has created an Amazon Cash program to work around that issue.
Whether the discounted Prime membership program will be a success or not depends on how you look at it. From Amazon’s point of view, if it gives agita to Walmart, even briefly, the discount is worth. From a consumer’s point of view, success is a lot harder to define.