Comment by ajkjk

FBA gives them an economy of scale that you can't get with just internal staff--every retail inventory requires account managers and oversight, whereas with FBA you just set up a platform and let the economy sort itself out (while skimming your cut). It is not that different from Apple's app store being a better business model than commissioning all the apps themselves. Anyway the distribution world is much messier than you might think. Allowing everybody to individually optimize whatever they way (say, finding a cheap wholesaler and then reselling via FBA) is hugely advantageous for them. Although I would guess that in the last decade the efficiencies have largely been exploited now.

also, you're probably aware of all the made-up brands which sell like, thousands of versions of staples like HDMI cables on Amazon... all of that exists because FBA made it possible for people to start random business in consumer goods, basically by (my understanding) using Alibaba to find manufacturers and FBA to find customers and connecting the two. It's all exhausting now because the fake brands have crowded out the real ones, but for a long time that was what the economy becoming more efficient looked like (at least in one sense... maybe not the sort of efficiency that actually benefits the customer, though, since in practice a lot of the gains were found by capitalizing on Amazon's reputation to sell cheap stuff for more than it was worth).