As has grown more dominant, investors' interest in e-commerce start-ups has plunged.
In 2016, venture deal volume in e-commerce start-ups dropped to a four-year low, while the total dollar amount was almost slashed in from the year before, according to CB Insights.
But there are ways to thrive in this environment, even when Amazon is driving more than half of US e-commerce growth, says Deven Parekh, an investor from Insight Venture Partners.
"There are ways to compete with Amazon," Parekh said. "The question is what are your odds and I don't think the odds are very good without a truly differentiated strategy."
Parekh, who's invested in successul e-commerce companies like Alibaba, JD.com and Fanatics, notes that several similar companies have built a strong following lately despite Amazon's dominance.
To illustrate his point, Parekh shared three different types of e-commerce business models that can work:
That doesn't mean it's an easy task to pull off. Plenty of e-commerce companies have gone bust after enjoying early success, including flash sales site Fab and the daily deals provider Living Social. But given e-commerce is still in its early stages, accounting for just 11% of total retail sales, there's still much more room for growth.
"Amazon is a formidable competitor," Parekh said. "But there are certainly examples of companies that are executing well in e-commerce."