The Amazon 3rd Party Seller Ecosystem Might be the Most Important Thing Since the iOS App Store

While the first wave may be third-party seller rollups, the next wave could be software companies that power them. And more ancillary markets will come out of all this.

But for now – there is not a lot of capital in the space, and many of these sellers cannot keep up with their own growth. The easiest way to get de-ranked is by running out of inventory, but a business that can’t get financed, is fully bootstrapped, and that is growing quickly (with holiday season volatility) will struggle to procure inventory fina... See more

Because they don’t pay for their real estate. When you search for a product, a list of sellers/items comes up in the search result. Being ranked number 1 in a category is like having a corner store front on a busy street, without paying any rent for it. And having good reviews/comments is like having a nice view and big, wonderful windows. These ac... See more

(1) They have a Compounding Comment and Review Moat. When an account has lots of positive reviews and comments, it increases the ranking. And the higher the ranking, the more comments and reviews an account will get, and so on. So with each comment/review, the account increases its defensibility in a compounding fashion.