Watch out Walmart – Amazon’s feeling charitable
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Watch out Walmart – Amazon’s feeling charitable

When it comes to everyday brick-and-mortar retail in the U.S., Walmart is the name to beat. And, because it stocks a huge variety of goods – many of which are daily essentials – at an extremely low price point, the company is particularly powerful amongst lower-income Americans. For now, anyway, because Ecommerce’s raining champion has set its sights on the demographic.

Amazon’s share price is up by 30.46% so far this year

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SOURCE: Yahoo Finance

Amazon is offering a massive 45% discount on the price of its Prime membership for customers who are receiving government aid. This deal is perfectly designed to steal lower-income American’s away from the company’s offline rival: Prime membership comes with tons of free content (through Amazon Prime Video, Prime Music, and more). This means that, combined with a low price point to access the service, it is particularly attractive to people who have less discretionary income; in short, it’s a great deal, and its obviously a great deal.

The value for Amazon won’t necessarily come from the paltry $6 / month it plans to charge low-income Americans for the service. Rather, the value will be derived from importing all these customers into its lucrative Prime ecosystem. Because Amazon can match-or-beat Walmart when it comes to price, and it stocks pretty much everything you can think of. Add in the other propositions that its customers love – same day shipping, free shipping, auto-ordering on some products, deep discounts, and more – and Amazon’s beginning to look a lot like a Walmart killer.

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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