I've been thinking this for years now, that the free-for-all for 3rd party sellers would eventually erode trust and make Amazon less appealing. But it hasn't collapsed yet and they still keep growing.
Now I really view Amazon as two separate products in one interface - there's the Ebay style bazaar, and then there's the first-party store. If I'm looking for a brand-name item, like an iPad or some other gadget, or some camera gear, I can often find it on Amazon and it'll be "shipped from and sold by Amazon", or there are a few other sellers whose names I recognize (like Apple or Adorama for the camera gear I was recently looking at) that I trust to buy from. More and more there's also the Amazon Basics brand covering everything from batteries and usb cables to snacks like trail mix, and I have come to trust their brand as well. These things will generally ship with prime shipping and arrive in 1 or 2 days, I get 5% cash back on my amazon card, and it's convenient to check out and I generally can trust I won't have any issues.
If I'm looking for something that's not brand-name, and I want to pay the cheapest price I can for something that gets the job done, I can venture into the bazaar land. I recently bought some patio furniture and a rug that were quite cheap, and they work pretty well and have been awesome for using my outdoor space during the lockdown. In this side of the platform I know I'm making sacrifices, I often don't get prime shipping, and I may even get counterfit items. I would never buy things like vitamins or lotion or make-up here in the seedy back alleys of the store. And often I do opt to use a different e-commerce site instead of Amazon, rather than risk it here. But I still buy from here occasionally.
I still think Amazon should do more to differentiate these two worlds, the high-trust vs low-trust platforms. But as a frequent user I now know what to look for and am mostly able to distinguish between the two, and I have to admit I do appreciate that the low-trust, 3rd party world exists. It gives me more choice as a consumer, and the alternative is that most of these items wouldn't be available on Amazon at all.