It certainly took long enough, but it now feels like Walmart (WMT - Get Report)  is both serious about growing its online retail operations, and has a management team in place that can execute on its strategic vision. The impressive April quarter e-commerce numbers the online retail giant posted certainly drive this home.

But while Amazon.com's (AMZN - Get Report) non-stop e-commerce share gains did manage to finally awaken a sleeping giant, it would be a mistake to assume Jeff Bezos & Co. don't have significant room to launch countermeasures of its own. Its latest action to slow Walmart's growth could be followed by several more.

On Tuesday, April 6, Amazon announced U.S. consumers eligible for one of several government-assistance programs used via EBT cards can subscribe to Amazon Prime -- free shipping, digital content and all -- for $5.99 per month. That's $5 per month less than what Amazon typically charges for Prime on a monthly basis, and $2.26 per month less than its effective monthly price for a $99 annual membership.

Amazon's move targets the $13 billion in annual revenue Walmart gets from purchases made using funds provided by the Supplemental Nutritional Assistance Program (SNAP - sometimes referred to as food stamps), as well as the Walmart spending done by SNAP recipients using their own income. Reuters notes at least 1 in 5 Walmart customers pay via food stamps.

Other low-cost retailers, such as Dollar General (DG - Get Report) , Dollar Tree (DLTR - Get Report) and Five Below (FIVE - Get Report) , are also in the crosshairs. And to an extent, so is Netflix (NFLX - Get Report) , which charges $10 per month for its HD streaming plan and $8 per month for its non-HD plan. With Netflix now possessing over 50 million U.S. streaming subs -- some of which are "sharing" subscriptions with a friend or relative -- maintaining healthy growth in a market with about 125 million households depends a lot on growing the company's lower-income subscriber base.

The discount arrives three weeks after Walmart announced (without giving a revenue figure) its e-commerce sales grew 63% annually in the April quarter. That's a big improvement from the 29% growth posted in the January quarter, and -- though Walmart spent $3.3 billion last summer to buy e-commerce upstart Jet.com, and has since spent smaller amounts to buy online apparel retailers ShoeBuy, ModCloth and Moosejaw -- said to be mostly due to Walmart.com's organic growth.

The growth acceleration says a lot about how Walmart.com has been revitalized under the leadership of former Jet.com CEO Marc Lore. Walmart, estimated by Euromonitor to have a 7.8% 2016 U.S. e-commerce share to Amazon's 33%, now claims to offer over 50 million items online, up from about 10 million a year earlier (Amazon is estimated to offer 480 million). In addition, the company began providing free 2-day shipping in late January for $35-plus orders involving 2 million-plus items (no subscription required), and in April announced discounts would be provided for over a million online items if a buyer agreed to pick up the order at a local Walmart store.

Lore has also been keen to revamp Walmart's mobile apps and offer promotions through them, win over the kind of online sellers relying heavily on Amazon's marketplace and better integrate Walmart's massive logistics and fulfillment infrastructure with its online operations. And last week, Walmart began enlisting its retail workers towards its effort, offering to pay them to deliver online orders on their way home.

Amazon going after low-end shoppers.
Amazon going after low-end shoppers.

Amazon has already responded to Walmart's moves by slashing its free shipping minimum for non-Prime shoppers -- first from $49 to $35 in February, then to $25 in May. After having hiked its minimum to compel shoppers to sign up for Prime, the company has apparently decided keeping non-Prime customers from defecting to Walmart is now a bigger priority.

And now it's trying to drive sign-ups for Prime, estimated by Cowen last year to have about 50 million U.S. subscribers, with a targeted discount rather than a de facto price hike. Considering how much Prime's base currently skews towards wealthier consumers -- Piper Jaffray estimated in late 2015 U.S. Prime subs have an average household income of $69,900, $13,900 higher than Walmart's retail stores and $8,900 higher than Walmart.com's, there's definitely an opportunity here.

The cost-sensitivity of lower-income consumers could, of course, limit how much damage Amazon's Prime discount does to the offline sales of Walmart and discount retailers. In addition to Prime membership fees that still amount to $72 per year, the relatively high prices Amazon charges for many consumer staples relative to low-cost offline retailers -- the result of shipping costs, and also the volume discounts a company like Walmart can command -- can act as a deterrent. Those buying such items on Amazon often do so in the name of convenience rather than price.

On the other hand, those consumers able and willing to take up Amazon's offer will likely end up spending more on Amazon and less on Walmart.com and other e-commerce sites, judging by survey data on the spending habits of Prime subs relative to non-Prime subs. And through several efforts, Amazon has been trying to narrow the price gap between the consumer staples sold on its site and the ones sold offline. These include its Prime Pantry service, which offers price and shipping discounts to Prime members making larger grocery orders, and expanding the company's lineup of cheap private-label goods.

Moreover, one shouldn't assume Amazon is done launching countermeasures. The company has quite the history of sacrificing near-term profits to gain market share, and with Amazon having produced $2.37 billion in net income last year -- North American and AWS profits offset international losses -- it certainly has some headroom to step up its U.S. discounting activity to fend off Walmart without having to worry about posting losses again.

In spite of Walmart's resurgence, Amazon's North American segment sales grew 24% annually in the first quarter to $21 billion, outpacing the 22% growth seen in the fourth quarter of 2016. The popularity of Prime, which (unlike Walmart.com) is backed by a logistics and fulfillment infrastructured optimized solely for online sales, clearly had much to do with this growth.

Amazon now seems eager to add to Prime's momentum, lest a rival that's suddenly executing well gain too much ground.

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