[silverpepsi]

One black friday season I went in Office Max or Depot and bought 20 $100 gift cards for Amazon because there was a very slight discount. This enabled me to purchase a laptop and save $100 approx

Remember Amazon has the credit card fee margin of savings if someone uses a gift card instead of a credit card.

[mlyle]

That's not really savings, though, because they need to sell it to Office Max for a price where A) Office Max can pay credit card fees, and B) make a small profit.

[silverpepsi]

Well that was kind of exactly my point. It is in their interest to do gift cards because they don't lose anything or incur a cost on themselves, once someone is locked into a gift card they only gain sales.

This is made possible at least in part because they have savings on the credit card cut

[mlyle]

I think you're not understanding me.

They have to sell it to retailers for less than they'd get after credit card acceptance. E.g. Apple sells gift cards for $88/$100 to a retailer, who then uses the remaining $12 on transaction costs (including paying their credit card fees) and profit margin.

Vs. Apple likely loses ~2% on credit card acceptance-- and gets to keep $98/$100.

It's still worth it, because they capture money from last-minute gifts, etc...

[silverpepsi]

Hmmm yeah.

Though $88/100 is super unrealistic with margins on electronics of 1-2% Amazon would be taking a loss of what the profit from 10 laptop sales every time they dealt with someone buying a laptop all in gift cards.

Or maybe gift cards are so rarely used in this way they write it off with higher margin uses