Amazon.com Inc. is making its Prime loyalty program available at a reduced monthly rate for consumers who receive government assistance.
Consumers who have a valid Electronic Benefits Transfer (EBT) card qualify for the discounted membership, which is $5.99 a month for a year, the e-retailer said Tuesday. Prime membership comes with access to free two-day shipping on more than 50 million eligible items and other perks such as streaming video, music and digital photo storage. An EBT card, which recipients use to access cash payments and food stamps, cannot be used to pay for membership, according to Amazon, No. 1 in the Internet Retailer 2017 Top 500.
“We know when people try Prime they love it, because they save time and money with low prices on millions of items, unlimited access to premium videos and music, and fast, convenient delivery,” says Greg Greeley, vice president of Amazon Prime. “We designed this membership option for customers receiving government assistance to make our everyday selection and savings more accessible, including the many conveniences and entertainment benefits of Prime.”
Amazon does not say how many Prime customers it has, but securities research firm Consumer Intelligence Research Partners in April estimated there are 80 million customers in the United States, up 37.9% from 58 million at the same time last year.
This offer may be Amazon’s way to keep Prime membership growing, particularly among lower-income consumers who have not subscribed to Prime in larger numbers, says Scot Wingo, executive chairman at ChannelAdvisor Corp., which helps merchants sell on online marketplaces like those operated by Amazon, Wal-Mart Stores Inc., eBay Inc. and others. He notes Wall Street data indicate that 80% or more of Amazon Prime’s members live in households with annual incomes above $100,000, while membership is low in households of less than $50,000. Speaking of today’s announcement, Wingo says, “It looks like a move to keep Prime subscriptions growing.”
There’s good reason for Amazon to want more Prime customers, even if they are less affluent, as joining Prime appears to spur shopping on Amazon. Each Prime member spends nearly double ($1,300) the amount annually a non-Prime member ($700) spends on Amazon, CIRP says. Also, Amazon increasingly is where consumers start their search when they shop online. 55% of U.S. consumers began their product searches on Amazon in 2016, up from 44% in 2015, according to data released by BloomReach in September 2016.
The move also looks to be an effort to capture some of Walmart’s core customers, according to Matt Sargent, senior vice president of retail at consultancy Magid Associates.
“Amazon is not content existing within the confines of the more affluent customer base utilizing Prime today and is looking to expand into the lower income households that it has had trouble penetrating,” Sargent writes. “Less than 25% of households making less than $25,000 subscribe to Amazon Prime, contrasting the fact that 60% of consumers making the same income regularly shop Walmart. Amazon recently announced the ability to engage with customers with poor credit through Amazon Cash and is now taking this a step further with a discounted Prime offering for customers that receive financial support through government assistance programs.”Favorite