Amazon Competes With Walmart For Lower-Income Shoppers

Amazon already has a hold on high-income shoppers in the U.S., but the online retailer now wants to attract lower-income customers to the site with a 45 percent discount on Prime memberships.

According to Recode, Amazon announced the new deal on Prime — $5.99 a month instead of $10.99 month — to U.S. residents receiving government assistance.

Shoppers with an Electronic Benefits Transfer card, which is used for benefits like the Women, Infants and Children Nutrition Program, are eligible for the lower price. These customers will then have to re-qualify every year for up to four years.

This new offer comes a little more than a year after Amazon introduced the $10.99 monthly payment option for Prime, which was previously only available for an annual fee of $99. Both options have the same perks, such as free two-day shipping on tens of millions of items and access to a large selection of online movies and TV shows for no extra charge.

Since the company starting offering the monthly payment option, Prime membership growth has been the strongest with households making less than $50,000 annually. With Amazon Prime customers spending more and buying more frequently than non-Prime members, CEO Jeff Bezos has said he wants to add so much value to the membership that it becomes irresponsible to not use it.

And this latest discount is the result of a renewed rivalry between Walmart and Amazon since Walmart acquired last year. The two sides are currently engaged in a price war in packaged goods, and Amazon has followed Walmart’s 500-store expansion of a grocery pick-up model with two locations of its own. Amazon also lowered its free-shipping threshold to $25 to combat Walmart’s free, speedy delivery offering.

Amazon also announced this year that it would start accepting food stamps for its grocery items beginning this summer. Amazon’s grocery service costs an additional monthly fee on top of the Prime membership.