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Seems to me the product here is the "plush toy experience." It involves buying plush toys while participating in a plush toy community. Even if Amazon isn't selling the plush toys today, presumably it could do it tomorrow, and at cheaper prices. But it will be a lot harder for Amazon to replicate the community, and that is how this site can compete with a 900-lb. gorilla.

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They are also selling a brand. People buy Sony (I'd say Apple, but then the OS clouds the issue) laptops because they like the brand. Reputation, good configurations, good quality ... you guys know what a good brand should be.

One way to build a brand is to build a web store. You lose Amazon's distribution, payment systems, data-mining, and visibility; but you gain more brand recognition. You could also sell on Amazon, but that will take people away from your site which may mean your brand loses it's uniqueness.

Face it, if you don't have a good brand and you are selling anything that can be made in China, you can't expect any margins. Wallmart and Amazon will sell the same thing cheaper.

Even better is that Amazon might even start stocking the squishables if they are popular enough, giving them another channel.

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