Amazon Prime's core customers have typically been middle- and upper-class shoppers. That may soon change.
The e-commerce titan said Wednesday it will now offer the popular membership program to Medicaid recipients for $5.99 a month, less than half the regular monthly price.
The move vastly expands the number of people now eligible for that discounted rate, with about 35 million American adults enrolled in Medicaid, the public health insurance program for people with low income.
Amazon in June started offering that discounted rate to people with Electronic Benefit Transfer, or EBT, cards, which are used to give money for food assistance and other government aid programs. About 30 million American adults receive federal food assistance.
"We know a discounted Prime plan is not the solution to every problem customers face," said Aaron Perrine, general manager of Lifestage Programs at Amazon, "but we believe it's one piece of the puzzle in making their lives a little bit easier."
Amazon's intentions, of course, aren't wholly altruistic. After successfully bringing Prime into the majority of higher-income homes, Amazon now likely needs to look to lower-income shoppers to keep growing the program, which has tens of millions of subscribers in the US. (Amazon doesn't disclose its number of Prime subscribers.) Amazon's decision Wednesday to more than double the size of potential customers for discounted Prime could significantly help it in that goal.
The move could also help Amazon siphon customers from Walmart, a major competitor that's focused for years on providing services for lower-income customers. In a similar effort, Amazon last year also introduced Amazon Cash, a way to help people without bank accounts load money into their Amazon accounts.
"Once these folks try Prime, we feel like we're going to make lifetime Prime members out of them," Perrine said.
In that regard, offering a social benefit for people who may have more challenges getting to a store or affording faster shipping could become sound business, too, said Avi Greengart, an analyst at Global Data.
To qualify for for the discounted membership, customers can visit Amazon.com/qualify and upload an image of their EBT card or Medicaid card. The new membership will be available immediately after signing up, Perrine said.
Customers will need to renew their membership every year and the lower rate will only be available for four years for each customer. People can cancel the monthly membership anytime.
The discounted Prime service includes Prime Video and Prime Music streaming services, in addition to unlimited two-day shipping. But customers won't be able to share their Prime membership with a second adult, as with a regularly priced Prime membership.
Prime costs $99 annually, or $12.99 on a monthly basis. Prime membership for students is $6.49 a month.
Perrine said his company spoke with customers who enrolled in discounted Prime to get a better idea of how people use the service. He mentioned Wendy, a single mom with four kids who lives in rural Missouri. Her youngest son has a rare genetic disorder that prevents her from working full time and makes going to the store more difficult. He said Prime has helped save her time and money by helping her skip some of those errands.
"I think customers that have tried this plan have seen enormous value from it," he added. "We couldn't be more excited about the response."
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