As Wired notes:
Compared to the other industries Amazon is competing in, diapers can seem like a fairly small thing, and yet, this move signals a much larger shift for Amazon, because Elements positions Amazon as a competitor to some of the very brands who sell their goods on Amazon. If Amazon were to expand that approach to other consumer products, it could be very bad news for the millions of merchants who treat Amazon as their own storefront.
This has been the case for some-time actually; essentially since the year 2000 when they formally launched ‘zshops’. We know this today off course as it’s third party marketplace and sellers; folks who list their goods on the website alongside Amazon sku’s.
This announcement that Amazon is now selling diapers, coupled with Kindle, Fire, as well as less well known AmazonBasics products, is possibly pointing to the fact that the private label strategy they’ve long ignored is coming to fruition.
What does it mean for suppliers as well as third party sellers? No different from selling to Walmart or any other mass merchandising outfit; it’s a channel, and you compete.