Today, nobody wants to start up a competitor to Amazon. New ecommerce retailers aim at niche markets because Amazon is such a juggernaut and fierce competitor that it would be foolhardy to go against them.

Those niche retailers look at Amazon as an exit strategy more than a competitor. Like Microsoft in the 90’s, Amazon isn’t the competition, they’re the environment that any entrant deals with.

Competitors emerge when they sense an opportunity to take away market share from a weakened incumbent. This starts at the periphery: a new entrant takes away a small, uninteresting, or insignificant portion of the market.

The incumbent gradually finds themselves hemmed in by upstarts each nibbling away at their fringes.

The upstarts will both expand the edges into areas the incumbent never realized were part of their TAM. Meanwhile the upstarts make incursions into the core.

Eventually one or two of the upstarts will become the dominant player in the new, expanded market.

This is the classic “Innovator’s Dilemma.” It starts when the dominant player is seen as vulnerable.