Amazon Ads is going to be a really interesting corporate case study in ~10 years. A combination of factors are coming together that will eventually result in the death of Amazon's retail division.<p>Amazon has been doubling down on ads in retail search results over the last ~4 years. Ad load (e.g. "Sponsored Products") has been steadily increasing. One of the main reasons is that Ads as a group has incredible margins (the marginal cost of displaying an advert is ~$0). As a result, Ads has been crushing all KPIs, leading to more resources dedicated to the Ads org. The growing teams and increased headcount in the org have had to justify their existence through revenue growth. What's the easiest way to grow an advertising org? Show more ads!<p>The above is simplifying things, but the bottom line is that Amazon.com today shows a lot more ads than four years ago. Concurrently, Amazon has aggressively shifted away from directly selling goods itself towards third party sellers. Amazon.com is now predominately a marketplace of third party sellers all competing against each other to appear at the top of the search results. The only way to consistently appear at the top of retail search results is to be the highest bidder for marketplace ads.<p>All of this has really distorted incentives for third party sellers. They no longer need to have the best product to get sales. They're incentivized to spend more on ads and less on the product itself. Product quality is noticeably worse than in the past and it's still getting worse. To battle that, sellers leave fake reviews. Customers lose trust in Amazon and become more wary of what they buy.<p>These factors are self-reinforcing -- hence why I think Amazon will be an interesting case study. Once you lose customer trust, it's hard to get it back. They can try to combat this with a great return policy and customer service, but the incentives are still misaligned.<p>Context: used to work for Amazon Ads org