The end of the third party seller?

Will the third party seller be rare or extinct in a few years on Amazon?

My portfolio is a mix of products that 1) I created, 2) I acquired, 3) I distribute exclusively, and 4) I distribute as a third party buying wholesale from several major brands in my industry. Observing the changes over the years, Amazon has obviously heavily favored #1, 2, and 3, and actively targeted #4.

I suspect the new fee structure will create a vacuum out of the marketplace for small-scale merchants, effectively ending retail arbitrage, incentivizing authorized third-party merchants to either use FBM or take the goods to other marketplaces, and, maybe, in the end, finishing off independent retail as a common practice.

The obvious way for Amazon to replace the business lost is to begin incentivizing brands to eliminate their relationships with third party sellers altogether. For example, by giving them some fee incentive for distributing the product themselves on Amazon and leveraging FBA to reduce the workload of taking on the extra distribution burden.

I think by now it’s fairly obvious Amazon prefers a world where, say, in five years time or so, the third party seller is a rare bird, effectively extinct because Amazon has driven them out with fees, compliance requirements that only a brand owner can satisfy, and brand gating. To me, the endgame for Amazon has always been for every brand on Earth to distribute their products directly on Amazon. I think the downstream effect will eventually end what’s left of independent brick and mortar stores, and it will corral third party merchants on eBay.

Further, if it becomes clear that most third party sellers on eBay are just flipping high demand products and exacerbating inventory shortages, I could then see some kind of anti-arbitrage laws attempting to filter into the legal system, and since your average person hates the “scalpers,” there’s a threat there. That might be more of a legal longshot, but if it happens, things will get real ugly for anybody that hung on, or even for just collector-speculators that flip to pay for their own stock.

I do, however, always wonder why Amazon hasn’t opened some kind of eBay competitor so that it doesn’t ultimately lose all the business from third party merchants. Maybe it would behoove them to spin off Amazon Marketplace as its own site, and make it more like eBay, maybe with some access to FBA for a high price. They can leave Amazon.com open exclusively to brand owners with stricter rules. Marketplace by Amazon could be a more open market for selling used goods, your personal items, etc. but with some of the Amazon tools, and it could be spelled out to the customer that this is effectively a swap meet hosted by Amazon, and quality is not guaranteed like it would be on Amazon.com. They could even still feature some of these offerings as a “warehouse deals” type offer to give their customer a better price, but make it clear that they are buying from a third party with less of a quality guarantee. This model would give Amazon a piece of the lucrative collector market that thrives on eBay too without mucking up its brand relationships.

In the end, lots of lawyers will get fat, and Bezos might be able to give the rack on his yacht a boob job so they have to expand waterways lengthwise for it too.

What are your thoughts?