Amazon is going after Walmart with cheaper Prime rates for some shoppers

Amazon

Amazon is going after Walmart in a war to win over low-income shoppers.

On Tuesday, the online behemoth announced that it is now offering reduced Prime membership rates for American shoppers who are on government assistance.

A Prime membership costs $99 a year or $10.99 a month. But now, customers who have an Electronic Benefits Transfer (EBT) card will qualify for a reduced $5.99 monthly membership, which grants them unlimited free two-day shipping and access to Prime Video, Music, Reading, and Photos. This discounted rate will be available to nearly 20% of the US population, according to Morningstar.

“We designed this membership option for customers receiving government assistance to make our everyday selection and savings more accessible,” Greg Greeley, Amazon’s vice president of Prime, said in a statement.

Amazon is looking to poach customers from competitors like Walmart and Costco.

Nearly $1 out of every $5 spent using the Supplemental Nutrition Assistance Program, better known as SNAP, was spent at Walmart last year, according to Morningstar.

Prime memberships are poised to outnumber Costco memberships soon.

Business Insider reported earlier this year that there are now roughly 80 million Amazon Prime members in the US, according to Consumer Intelligence Research Partners estimates. This is up from 58 million members from the same period last year; a 37.9% increase overall.

Meanwhile, Costco reported in March that it had 88.1 million total card holding members. The company raised its annual membership fee to $60, from $55, on June 1.

According to a note published by Cowen & Co. last September, the percentage of US households that only pay for Prime membership has more than doubled over the past four years, from 7.1% in 2013 to 16.2% in 2016. In that same period, the percentage of households that only have a Costco membership has shrunk from 14.9% to 9.8%.