Amazon brings forth another powerful service offering, the chase to get even more challenging for Walmart and other retail firms

June 13, 2017

Renowned global cloud computing and e-commerce giant, Amazon, Inc., has brought to light, another superb service offering via its discounted Prime membership program, for customers who receive U.S. government assistance. As per reports, this service is another one of Amazon’s attempts to compete with its rivals, specifically Walmart, the multinational corporation accumulating a huge chunk of the online retail market in the U.S.

In all probability, this move has most likely been propagated by Amazon’s reputation amidst the society’s elite – including the upper income households. As per a reliable study, more than 80% of the consumers belonging to the upper class are already Prime members, and Amazon’s earnings through this channel are approximately USD 112,000, on an annual basis. On the contrary, the Amazon Prime has penetrated only 52% of the low-income households, through which the company makes around USD 41,000 per year. The valuation is even lesser than USD 25,000 for some low-income group consumers, which have the benefit of being bestowed with government incentives. ‘Discounted Prime’ thus, seems to be a viable option for this consumer base. It is Amazon’s direct attempt at targeting these customers, as they offer a higher growth potential and are likely to aid Amazon to administer a huge blow to Walmart.

Discounted Prime is also deemed to be Amazon’s counter attack on Walmart’s recent service offerings, including curbside grocery pickup and free shipping without fees. As per a leading investment management firm, almost 1 out of every 5 US dollars in SNAP (Supplemental Nutrition Assistance Program) benefits had been spent on Walmart in 2016, generating a valuation of USD 13 billion. Amazon thus, aims to lure Walmart’s key consumer base – low-income groups, with Discounted Prime.

Experts vouch that this offering is likely to encroach the retail and e-commerce industry in the U.S. The company’s sales have already grown to 43% in 2016 from 25% in 2012. In addition, the firm launched the Amazon cash offering earlier in 2017, which allows consumers to add cash to Amazon accounts in more than 10,000 locations across the country, paving the way for this retail giant to outmaneuver Walmart and other retail companies.

Amazon is essentially penetrating into a broad consumer base of 43 million consumers who received more than USD 66 billion in annual SNAP payments. With this service offering, the e-commerce behemoth has struck a raw deal and will most likely gain advantage to a perpetually massive customer pool. The benefits of the Prime membership including affordable delivery service, doorstep delivery, music and video streaming, photo storage, and original content, will reportedly act as catalysts for consumers to invest in Discounted Prime, thereby furthering Amazon’s plan to dominate the retail landscape across the United States. As per trade analysts, it is now time for Walmart to turn on its gears and launch even more friendlier, consumer-centric services.