Well, yeah but the margins on operating a platform for 3rd party sellers is way better than actually just selling stuff.
Think about it - Amazon gets to take a fee on - accepting inventory into warehouse, holding inventory, listing fees, listing ads, sales fee, shipping products, accepting returns, destroying returned merchandise.. and probably a few more things.
Amazon makes money whether the underlying sale of products is unprofitable .. because that's someone else's problem.
If you reduce usefulness of your product (your store) to the point where people can't get what they want and don't use it, it doesn't matter how much margin you have.
That takes forever (every bankrupt store ever has still had customers to the very end) and meanwhile it looks great.
Especially when you realize that Amazon holds a gun to the head of all these "scammy/crappy" sellers and makes them pay even MORE to be the first suggested result, etc.
