[cosmie]

> The danger is when you do well enough that Amazon takes notice, because if you're little slice of the industry starts to look too profitable, Amazon will come in and start selling in your category direct. And they're bigger than you and can do it on a smaller margin. Entire verticals can be consumed in a matter of weeks if Amazon decides to set up shop next to you. Amazon is really good at destroying the retailers that they helped in the beginning.

Retailers have been doing this to manufacturers for years with store brands. All large retailers analyze their sales data to find out exactly when a product has reached critical mass in popularity, then commission their own store-branded version.

The only difference here is that Amazon doesn't just have their own sales data, but that of everyone that uses their platform. So they can take it a step further and do this to other retailers in order to come up with an ideal SKU mix. Then they do what other retailers have done and start cannibalizing the manufacturer's margins by commissioning store brands.