If large companies can legitimately offer better services for cheaper, then so be it. To me thats just an argument that we should have lots of big companies.
That said i disagree with the premise. I never said that other companies had to be as cheap as amazon, only offer the same services. They can certainly offer things like overnight shipping and generous refund policies, it just means they will have to charge a bit more to offer that. I'd happily pay a little extra to use a mom & pop store that offered amazon-like services. But they generally dont offer those services, and again, not because they can, they could always charge for it.
Not that im setting aside ethics, but only that i am not making any argument one way or the other about the ethics of amazon... I am explaining, however, why i buy from them, why i wont switch, and why getting me to switch, even if im convinced of the ethics, would first require mom and pop stores from doing their part and offering replacement services.