Amazon actually tried doing this with junglee.com. The challenge of course is generating traffic for a separate entity, plus it is more costly. So now it has sort of integrated Junglee with Amazon where, junglee powers the used & refurbished business.

P.S: In India, all Amazon listing are third party, since legally foreign investment is not permitted in ecommerce, so Amazon.in actually just functions as a marketplace not a retailer.