More reports on: E-business, IT news, Retail

Amazon cuts price of prime membership to woo low-income shoppers

08 June 2017

After having enrolled over 70 per cent of households that earned more than $112,000 annually as Amazon prime members, Amazon is looking at the rest of the country.

Now, anyone holding an electronic benefit transfer (EBT) card can join Amazon Prime for $5.99 per month rather than $10.99.

Amazon's decision to target low-income customers with a discounted prime membership had left some industry experts puzzled, but some commentators say it could turn out to be a brilliant strategy.

According to critics, Amazon was targeting shoppers on government assistance with its new discount, but they were generally less active online and had limited access to broadband internet, smartphones, and credit cards.

"These consumers have always indexed lower in online transactions, and their living circumstances are often not well-suited to package delivery, and many of these consumers don't have vehicles to drive to a location to pick up packages," internet consultant Sucharita Mulpuru-Kodali told the Associated Press. "Of the long list of businesses that Amazon could target, this doesn't seem like the biggest one."

But commentators point out that even if Amazon got a tiny fraction of the shoppers hooked on Prime, which offered free two-day shipping on millions of items, it could pay off in the long run given that prime customers were highly loyal, according to Doug Stephens, a retail-industry consultant.

According to estimates of Piper Jaffray, an investment bank and asset management firm, somewhere around 64 and 69 million households - or around 60 per cent of all US families - were prime members.

Though the company did not share total number of prime customers, Amazon spokeswoman Julie Law confirmed it had ''tens of millions of prime members,'' which it first disclosed this February. She added that the company added 20 million new members in 2016 alone.

 search domain-b