Amazon Bets on Buying, Reselling iPads to Boost its Own Business

Amazon is among the best marketers in the mobile commerce space, perhaps the boldest. While most other contestants consider near term return on investment, Amazon frequently goes for the long term opportunity, even at short term risk.

Amazon Trade-In, for example, lowest offers a trade-in program  iPad 2s, giving users $236 or more fore units in “good” condition. Apple is selling new iPad 2s for $399.

While other trade-in sites will give sellers cash, Amazon gives customers store credit. In essence, Amazon is simply buying a bit of business. For starters, the reconditioned iPads are in turn sold on Amazon for $360 or more.

By some estimates, Amazon might actually lose $14 after buying, reconditioning and reselling any single iPad. But that isn’t the point. It never is, with Amazon.

Users then buy stuff from Amazon, which begins to earn back that $14 of loss.

There’s a chance, though, that Amazon could get even luckier on you. If you use your trade-in money to buy a device or service that keeps you locked to the company for a long time, Amazon might end up making more money on you over time, especially if the user buys a Kindle, or joins Amazon Prime.

One analysis suggests that after joining Prime, the amount of money that a customer spends at Amazon jumps from $400 per year to $900 per year.