Will new payment options make Amazon Prime memberships even more popular?

Discussion
Source: Amazon.com
Jun 15, 2017

Amazon.com has recently announced new ways to pay that may expand the rolls of its Prime subscription program and make it more likely that consumers will turn to the e-tailer when making purchases.

Earlier this month, Amazon announced a new program to open Prime memberships to low-income consumers. Americans who have a valid Electronic Benefits Transfer (EBT) card used to make purchases as part of the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF) and Women, Infants and Children Nutrition Program (WIC) are eligible for a one-year membership to Prime billed at $5.99 a month. Amazon plans to add other ways for consumers participating in government assistance programs to qualify without the use of an EBT card.

Prime for those receiving government assistance comes with all the features enjoyed by the 80 million members that Consumer Intelligence Research Partners has reported are currently enrolled in the program in the U.S.

This is not the first step Amazon has taken to reach out to lower income consumers. In April, the company launched Amazon Cash, which allows people visiting brick and mortar stores, such as CVS, to deposit between $15 and $500 in cash into an Amazon account by presenting a barcode at the checkout. The program, which is not tied to Prime memberships, is intended to give unbanked (17 million) and “underbanked” (51 million) Americans access to Amazon.

Unrelated to income, Amazon this week announced the launch of Prime Reload, a new program that offers subscribers the option of earning a two percent credit on their gift card balances when they use their debit cards to pay for purchases.

To set up the feature, Prime members supply Amazon with their debit card number, bank account and routing information and their driver license number. They then transfer funds from their account directly to their gift card balance to make future purchases and receive their credits.

The move, as The Verge reports, makes sense for Amazon because it gives the retailer a way to avoid fees on credit cards while providing a tangible reward for customers.

DISCUSSION QUESTIONS: Will expanded payment options help Amazon expand the numbers of Prime subscribers? Will the new options increase the amount of money that Amazon members, Prime or otherwise, spend on the site? What are the implications for Amazon’s competitors?

Braintrust
"I think Amazon deserves tremendous credit for continuing to be innovative and now finding newer and better methods for customers to pay."
"It seems like a good move, but in application I’m not so sure it will move the needle."
"For those who will now get cash back from shopping at Amazon, it’s just another reason to shop there, and that makes quite a few."

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11 Comments on "Will new payment options make Amazon Prime memberships even more popular?"

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Max Goldberg
BrainTrust

Smart move by Amazon to reach consumers who might be underserved by the Internet and e-commerce, and to take definitive action to reduce credit card fees. This comes on the heels of Amazon offering a credit card that gives 5 percent back for purchases on the e-tail giant. All of these moves will help cement Amazon’s lead in e-commerce and grow both Prime membership and sales.

Art Suriano
BrainTrust

I think Amazon deserves tremendous credit for continuing to be innovative and now finding newer and better methods for customers to pay. The low-income discount is smart because it’s been getting a lot of press. What’s clever about it is the marketing because it sounds a lot less expensive than it is. As we move forward with technology, cash will eventually go away entirely and so will what we know today as credit cards. Amazon is staying one step ahead of all competitors and forcing them to take notice.

Shep Hyken
BrainTrust

The “Amazoning” of America continues. Amazon is a role model for how to do things right. 64 percent of U.S. households have a Prime membership. Prime members spend more than non-Prime members. This is a way to increase that number, which increases sales, market share, revenue, profit, etc.

David Livingston
Guest
4 months 4 days ago

Good move to get more members. It will be one of the few places that EBT users will actually pay less for something.

Sky Rota
Guest
4 months 4 days ago

If you think about it, some people are only receiving $106 per month in food stamps/EBT or WIC. Having $5.99 taken out of their food money on a monthly basis is a lot of money for them. I don’t see them jumping at this monthly fee. Lots of us don’t see having something shipped or making monthly payments as a luxury. Sadly, to people in those demographics shipping is a luxury not a necessity. It’s the difference of having one more jar of peanut butter to eat.

It cannot hurt Amazon being approved for government assistance programs. Amazon is always thinking of ways to earn. Another of the many reasons why they are king! Competitors must have creative thinkers on their teams if they want to compete. There is no reason they can’t apply for government programs as well, Amazon doesn’t have to have the monopoly on that demographic.

David Livingston
Guest
4 months 4 days ago

Now they don’t have to spend money getting to the store to buy groceries, if they are lucky enough to have supermarket nearby and have access to transportation. Food Stamps users will be money ahead. Our local food pantry and Meals on Wheels already is delivering food. Amazon will just be another delivery for them.

Richard J. George, Ph.D.
BrainTrust

Almost half of all U.S. households are Amazon Prime members. The annual fee has been an impediment for lower-income households to join. Now that impediment is reduced. I believe the end result will be more members and larger baskets. As for Amazon’s competitors, again, they find themselves in the position of having to follow Amazon, relinquishing the first-mover advantage. Amazon will continue to innovate and test all forms of delivery, payment and communication options!

James Tenser
BrainTrust

Clearly Amazon.com and Walmart.com are engaged in a pitched battle to win the hearts and minds of lower-income shoppers — including the un-banked. Subscription fees are a turnoff to folks living paycheck to paycheck — that auto-withdrawal might cause your cell phone check to bounce! But accepting electronic benefits for eligible purchases may add up to a hill of beans. And what retailer doesn’t want to save a bundle on exchange fees? The big watch-out here (for both companies) is complexity. The ROI may be attractive but, as with any new service commitment, they should be careful what they wish for.

Alex Senn
BrainTrust

It seems like a good move, but in application I’m not so sure it will move the needle. First off, are these people going online? Are these people able to spend enough with Amazon to make them worth it? I’m sure Amazon has worked out the numbers to know that it will. The under-banked and un-banked population is a larger market than probably most retailers understand, meaning Amazon has tapped into a place where yet again they will soon dominate. It is unfortunate that there was nothing presented to connect these populations of people even earlier.

Stefan Weitz
BrainTrust
While Amazon’s decision to offer discounted Prime memberships to consumers receiving government assistance has been touted by some as a smart way to bolster the finances of low-income individuals, I think there could be unintended consequences. Offering such an incentive for those purchasing online, Amazon is potentially taking away from the revenue of retail stores, many of which employ individuals who are one paycheck away from government assistance. Lower revenue for these stores can lead to reduced hours for employees and cuts to staff. With retail already having cut more jobs this year than any other industry, this new move by Amazon will only cause further disruption. By contrast, while Amazon continues to upset the market other organizations are implementing programs that benefit the consumer. For instance Walmart recently began piloting a service allowing store employees to deliver packages on their way home from work to earn extra money. This process creates cheaper shipping prices for the consumer AND allows store employees to increase their earnings, generating mutual benefit for both store employees and buyers alike. In addition, Walmart already offers discounted prices for consumers who purchase online but pick up in-store. With 95 percent of the country within 10… Read more »
Cate Trotter
BrainTrust

This seems a smart way to expand Amazon Prime’s reach beyond those with plentiful disposable income. Without creating these sort of payment options, Amazon would be limiting its marketplace. In this way it’s ensuring that it stays number one and brings in those that aren’t currently served by online shopping.

Whether $5.99 a month is still too much for those on a very low income is still a question, but I think Amazon will make some progress in new markets through it. For those who will now get cash back from shopping at Amazon, it’s just another reason to shop there, and that makes quite a few.

wpDiscuz
Braintrust
"I think Amazon deserves tremendous credit for continuing to be innovative and now finding newer and better methods for customers to pay."
"It seems like a good move, but in application I’m not so sure it will move the needle."
"For those who will now get cash back from shopping at Amazon, it’s just another reason to shop there, and that makes quite a few."

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