We can’t !
On " New " media items, service seems to count for nothing and price is everything. Buyers don’t see what you consider marks you out from the pack. They simply see the lowest price and the Buy Box. I know I give a better service than other sellers I have bought from. But it is all about the price.
In DVDs and Games there are sellers selling US editions of releases, with up to 14 days delivery. Buyers never notice. They just go for the " Buy Box " and only realise later what the nature of the transaction they have entered into is, a US packaged and rated compatible edition, turning up two weeks later, when a great UK seller could have sent them the correct item within a day, but a crucial penny was the deciding factor.
I have tried various experiments on Amazon and in answer to the question, you can’t compete with Amazon on price. When in need of funds, coming up to disbursement, I have set prices of brand new sealed goods lower than Amazon, in the hope of clearing a few items out quickly liquidating to get some funds. Amazon have simply reduced their price, not to lower, but to a price where their mathematical equation retain the " Buy Box ". As I slashed my prices again, they again cut their prices, again not under me, but enough to somehow retain the buy box. So, I have just left the item there, a single unit, with a description saying how quickly and securely I will post it, £1 less than Amazon, and it has sat there up to a week, waiting to be bought, and nobody has touched it.
Other contributors are right. You can sell when Amazon run out of stock. In my experience People have paid from 33% more to DOUBLE, the Amazon " in stock " price, depending on the item, but it is a very brief window. And often you get a couple more items in, Amazon are back in stock, and now you are stuck with it. Mainly it has always made me wonder exactly how cheap Amazon are getting their stock, because I know at the much more " expensive " marketplace seller price, there might not even be a profit after fees and shipping !!!