Amazon Just Made a Major Play for Walmart Customers

Amazon figured out a great way to appear altruistic while also taking a shot at its biggest competitor, announcing a discounted Prime member for low-income Americans on Tuesday. Yahoo reports the 45% discount lowers the cost of Prime, which bestows free two-day delivery, to $5.99 for anyone with an EBT card, which is used for food stamps and other government assistance. Qualifying people will also get the first 30 days of Prime for free, according to NPR. Approximately 60% of American households already have a Prime membership, Business Insider reports. But most of those memberships are found in upper income brackets, where membership is reaching saturation. On the other hand, some 45 million low-income Americans are now eligible for a discounted Prime membership.

Industry insiders reacted with skepticism to Amazon's announcement. After all, low-income Americans don't shop online as much and have limited internet access. But retail consultant Doug Stephens says even a small amount of new customers can pay off for Amazon through loyalty. "Prime is the gateway drug for the heroin that is Amazon," he says. One Amazon investor agrees, saying discounted Prime membership will get low-income people used to buying online. Even better: It will eat into Walmart's customer base. Nearly $1 out of every $5 in food stamps was spent at Walmart in 2016. For its part, Walmart has been actively trying to steal Amazon customers, recently experimenting with employees delivering orders at the end of their shift. (More Amazon stories.)