I've worked with a lot of Amazon merchants where they would put up a item with a decent margin and good sales only to be reliably be cut out from that exact item by Amazon offering it themselves after 1-2 months. The core of their business on Amazon was to continuously hustle and identify new products that would fill that niche, as that made up for the biggest chunk of their profit.
So there are many 3rd party merchants at risk _now_ on Amazon.
Apart from that there are also numerous brands from Amazon themselves already. Most obviously "Amazon Basics" and "Amazon Essentials", but also many with a non-obvious name[0].
>> The core of their business on Amazon was to continuously hustle and identify new products that would fill that niche, as that made up for the biggest chunk of their profit.
That sounds like a very risky business. How do they manage/lower that risk ?
For some of them I would say that they barely had any strategy to reduce that risk, and just had people whose sole job it was to constantly try and identify new products, and then they just accepted that they had better or worse months of that working.
The merchants where it was more stable had generally less of those products, and had a bigger existing offline business. Through their offline business they had bigger volume on those products and could cut a better deal with the supplier than Amazon, and through that offer them at a lower price[0]. I would guess though that that's also only a very temporary position they can hold, as Amazon should be able to beat them in warehouse logistics and demand forecasting.
[0]: As a silver-lining Amazon is pretty fair that if you underbid them even if they have the item in stock themselves, you will still make the sale "by default".
Currently Amazon has better ways to use their money to grow.
When that's over, a lot of the 3rd party sellers will be at risk.