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Amazon Pitches to Low-Income Residents

July 2017

Discount deal likely to spur package delivery volume to B and C communities.

By Paul R. Bergeron III

This week likely stands to generate the largest volume of package delivery to apartment communities as Amazon holds its third annual Amazon Prime Day during a 30-hour period starting at 9 p.m. ET July 10.

Last year, Prime Day was Amazon’s biggest sales day ever, despite checkout glitches the site suffered during peak shopping hours. Package delivery volume already figured to climb this summer at affordable housing, B and C properties as a result of a discount offer recently made by Amazon.

The Amazon deal announced in June targets consumers with valid Electronic Benefits Transfer (EBT) cards, offering them a Prime membership for $5.99 per month, a drop from the standard $10.99 per month or $99 annual fee. Analysts suggest that the discount is designed to entice “Wal-Mart” shoppers and was crafted in response to the retail giant’s efforts to strengthen its e-commerce traffic.​

Package delivery volume could increase this year at affordable housing, B and C properties and off-campus privatized student-housing communities as a result of a discount offer recently made by Amazon.

The Amazon deal targets consumers with valid Electronic Benefits Transfer (EBT) cards, offering them a Prime membership for $5.99 per month, a drop from the standard $10.99 per month or $99 annual fee. Analysts suggest that the discount is designed to entice “Wal-Mart” shoppers and was crafted in response to the retail giant’s efforts to strengthen its e-commerce traffic.

Amazon says that nearly 20 percent of the U.S. population would qualify. Among those in that income category are participants in Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program and the Women, Infants and Children Nutrition Program.

Additionally, Prime membership includes a 20 percent discount on diapers and wipes subscriptions. Therefore, e-commerce could become an attractive option for low-income families seeking to save on gasoline costs for trips to and from retail centers and for those who do not have access to automobiles. Consumers averse to using credit cards also could benefit.

Additionally, July 10-11 will likely be a blockbuster sales day at Amazon when it holds its third annual Amazon Prime Day during a 30-hour period. Last year, Prime Day was Amazon’s biggest sales day ever, despite checkout glitches the site suffered during peak shopping hours.

“Affordable housing, class B and C properties see roughly 30 percent fewer packages delivered daily when compared to Class A properties,” says Georgianna W. Oliver, CEO of Package Concierge. “This news from Amazon will be a game changer and I would anticipate these properties will see their daily numbers grow to become closer to that of Class A.”

Renee Pulliam, CPM, CAPS, CAM, CGPM, HCCP, Senior Regional Property Manager, Community Housing Partners, Richmond, Va., says that regardless of residents’ income levels, the popularity of online shopping is growing.

Tamara Longo, Senior Manager, Artcraft Management, Richmond, says the convenience of services such as Amazon Dash and Hello Fresh will increase package delivery volume.

“When residents can literally push a button and have diapers, detergent or any number of household items immediately delivered to their door, the game is going to change,” Longo says.

Andrew Kadish, President of owner and manager CAPREIT, says, “It’s the ease of the transaction that Amazon has provided that is really valuable, and they're affecting a broader and larger segment of the population now. Amazon Prime truly revolutionized the online shopping experience, and with this, apartment operators can only expect package delivery to rise at an exponential rate.”

The increase in package deliveries is cause for concern for low-income properties, because staffing and space may not be adequate to handle the greater volume.

Pulliam says, “Ultimately, this becomes a challenge for leasing offices. Typically, communities attempt to hold packages in the office in a secure area, but sometimes the volume is too much to handle. At some communities, we have stopped accepting packages, instructing our residents to have theirs dropped at their doorsteps.”

Steve Minn, Vice President and Chief Financial Manager of Minneapolis-based Lupe Development, says affordable housing communities typically have far fewer onsite staff members than market-rate properties, therefore increases in package delivery is a concern.

“Our residents have income limits to qualify for our housing, and extra costs are closely monitored,” Minn says. “We are looking at offering the self-service package lockers in our property designs as a way of offering service without increasing our staffing costs.”

Longo says increased package delivery to communities that do not manage the process onsite could lead to more resident complaints about package theft, regardless of whether it is a Low-Income Housing Tax Credit property.

Longo says that since November, her community has had four instances of residents reporting that their packages were misplaced or stolen from their doorsteps.

“Residents who have packages delivered to their door are responsible for handling them — not the onsite staff,” Longo says. “If they are instead having them delivered to the leasing office, there is usually a package acceptance addendum or verbiage in the lease releasing the office of liability and responsibility.”

Pulliam says package lockers are an alternative that could help prevent package theft and reduce time onsite staff would need to handle packages.

“But there is expense to have them installed, and there often are space constraints on existing properties,” she says.

Holli Beckman, Vice President Marketing and Leasing Operations, WC Smith, Washington, D.C., says the new Amazon deal could significantly increase package delivery at her properties.

“Use of Amazon lockers [could] gain traction,” Beckman says. “Many B or C properties in our market may not even have leasing offices; for example, we centrally process applications at our corporate office. Amazon lockers provide security for residents’ packages so they don’t have to worry about those left on their doorstep going missing. We hear chatter of Amazon starting to make deals regarding installing lockers on property for larger property management companies. My bet is, in another five years, this will be the norm. For now, we recommend that residents use a [locker of some kind] if they know that they won’t be home to receive the delivery.”

Parcel Pending CEO Lori Torres says, “We are finding that package delivery issues are starting to happen at affordable housing communities. The Amazon [offer] will absolutely have an impact.”

Luxer One offers package lockers and automated package rooms for apartment communities of all classes. The company’s Director of Marketing and Communications, Melody Akhtari, says, “Class A communities are using package acceptance as a marketable amenity. Meanwhile, B and C properties are adopting them as a retention tool. Having them keeps their residents happy. It’s an amenity that does double duty by offering a perk that keeps residents’ packages from getting stolen while being a practical, time-saving solution for staff.”

Kadish says CAPREIT is exploring opportunities to add items that promote luxury-type service to his workforce and affordable housing communities, such as a concierge service and package lockers.

“Frankly, our staff has become overburdened with package delivery, and we need to cater to our residents no matter what income level they are at, he says.

E-commerce popularity is not growing at some affordable housing properties. Says Mercy Housing National Director of Education Susan Sherfield, “Most of our communities do not accept packages for residents. I would doubt that many of our residents would spend their money on Prime, even at a reduced cost.”

Students: Parental Guidance Suggested

“Amazon has been doing things that benefit students for a few years. Its Amazon Student Textbook Rentals program delivers rentable textbooks at a steep discount as well as granting a free one-year subscription to Amazon Prime with a discounted renewable rate after 12 months.

“Most students use their parents’ prime accounts anyway, just like they use their parents’ Amazon and Hulu accounts to stream for free—students are quite savvy at being frugal. So I’m not sure this change would impact the student demographic much.

“At EdR, we already have a huge volume of packages delivered daily—and not all shipments are from Amazon. It seems that students, today simply shop online whether discounts are available or not. For most, it’s about convenience and getting what they want and when they want it rather than being limited to the shopping options located near many college campuses.” 

— Kim Cory, Vice President of Sales and Marketing, EdR

The Online Shopper

• Wal-Mart generated $13 billion in sales last year from shoppers using government-assistance SNAP, accounting for approximately 18 percent of the money spent through the program nationwide.

• Low-income consumers, typically those earning $50,000 or less per household, are the fastest-growing group of Amazon Prime customers, according to a survey by Robert W. Baird & Co. analysts.

• The percentage of lower-income shoppers buying online increased 28 percent from 2009 to 2016, faster than the growth among higher-income households, according to consultancy Kantar Retail.

• The average annual household income of Amazon shoppers was $68,000 in 2015, higher than the $58,000 average household income of shoppers on Walmart.com, according to Kantar.

• Amazon lost an all-time high $7.2 billion on shipping in 2016, according to an analysis by GeekWire of Amazon’s financial results. “Making it easy to purchase Prime – whether it’s by charging annually vs. monthly, or offering lower cost options for different customer groups, such as students or EBT cardholders – will help Amazon offset its losses,” says Melody Ahktari, Luxer One.

• UPS announced in June that it would add shipping fees to senders during winter holidays. Ground residential deliveries will cost 27 cents more per package in the last two weeks of November and 81 cents for next-day air and 97 cents for second- and third-day air the week before Christmas. Peak surcharges will also be added to large packages and packages that exceed maximum size limits.