Yeah, most manufacturers would be happy with that deal. It isn't what Amazon is doing though.
When I sell to CostCo, I'm very happy to manufacture their house-branded vitamin C in exchange for them carrying my premium name brand vitamin C in stores as well. I make money on both products. (Heck, I as the manufacturer pay money out of my own pocket to advertise that CostCo branded vitamin C.)
How do we know that this isn't what Amazon is doing? Maybe they're not doing it with the specific product in the original post, but they're not directly manufacturing all the products under their brand. They're going to some supplier/manufacturer.
Private label manufacturing deals are as secretive as possible so the owner of the market (in this case, Amazon) can change the supplier when it suits them giving them leverage in the negotiation. I'd bet you can find that exact AmazonBasics cable you just bought from the same supplier with a different name on Amazon, too.
When I sell to CostCo, I'm very happy to manufacture their house-branded vitamin C in exchange for them carrying my premium name brand vitamin C in stores as well. I make money on both products. (Heck, I as the manufacturer pay money out of my own pocket to advertise that CostCo branded vitamin C.)