The Big Story
Amazon the Great Inches Closer to Tears
Paul Alexander, CFA
“When Alexander saw the breadth of his domain, he wept for there were no more worlds to conquer.” The Greek biographer Plutarch is widely credited as the author of this famous (though misquoted) line regarding the exploits of Alexander the Great. If Plutarch were alive today, and penning a slightly melodramatic biography of modern retail, he might argue that the industry’s modern conqueror, Amazon, is getting closer to its own weeping session.
While Amazon isn’t out of worlds to conquer just yet, it took a step closer last week, when it announced that it will offer Prime membership at a discounted rate ($5.99 per month, versus the normal rate of $12.99) to people enrolled in Medicaid. This comes after a similar move last year to offer discounted membership to people who receive government food assistance. Amazon has received praise for extending these discounts to less economically-advantaged consumers. But these steps can also be interpreted not as altruism, but as an effort to conquer a new target customer for Amazon Prime: lower-income households.