Amazon to abruptly stop buying goods from 3rd party sellers. Shifting its business model closer to Alibaba- revs might appear smaller but is this a good sign in the long term with less inventory costs and depreciation?

Yes I do think this a step in the right direction, strictly keeping Amazon as the marketplace and collaborating with external sellers. Although more people feel reassured buying when Amazon is the official seller/reseller, I believe the pros outweigh the cons. Amazon can then focus fully at its fundamental core business to grow this marketplace.

I believe for traditional brick and mortar retailers like Target- they too have been listing their items on Amazon inspite of having their own online retail website. This reaffirms the viability of Amazon's marketplace.

And indeed you already covered most of the effects on its balance sheet due to this change.