Those products are a significant percentage of its business, they basically took the street vendors and gave them a global marketplace. You no longer need to go to Asia to get a high quality counterfeit football jersey or shoddy electrical appliance. It's even easier for the vendor, get cutoff and open under a new name. No new storefront to find, no goods to mov or hide from spot checks when the government decides to 'crack down' due to pressure from manufacturers. The quality varies greatly depending on product category, the bolts, screws, random hardware to use in 3D printed stuff, screen protectors, yard flags etc. were all fine and a fraction of Amazon's cost from a reshipper.
Amazon's actions will be interesting because it seems pretty clear that some of the sellers are just drop shipping from the same sources in China and marking it up to cover Amazon's costs and shipping.