Returns are up, and some thing if they are cheap I don't even bother returning. I've gotten used items marked as new, totally counterfeit apple products more times than I could count (stopped using Amazon for that) etc.
Regardless, if there is an issue with a commingled product, Amazon's customer service will take care of it instantly, which is putting the customer first. I imagine there are a hundred variations, besides commingling, where sellers do shady shit, and regardless, Amazon will take care of you as a customer quickly, without question, and usually with additional compensation above what is expected.
So they compensate using customer service.
And they are actively trying to solve this and reduce the number of SKU's.
"Amazon's choice" tag is one example of that.
I've also noticed that sponsored products (which I don't want ever) are better targeted towards my queries by EBay. The difference seems to be that Amazon deletes keywords until it has something both sponsored and irrelevant to show and hopes for the best. That must have survived A/B testing, yuck.
What I think it comes down to is I'm an oddball that wants organic search results. I understand why Google messes with that to deliver ads, but for the life of me, I'm trying to help Amazon take my money and they're getting in my way and my larger purchases (>$100) are migrating away now because it's becoming impossible to find what I want, occasionally worked around by searching the Amazon catalog, ironically, from Google.