Amazon may eventually catch on, but it’s a ticking clock until they get paid and disappear.
Day A, they ship X fakes to Amazon. Day B, they sell at slightly below market rates to sell as quickly as possible. Importantly as they have the lowest price they should get the bulk of orders. Selling off a mix of real units from others and fake units from themselves.
If they are a fairly low percentage of the market it could take a while for any significant number of their fakes to be shipped. Now it’s a race if they get paid by Amazon before Amazon catches on.
Obviously this works best if the fakes are close to the real product so it takes a while before a significant number of people notice. Think functional but substandard USB cables etc.