Walmart lowers membership fees for low-income families to compete with Amazon Prime

It is learned that on July 20, according to the Wall Street Journal, Walmart announced a new policy that will reduce the subscription fee of its Walmart+ for low-income families receiving food stamps or other government subsidies. In an environment of continued inflation, Walmart's move is aimed at boosting sales and increasing the penetration rate of Walmart+ to compete with Amazon Prime.

It is reported that starting from July 20, consumers who receive government subsidies can enjoy a full-year subscription to Walmart+ for $49 and a monthly subscription for $6.47. Under normal circumstances, the annual fee for Walmart+ is $98 and the monthly fee is $12.95, which is equivalent to a reduction of half the fee.

Currently, many American families are facing the dilemma of having to cut back on grocery spending. The financial support program launched during the epidemic at the beginning of this year ended, and the benefits of food stamps (SNAP) also decreased. This not only hurt the purchasing power of low-income families, but also affected companies such as Walmart.

In the months following the cuts, households reduced their monthly food and beverage spending by an average of about 35%, according to research firm Circana.

For Walmart, lowering membership fees will help attract consumers from low-income families and increase its membership. According to data from the U.S. Department of Agriculture, more than 41 million Americans received funding through SNAP in 2022, and Walmart's new offer also applies to consumers who receive other government subsidies.

Walmart has not yet disclosed the number of its Walmart+ members, only saying that 25% of its members receive government subsidies. However, according to PYMNTS's estimate based on consumer survey data, as of October last year, Walmart had about 59 million Walmart+ users.

To be sure, Walmart’s membership is currently a fraction of Amazon’s: JPMorgan analysts estimated in June that Prime membership would approach 200 million by the end of this year.

Walmart's Walmart+ was launched more than a decade later than Amazon's Prime membership. At the same time, Amazon also launched similar discounts for low-income families as early as 2017, targeting this group, with a Prime membership fee of $6.99 per month instead of $14.99.

In addition to reducing membership fees, Walmart also announced that customers who are eligible for SNAP in all 50 states can add their benefit cards to the Walmart app or website so they can buy groceries online or use curbside pickup.

While large retailers such as Target offer SNAP benefits in most states, Walmart is the first retailer to accept food stamps online in all 50 states.

For Walmart, expanding the user base of Walmart+ has other benefits. Its monthly and annual fees not only provide a source of revenue, but also allow the retailer to better understand customer preferences and purchases. It can use these insights to support the analytics tool it sells to customers, Walmart Luminate, or to support its growing advertising business, Walmart Connect.

Editor✎ Ashley/

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