Amazon Discounts Prime Membership by 54% for Customers With Medicaid

Amazon is taking aim at Walmart by offering a 54 percent discount on Prime memberships for Medicaid recipients

With these discounted memberships, Amazon threatens to steal low-income customers from Walmart.

Amazon announced Wednesday that it will offer a low-priced version of its Amazon Prime membership program to qualifying Medicaid recipients. The $5.99-a-month price compares to the regular $12.99 pay-by-month option and is almost $30 cheaper than the $99-annual-fee plan. In a similar effort, Amazon a year ago also introduced Amazon Cash, a way to help people without bank accounts load money into their Amazon accounts. While Amazon doesn't say how many members Prime has, those customers usually spend more and buy more frequently than non-members. Amazon does not report the number of prime members it now has.

Since June, Amazon has offered the same Prime discount to people using food stamps or other government assistance through an Electronic Benefit Transfer card.

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.

Through the discounted Prime membership, subscribers gain access to free, two-day shipping on many products sold through Amazon; Prime Video, the company's streaming video platform; Prime Music for streaming music; Prime Photos; Prime Reading; Prime Now; Audible Channels and other features.

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. The report found that there are 85 million Prime members in the US, spending an average of around $1,300 a year compared to $700 for non-Prime shoppers. Eligible shoppers need to reapply once a year and are eligible for up to four years. The Prime promo price is only available to adult Medicaid cardholders.

"I think customers that have tried this plan have seen enormous value from it", he added.

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