The Hidden Genius Behind Amazon Preorder Credits

Amazon.com is easily the best place to buy video games online. If you’re an Amazon Prime user, there really shouldn’t be any other place to even look when you preorder games; especially on titles that offer free release day delivery. Amazon’s greatest incentive, however, is all of the $10 and $20 credits they give out for preordering select titles. We see the chance to save some cash, and we’ll jump at games that we’ve been watching. So what reason does Amazon have to do this? Why do they seemingly cut into their profit margins?

Well, Amazon doesn’t say if some of these credits are subsidized by publishers, but even if they aren’t, the credits still work out in Amazon’s favor. First, it definitely drives up the number of people wiling to pay for Prime memberships since online shoppers have started to move their game buying almost exclusively to Amazon. Secondly, the credits expire in a fairly short window, so you’re forced to return to Amazon.com to shop soon after your initial purchase to make another or you risk losing the credit. And since it isn’t an instant discount, the credit is essentially shared between two purchases (example: you buy the first game at $60, receive a $10 preorder credit, and buy the next at $50. Basically you bought two games at $110, which is more of a mild discount overall.) Finally, you must preorder the game to get the credit, meaning that you’re paying full price for the game and not buying it after any sorts of price drops.

Another thing to consider is that Amazon.com now takes games back in for trade-in credit. What many people are doing is preordering games that offer the credit, playing them to completion, and then selling them back to Amazon. When it’s said and done, the game ends up costing the gamer about $20-$25 depending on how quickly they finish it and send it back, but Amazon.com is free to sell the game a second time in the used market where they don’t give any cut to the publisher. In this case, if a game carried a $10 credit, Amazon.com sells it for $60, subtracts the $10 in revenue from another purchase, leaving us at $50. They later buy the game back for $30, and sell it again for $50. They’ve taken in $110 revenue and paid out $40, for a net price of $70 for what was originally a $60 game. It’s also possible that that same game comes back in as used again and out the door multiple times, each time making Amazon a bit more profit.

The system is amazing both for Amazon.com and for its customers. For people who buy 2-3 games per month, the preorder bonuses get used and rarely expire, making their hobby just a bit cheaper. It’s up to them if they want to trade the games back in to Amazon, but it’s just as good of a place as any to do so. Amazon has created a system where the retailer increases their revenues but still manages to lower prices for the end consumer. In these days it’s truly rare to see a win-win scenario between retailer and customer, and Amazon should definitely be commended for what they’ve built.

Note: For those unaware of what Amazon Prime is, it’s a yearly fee that Amazon users can pay in order to receive free 2-day and heavily discounted overnight shipping on all eligible items (basically anything shipped by Amazon). It also gives users free release day delivery on many of the bigger name video games.