Global e-commerce major Amazon.com is adding a discount on Prime membership for Medicaid recipients, apparently in its latest strategy to boost the fortunes of lower-income shoppers at Walmart’s expense, says a fortune.com report.
The global e-commerce behemoth had recently announced that customers on Medicaid can now get Amazon Prime for $5.99 a month, or less than half the regular $12 fee for the subscription service. It comes on the heels of discounts introduced in June for shoppers on some forms of government assistance who use an Electronic Benefits Transfer card, a sizable part of Walmart’s patrons, the report said.
Prime offers benefits such as free day unlimited two-day shipping on tens of millions of products, as well as other services such as streaming of various entertainment offerings. The service counts tens of millions of Americans among its customers (the program is used by almost half of the US households by to some estimates.) What is more, it has eventually made Amazon’s e-commerce website even stickier among members, who ramp up use as they look to get their money’s worth, noted the report. Amazon also clearly hopes the discount will sway lower-income shoppers who may balk at the Prime membership, it continued.
Cem Sibay, Vice President, Amazon Prime said, “We hope to make Prime even more accessible.” Neither Walmart nor Target have a membership program like Prime but instead, have set order minimums ($35) for free two-day shipping. Many lower-income shoppers still gravitate toward chains like Walmart and Dollar General where they can pay with cash and EBT cards, informed the report.
At the same time, Amazon’s incursion works both ways too, says the report and further adds that with Walmart looking at attracting the more affluent consumers than it typically has, apparently with the moves ranging from its recent rollout of Better Apparel brands, to its acquisition of Bonobos last year, to the upcoming online store on its website for department store Lord & Taylor. However, the cause for concern is the fact that Walmart had recently posted disappointing e-commerce growth, renewing concerns about its ability to compete with Amazon, which by some estimates accounts for about a third of the country’s e-commerce, the report further pointed out.
Medicaid in the US is a joint Federal and State Program that helps with medical costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, like nursing home care and personal care services. The Health Insurance Association of America terms Medicaid as a ‘Government Insurance Program for persons of all ages whose income and resources are insufficient to pay for healthcare’.
Medicaid is the largest source of funding for medical and health-related services for people with low income in America, providing free health insurance to 74 million low-income and disabled people, as of 2017. It is a means-tested program that is jointly funded by the state and federal governments and managed by the states, with each state currently having broad leeway to determine who is eligible for its implementation of the program. Shoppers who want to sign up will have to apply and upload a photo of their Medicaid card in order to prove their eligibility. Such shoppers will have to reapply once a year for up to four years, added the report.