Amazon.com is offering a discount on its Prime membership for people who have low incomes and receive government assistance, positioning itself as an even greater competitor to retail giant Wal-Mart.
Customers with a valid Electronic Benefits Transfer card — used for programs such as the Supplemental Nutrition Assistance Program, also known as food stamps — can now pay $5.99 a month for Prime membership, which offers free shipping, as well as streaming of certain movies, TV shows and other entertainment.!
Prime's typical monthly price is $10.99, but standard users can instead pay $99 per year up front, which equates to $8.25 a month.
Amazon said that it wants more people to have access to Prime.
"We designed this membership option for customers receiving government assistance to make our everyday selection and savings more accessible," Greg Greeley, vice president of Amazon Prime, said in a statement.
Customers would not use food stamps to pay for Prime, and in most places, people can’t even use food stamps to buy food from Amazon. In January, the U.S. Department of Agriculture announced a pilot program enabling food stamp participants in a few states to buy their groceries online through Amazon, along with six other companies.
Analysts say the lower Prime price is a way for the e-commerce giant to build its customer base.
The discounted price of $5.99 a month works out to about $72 a year, which isn't that much different from the typical $99 annual Prime membership fee, said Michael Pachter, an analyst with Wedbush Securities. "This is clearly aimed at Wal-Mart customers," he said. "Amazon's trying to present itself as a reasonable alternative."
And, Pachter noted, customers can opt into Prime for only one month at a time — say, a month when they plan to buy a lot. He said Prime membership could be pitched this way: "Hey, do it at Christmas for only $5.99. You can get all your shopping done and get free shipping."
But easier access to Prime doesn't necessarily bring Amazon's grocery offerings within reach.
While the Prime discount gives consumers access to things such as Prime Video, Prime Music, and Prime Photos, those with government assistance must still pay an additional $14.99 a month for membership in Amazon's grocery delivery and pickup service — AmazonFresh.
In addition to reaching a new market, analyst Kerry Rice with Needham & Co. said Amazon's new discount may have to do with appearances: "In this day and age, you get a benefit both from public perception as well as an economic benefit."
The Associated Press contributed to this report.