The Sears Catalog was the Amazon of the early 20th century. So we must ask ourselves "Why did Sears discontinue its catalog service in 1993?" One of the answers to that question is the rise of retailers like Walmart where people could walk into a local (or at least closer to them than a Sears location) store and buy all sorts of things that they otherwise would have had to order. The catalog was inconvenient with other alternatives available.
The concern with Amazon is with its delivery ability - sure, for now, their unsustainable model that burns out drivers and pays them a pittance is working. Should that slip where they cannot deliver same-day/next day/day after reliably then that's an opportunity for other retailers to do to them what Walmart did to Sears.
You can even see it in this discussion - Walmart's online component directly competes and with many, many more local retails locations than Amazon and can often either have the items ready for pickup the same day or even deliver the same day.
So yes, there's a precedent for this, and if Amazon is focusing more on AWS and the buckets and buckets of money there but starts neglecting the retail part then that leaves a massive opening for competitors.