Thursday's launch of a games trade-in program by Amazon.com has already begun to make waves in the games resale business. Shortly after the program was announced, competitor GameStop's stock took a dive, dropping nearly 14 percent by end of day Thursday.

As a follow-up to the announcement, GameStop's CEO Don Matteo went on the record telling Edge Online he had no faith in Amazon's model based on his company's earlier attempt at a similar program. Matteo was, of course referring to sister site TradeStop. Back in 2005 the site featured a similar offering, where users could get cash for games which the company would then turn around and re-sell on GameStop.com. The service also let people send in DVD movies and music CDs. GameStop discontinued the program at the end of 2005.

Strengths
Amazon is bringing something to the table that brick-and-mortar game resellers cannot easily match: Gamers who send in their used titles can spend their Amazon credit on things that aren't video games. For people who are selling games for a system they no longer have or use this is a clean break. It's also a chance for Amazon to make some extra cash when a user buys something that costs more than the credit they earned.

Another thing users may flock to is transparency. Amazon is showing users exactly what it will pay and has made this list able to be searched. Both GameStop and Game Crazy, two of the largest game resellers, offer no such feature on either of their sites. Instead you're limited to a list of hot games or promotional trade-in values, or you have to go into the store to find out the game values. Both companies will mail larger trade-in value lists, but the lack of an online system has led to users creating wikis to chronicle the ever-updating prices that can fluctuate by supply, demand, and retail price drops.

There's no special membership program. Both GameStop and Game Crazy have special memberships that its customers can join to get special discounts or receive a higher trade-in value for their games. Amazon doesn't offer this, which some may find appealing. Amazon pays everyone the same price in return for them logging-in with their Amazon.com account credentials. There's no annual fee, and the cost of shipping your games in is free.

There are no up-sells or pushy salespeople. You never have to talk to a human being in the entire exchange, which can be seen as a step up. Games retailers typically push paid membership programs, game pre-orders, and certain titles based on sales deals or events. For someone trying to offload their games and buy something new Amazon is letting you skip this.

Early weaknesses
Beyond past evidence of similar Internet trade-in programs failing, an obvious weakness with Amazon's new service is that it's lacking the instant gratification gamers get by being able to come in with a stack of old games and leave with something new. Instead, Amazon's system requires users to first mail in what they have. Those games then have to be processed, which can take up to two days after they're received before users to get the credit. Also, any games that are not accepted can take up to two weeks to be sent back in which time the customer is left in limbo. In a retail store, the person behind the counter tells you this right away.

Amazon accepts over 1,500 different titles, although that range is limited to titles released within the last two years.

(Credit: CNET Networks / Josh Lowensohn)

This whole mail-in process ends up with the customer purchasing another game, or something else on Amazon.com, then having to wait for it to be shipped. Compare that to a service where you may be getting slightly less for your old software, but can turn around and leave with a game in the same trip, and Amazon's new offering loses some of its luster.

Another sore spot is that Amazon has limited the range of titles it accepts for trade-ins. These are mostly titles from the last two years and on current generation hardware. Brick-and-mortar stores like GameStop and Game Crazy typically do not offer much for games that fall outside of that scope, but for someone offloading an attic or storage unit full of older games, this can be a faster process than searching and adding each game one by one on Amazon, or having to create listings in eBay, Craigslist, and other selling sites.

What the users are saying
What do Amazon's users think about the new program? So far the response has been mixed. One of the biggest gripes people are having is Amazon's low trade-in incentive. Right now it's a 10 percent discount on games and games accessories, but that's only running for two weeks, after which Amazon's trade-in prices may not seem quite as enticing.

Amazon says it will be changing up its promotions and trade-in values as the program matures, although compare that to the brick-and-mortar stores and it's a startling contrast. Most offer weekly specials and special trade-in deals that can net gamers a free copy of a new game, or heavy discounts in return for a certain number of trade-in games.

Those trying to get money for used games from Amazon have two options: either by trading them in, or selling them through Amazon's Marketplace program. Customers who sell through the program might get a few more dollars this way, unlike Amazon's trade-in service, there's no guaranteed buy. Instead they'll have to wait for a customer to buy through them, which could never happen.

Users who have been selling their used games through Amazon's Marketplace are also worried that Amazon will turn around and re-sell the used games it collects back to other Amazon customers. Given the company's scope it could offer things like free shipping, packaging, and a quality guarantee that Marketplace sellers cannot offer.

Looking forward
Will Amazon's new program take out entrenched competitors like GameStop, Game Crazy, and local mom-and pop-shops? Maybe the latter, but companies like GameStop and Game Crazy have retail presence that brings a following and has heavy purchasing and re-selling power of its own.

Amazon has already taken steps at becoming more aggressive with new video game and video game accessory sales by bundling in exclusive pack-ins and digital downloads. It's just going to have to step it up with used game purchases by providing special deals and discounts in other parts of its business, which is something none of its brick-and-mortar competitors are currently doing.

Source:http://news.cnet.com