Amazon concentration makes investors in B2C companies nervous. Amazon controls the marketplace and the search algorithm, which they can change anytime. It influences how products are surfaced and priced and fees, fulfillment costs and advertising can take a meaningful bite out of margin.

The question is: why does Amazon concentration make us nervous in a way that concentration with big box retailers like Walmart, Costco, or Home Depot often doesn’t?

Let’s look at Amazon first, because the risks are real. Amazon can favour its own products. It polices your pricing across the entire web and will not favour your listing if it finds you cheaper somewhere else. Fees drift up over time, the algorithm shifts, and a stockout at the wrong moment can tank your ranking. Every seller and consultant we talk to says some version of the same thing: you can never take your foot off the gas when selling on Amazon.

The side to the story no one talks about is that Amazon’s power is unusually visible. You can see your ranking, reviews, conversion, advertising performance, inventory and price competitiveness. No one outside Amazon truly understands everything happening inside the algorithm, but many of the inputs that matter are observable. A disciplined operator can see what is working, react when it isn’t and continuously improve.

A well-reviewed, well-run brand can be surprisingly difficult to displace on Amazon. A leading product may have thousands of reviews, strong organic rank, proven sales velocity and an established reputation with consumers. Those advantages take time to build. A new competitor can lower its price and spend aggressively on advertising, but that doesn’t mean it can simply buy its way to the top. In our research, less relevant competitors could need to spend multiples more just to compete for the same visibility.

Comparatively, in big-box retail, a brand is competing for finite shelf space, often against other brands and the retailer’s own private label. Getting onto the shelf means filling a real assortment need, demonstrating consumer demand, meeting the retailer’s economic requirements and proving you can execute. Staying there means continuing to earn that space.

When something goes wrong, the feedback loop can be much less transparent. If you miss an important seasonal window or fail to deliver operationally and the consequences can be severe. There isn’t always a dashboard telling you what went wrong or what to fix.

A company generating half its sales through Amazon is not automatically less defensible than one generating half its sales through a major retailer. In either case, someone else controls access to a meaningful portion of the company’s customers and economics.

That doesn’t mean Amazon concentration isn’t a risk. It absolutely can be. But Amazon concentration is often a symptom whose severity depends on what sits underneath it.

If a company sells an easily substitutable product, relies heavily on paid advertising to generate demand, has weak consumer credibility and offers little that a competitor or private label can’t replicate, then Amazon concentration should make you nervous.

But the reverse can also be true. A business we recently diligence built a defensible position through a combination of differentiated product and design, strong reviews and reputation, organic visibility, compelling price/value, and reliable supply. Importantly, that defensibility doesn’t have to come from traditional “brand” alone. In some categories, consumers may barely know the brand names at all. What matters is whether the product earns preference and whether that advantage is difficult for someone else to replicate.

There is no channel where you get to keep all your margin and all your control. Both Amazon and big-box retailers will take their cut. Every channel that isn’t your own website is, is a landlord who can change the rent.

That’s why I think the diligence question needs to go one level deeper. Don’t just ask how much revenue comes from Amazon. Ask why the company is winning there. Ask what a competitor would actually have to do to take its place. Ask whether the economics still work after advertising, fulfillment and other fees. And ask whether the capabilities that made the business successful on Amazon can translate when it moves into other channels.

That’s the risk worth diligencing.