According to a Bloomberg article “Amazon Wants Cheerios, Oreos and Other Brands to Bypass Wal-Mart,” Amazon is hosting a three-day gathering in May for some of the world’s biggest brands. In which they are hoping to pitch brands on the future of e-commerce as far as Amazon sees it.

“Times are changing,” Amazon says in an invitation obtained by Bloomberg. “Amazon strongly believes that supply chains designed to serve the direct-to-consumer business have the power to bring improved customer experiences and global efficiency. To achieve this requires a major shift in thinking.”

What’s interesting in this message is that direct-to-consumer sounds like it would cut Amazon out of the value chain as well. If Amazon wants manufacturers to sell directly to consumers, how will Amazon benefit from it, aren’t they a middleman too?

Amazon is positioning themselves as a e-commerce infrastructure company, not a retailer. Their message to big brands is that they wouldn’t be selling products to Amazon for resale, but instead using Amazon as a platform to reach a massive audience, and using their infrastructure to facilitate all e-commerce tasks. In this view, Amazon is not a middleman, but instead an enabler.

If big brands buy into this, Amazon is unstoppable.

The Amazon marketplace as it stands right now is largely consisting of retailers. But the trend we have been noticing for a while, and the vision this Amazon event is showing, is the ultimate rise of manufacturers participating in it. Amazon has always been focused on cutting out middlemen - they don’t want to be one, nor they want them on the platform.

Customers are going to be the ones to benefit the most, as they will get better pricing and more selection. Improved customer experience is achieved by direct-to-consumer, while the traditional retail model of wholesale can only optimize one thing - price. But going direct-to-consumer price too will be achieved just by not having additional layers of the retail chain.

Currently marketplace sales account for 50 percent of all sales on Amazon. We think this number will continue to slowly rise, and eventually Amazon will be 100 percent marketplace.

We have a view that Amazon retail exists in many ways to put pressure on the marketplace. When Amazon sells a product, it is often hard for competition to compete unless they have a really good deal. If Amazon doesn’t sell it, then even retailers with high pricing have a chance. But if the marketplace continues to grow, then this pressure from Amazon is not needed, and thus eventually Amazon could just stop doing it.

Instead, Amazon will focus fully on developing their own brands, and building the best possible infrastructure. If that’s the case, then Walmart, Target, Costco and others are going to have a difficult time competing. For now, Amazon’s competition is still doing traditional retail only. In this shift from wholesale to direct-to-consumer Amazon has a lot to gain, and traditional retail will struggle.

Our thesis on Amazon remains that they are playing a different game than their assumed competition.

And while this is a market shift which will take years to play out, sellers currently on the marketplace need to be thinking about it now. Amazon is making it clear that they don’t see middlemen in the future, sellers should not be betting against that.