Amazon.com has announced that people who receive Medicaid in the US are eligible for Amazon Prime for $5.99 a month. That’s a 54% discount on the normal rate of $12.99 a month. And the new reduced monthly rate is $27 cheaper than the $99 annual Amazon Prime membership fee. The new rates, needless to say, are applicable only to subscribers in the United States.
What exactly is Medicaid? Medicaid provides health insurance to millions of low-income adults, children, the elderly and people with disabilities. More than 74 million Americans — roughly 20% of the population — were enrolled in Medicaid and the Children’s Health Insurance Program (CHIP) equivalent at the end of 2017.
This move takes Amazon Prime increasingly to a new demographic. Prime on Amazon.com has a reputation of being the preserve of the middle class and relatively wealthy. It’s also popular with millennials who have a high level of disposal income. But this Medicaid offer is aimed at people who can’t afford, or don’t have, private medical healthcare insurance in the US. It’s tricky to explain it in terms relevant to UK users who aren’t familiar with the US healthcare system but it’s broadly the equivalent to giving a reduction to anyone on some form of tax credit or state benefit.
Critically, for Amazon, it signals a new assault on the Walmart customer base. In the USA, Walmart is the most significant Amazon competitor. The supermarket chain there is focussed on affordability and it’s making decent inroads into online selling too. It also hosts its own marketplace for third party traders. So by offering lower income families access to Prime on the monthly subscription, Amazon is trying to bring in more of that sort of consumers.
The Prime proposition is crucial to Amazon because it breeds loyalty and stickiness. Prime customers spend more, more frequently, and Amazon (needless to say) likes that. Any reductions in fees are to be welcomed but with this, and other initiatives, Amazon Prime is starting to look comparatively rather more expensive to UK subscribers.
