JackThreads.com recently joined the ever growing list of ecommerce companies that took investment but never managed to become a viable operation. It's looking more and more like online we'll have Amazon, a few big box retailers that have enough going for them to compete with Amazon (thinking Home Depot, Tractor Supply, Wal-Mart, Target, Costco) and then a bunch of smaller businesses built around tight niches and savvy marketers.
I think there is plenty of room for smaller businesses to be efficient and nimble and picks the scraps left by Amazon. We just have to be willing to do the difficult work and get good at our specialty. An analogy I would use would be a kill made by a lion. Amazon is the lion, they get the majority of the flesh. Then you have some clever hyenas who get some decent size bites while the lion is distracted. Next come the vultures and small scavengers when what's left is too difficult for the lions and hyenas to get to. Finally, you have millions upon millions of bacteria.
It ain't easy to go from a bacteria to a small scavenger but it can be done if executed amazingly well. But it's damn near impossible to jump from bacteria to a hyena. Amazon is coming for the hyenas, and they've enlisted a bunch of third party bacteria to join the fray.