June 6, 2017

COMPETITION: Amazon Fights Wal-Mart for Low-Income Shoppers.

The online retailer giant said Tuesday that it will offer a nearly 20% segment of the U.S. population—people who obtain government assistance with cards typically used for food stamps—a $5.99 monthly Prime membership, less than the $10.99 a month or $99 annual plan for other consumers. The membership buys access to unlimited two-day shipping, video and music content, photo storage and other perks.

The new Prime offering takes direct aim at Wal-Mart, which counts on shoppers who receive government assistance for a large percentage of sales. Wal-Mart generated about $13 billion in sales last year from shoppers using the Supplemental Nutrition Assistance Program, or SNAP, accounting for around 18% of the money spent through the program nationwide. Those customers also spend additional income while in Wal-Mart stores.

Amazon will require cards typically used for food stamps as an initial measure to determine participant eligibility, although they can’t yet be widely used for shopping online. The retailer plans to add additional ways to qualify.

What could go wrong?

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