Market Watch

Amazon UK Begins Games Trade in Service


Display Driver IC Forecast


Amazon has started a game trade-in service at its UK site, having trialled a similar service in the US since March 2009. Platforms covered include PS3, Xbox 360, Wii, PS2, DS and PSP as well as a number of legacy and classic platforms stretching back to the Atari platforms of the 1980s and also includes some accessories. The company offers free return postage to those that trade-in - users print off a pre-paid delivery label and packing slip. Amazon is one of a number of retailers to recently expand into games trade-in services in the UK including supermarkets Tesco and Asda and entertainment specialist HMV, which has been operating its service successfully for over a year. Amazon's US trade-in service covers around 10,000 games, accessories and console hardware.

Analysis
Amazon's move into pre-owned games is a reflection of the importance of providing a games trade-in service as part of a wider strategy to engage specific customers and compete in the retailer landscape both on the highstreet and online. Trading in games was once solely the preserve of the highstreet, but, like video and games rental services from companies such as LoveFilm, is now a legitimate competitive strategy for online-only retailers as well aided by well-established and cost effective distribution capabilities. In late 2010, in the UK and US specifically, not having a trade-in service for games is a competitive disadvantage as gamers, many of which are male aged 18-35 and with high disposable income, are an important target consumer group for a wide cross section of retailers. Implementing strategies to ensure gamers visit and engage with your business regularly is vitally important to retailers such as Amazon.

For the consumer there appear pros and cons to adopting Amazon's offering. Positive factors include guaranteed trade-in prices as long as the game is returned within a certain timescale. We are aware of only one highstreet store in the UK, CEX, that allows users to check online how much a trade-in is worth prior to visiting the store. Other highstreet specialists, such as Game Group, either need a phone call or a visit to check trade-in value. Not having to visit a store to trade-in a game is another advantage, but Amazon's solution still needs packing and a trip to the postbox or post office. Another con includes not being able to trade for cash, which is a key advantage of highstreet services from Game Group, HMV and CEX but Amazon's credit strategy allows users to offset trade-ins against the whole of Amazon's catalogue of products, a much wider offering than any of the specialist chains. Lastly, Amazon's service, while having its own user advantages, results in users have to wait a few days to gain access to their credit as games are sent through the post, checked and accounts are credited, a considerably slower process than the highstreet.

Although we consider a trade-in service a core offering for UK retailers selling games, Amazon already offers a marketplace for selling used games to its shoppers, which is likely to lessen the impact of a trade-in service for the company. Like Play's PlayTrade service, gamers can use Amazon's marketplace to sell their games at a higher value than trade-ins. With both services on offer from Amazon, users will need to decide between guaranteed payments and ease of use, compared to often higher prices achieved through the marketplace marginally offset by cost of postage.

IHS Screen Digest will soon be publishing an insight report on the pre-owned games market in the US and UK.

Read More > iSuppli | Screen Digest Games Intelligence