Amazon lures food-stamp shoppers as e-comm rises

Bloomberg

Ian Babcock used to take the bus from his home in northern Michigan to get groceries, a trip that was inconvenient before the pandemic made it dangerous. For the last several months, he’s been using his food-stamp benefits to get groceries delivered by Amazon. “It potentially is a lifesaver for me,” he said.
Babcock is among one million-plus US households now using government benefits each month to buy groceries online. Their numbers spiked 50-fold this year after the spread of Covid-19 prompted the US Department of Agriculture to make it easier for food-stamp recipients to shop on the web. While the USDA declined to provide an industry breakdown of such purchases, the main beneficiaries are Amazon.com and Walmart — the only retailers in most states to take part in the agency’s online shopping pilot.
For Seattle-based Amazon, the USDA program is an opportunity to get a chunk of the $55 billion that food-stamp recipients spent last year, purchasing that surged 20% in the first four months of 2020. It also lets the company court a cohort that has traditionally patronised Walmart or other discount grocers. Amazon is nearing saturation with higher-income US households and has few other sources of new, potentially loyal customers in its most important market.
The 1.1 million households that bought subsidised groceries online in September represent a small fraction of total food
aid; more than 22 million households participated in the Supplemental Nutrition Assistance Program (SNAP) in April, according to the most recent overall program data. But it’s made a difference for people who’d rather not risk a trip to the store.
When Michigan joined the program in May, Babcock, who suffers chronic health problems and has a suppressed immune system, started using his benefits to buy groceries on Amazon. The 55-year-old former financial planner, computer programmer and self-described veteran of Detroit’s hardcore punk scene, also has a discounted Prime membership available to holders of Electronic Benefits Transfer (EBT) cards. Referring to Amazon CEO Jeff Bezos, he said “the guy is making money hand over fist, but he’s providing a service I can’t get elsewhere.”
The USDA food assistance program, launched decades ago to help the poorest Americans, tiptoed into the 21st century last year with a pilot that lets participants use their EBT cards to buy groceries online, for delivery or pickup. The scheme began with a trial in New York with Amazon and Walmart and, later, Wakefern Food’s ShopRite stores.
As business shutdowns to limit the spread of the coronavirus added tens of millions to the unemployment rolls, Congress loosened restrictions on food assistance. The USDA quickly expanded the online program, which is available today for shoppers in 46 states and the District of Columbia. In Washington state, about 3% of food aid spending in September was paid for online — the vast majority for pickup — up from 1.7% in March, when Covid-19 began to spread, according to the Washington State Department of Social and Health Services.
Organisations working to eliminate hunger cheer the program’s growth but, citing limited data from the government and participating retailers, are reluctant to say the online pilot is meeting all the needs of people, particularly those with mobility or health issues. Some worry the predominance of two large retailers comes at the expense of local grocers. (USDA said in a statement that more retailers would soon join.) Both Amazon and Walmart have been criticised by activists who say the large number of SNAP recipients on their payrolls is evidence they treat workers poorly.
Anti-hunger advocates also fret that many SNAP participants live in areas where fresh food delivery remains unavailable. The San Francisco-Marin Food Bank in June raised concerns that the program risked perpetuating a history of systemic racism in apportioning government benefits after discovering that neither retailer delivered fresh groceries to SNAP recipients in Marin County, which includes low-income enclaves like Marin City.
Amazon expanded the coverage of its same-day delivery service in 2016 after a Bloomberg News analysis found that the company’s same-day delivery service excluded predominantly Black ZIP codes in six cities.