The online retailer opened its discounted $5.99-a-month Prime membership on Wednesday to people on Medicaid, giving it an even bigger pool of potential shoppers who may otherwise have been unable to pay the standard fee.
Prior to expanding to Medicaid recipients, Amazon made the discounted version of Prime available to customers with a valid EBT (Electronic Benefit Transfer) card. The lowered monthly rate is $27 cheaper than the $99 annual Prime membership fee.
Medicaid provides health insurance to millions of Americans, including low-income adults, children, the elderly and people with disabilities. Prime members have access to free two-day shipping on most items, same-day delivery in some locations and streaming music and videos. Such cards are typically made available to USA residents who receive funds from government assistance programs like Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP) and Women, Infants, and Children Nutrition Program (WIC). A Morgan Stanley survey found 40% of Amazon Prime members spend over $1,000 a year on Amazon compared to 8% of non-Prime customers.
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. But it's not altruism; Amazon Prime has been widely adopted by middle-class and well-off Americans, so if the membership program is going to continue to grow in the US, the company has to figure out how to attract other demographics.
Amazon's blind spot for low-income users has been a benefit to some of its largest competitors who have managed to offer services to recipients of government assistance. (Monthly subscriptions cost $12.99 a month after a price increase in January).
Whether the discounted Prime membership program will be a success or not depends on how you look at it. He said Prime has helped save her time and money by helping her skip some of those errands.