3-7-18 9:14 AM EST | Email Article
By Laura Stevens 

Amazon.com Inc. is expanding its discounted Prime program, its latest salvo in a battle with Walmart Inc. for low-income shoppers.

The online retail giant said Wednesday that it will extend its $5.99 monthly Prime membership to the roughly 20% of the U.S. population that is signed up for Medicaid. Last year, the company introduced the discount--Prime membership ordinarily costs $12.99 a month or $99 a year--by offering it to people who obtain government assistance with cards typically used for the food-stamp program, formally called the Supplemental Nutrition Assistance Program.

Prime perks include unlimited two-day shipping and video and music streaming.

Amazon's pursuit of more low-income shoppers comes as analysts estimate Prime membership has reached more than half of all U.S. households with internet and largely saturated the wealthier segment.

Even as shopping increasingly shifts online, many low-income customers continue to frequent brick-and-mortar stores, where they can pay with cash or a SNAP card. Walmart has more than 4,600 stores in the U.S. and Dollar General Corp.--which targets households earning $40,000 or less--has more than 14,000, many in low-income, rural areas.

Walmart, the country's largest retailer by revenue, is seeking to attract wealthier shoppers, ramping up efforts to better compete with Amazon online. It is wooing premium brands to walmart.com; late last year it announced plans to start selling products from department store Lord & Taylor online. And last week it replaced many of its private-label clothing brands with new, slightly more expensive and fashion-forward versions.

Amazon's discounted membership, which is limited to four years of eligibility, is increasing orders for items like baby food, toys and diapers, said Aaron Perrine, who leads the program. Customers are also using the company's one- and two-hour shipping option, Prime Now.

"They come for shipping," he said. "They stay for digital"--specifically Amazon's video- and music-streaming options.

These customers also frequently purchase the company's own devices, including its Fire TV streaming sticks, Echo Dot speakers and Fire tablets, he added.

Lower-income consumers have been the fastest-growing segment of online shoppers, analysts say, but still face potential impediments. They may lack internet access, banking resources like credit cards--SNAP cards can't be used to pay online--and safe places to deliver a package.

But consumer habits are shifting rapidly. Most low-income shoppers now have a mobile phone, and companies including United Parcel Service Inc. and Amazon have been adding lockers and other pickup locations to allow for safe delivery. The retailer has also recently expanded the ability to reload account balances with cash at convenience stores and other locations.

Sarah Nassauer contributed to this article.

Write to Laura Stevens at laura.stevens@wsj.com


(END) Dow Jones Newswires

March 07, 2018 09:14 ET (14:14 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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