As a change of pace, how about a visual quote (gotten via Read/Write Web)...

That pretty much says it all, Amazon is turning physical space into a web service and charging for it in the same way they charge for hard drive space now.  Apparently the way this will work is that Amazon won't charge for the service but will instead charge for storage space and the transactions themselves. 

This way companies can use Amazon's back-end for automation while only paying when they make money. 

This service seemed counterproductive to me at first (package up all your stuff and send it to Amazon just so they can package it up and send it to someone else).  But as I thought on it I realized most people using this service don't manufacture their own goods they buy those goods from someone and then act as a middle man.  So by just having your supplier ship straight to Amazon you could, in theory, automate your supply chain just like the big companies do. 

That's where the beauty of this comes in.  With a little programming knowledge you can run your business as efficiently as a big chain store and do so at a fraction of the cost.  Especially since there is no cost to the service itself allowing you to poll it as much as you need to.

I do see one issue and that is in quality control.  Because you as the seller will never have your product in-hand you won't be able to weed out damaged items until they hit the consumer.  You can obviously offer returns in the same way the big chains do but a smaller company might not be able to get their money back from the original vendor once the item is returned.  Small companies usually have a limited return window which means they lose money if a damaged item sits on Amazon's shelf too long.

But unless you have serious quality control issues on the vendor side I doubt this would be too big an issue.  If anything a few losses should be easily offset by the money saved through operating more efficiently. 

So while this is a harder sell than previous Web Services I still think it's a win for Amazon...albeit not an immediate one.  Since this is a relatively new concept to small companies I expect adoption to be a slow process.  But Amazon is building this off their own infrastructure so they can, in theory, give it as much time as it needs to prosper. 

Addendum: In case you were wondering, the title of this post is in reference to Amazon blurring the line between the virutal world of web services and the physical world of storage and shipping.  I thought that was clearer than it was :)

Second Addendum: As was pointed out in the comments there are similar services to this that have been around for a while.  One of which is ShipWire.  I don't have the specific need for a service like this and I lack the time to fully investigate which service is better but I thought I'd throw that out there so anyone interested in this type of thing could make their own comparison.