Many don't realize that there are several types of listings for the same product. In many cases, Amazon actually buys the products from the manufacturers, much in the same way that Lowe's or Costo would. Amazon pays the manufacturer (or distributor) and owns the product that they then resell. These products are labeled as Sold by Amazon.
In other cases, the manufacturer/distributor continues to own the product until it is sold and merely uses Amazon to list the product. Or, if they want Amazon to list the product and help with the shipping, they can send their product to Amazon (but the manufacturer/distributor still owns the product) and have Amazon handle the listing, the sales processing, and the shipping. These items are labeled as Fulfilled by Amazon.
Individuals can also sell items on Amazon and can use Amazon's fulfillment services for a fee. Amazon stands behind these items (in a limited way) but it's not all that different than buying something on Craigslist, except without the ability to inspect the product before taking it home.