I think with your future goal in mind which is to eventually have a bigger website with everything from every website, it is better to go with Option 1. Having an umbrella brand and then having sub-brands within it will make it easier for the customers to relate to the brand once you implement your final goal of the bigger Amazon-like website.

This also doesn't hurt your need to make customers feel that they are a part of something that identifies with them. You could have your Action Sports website for example to talk directly to the right Action Sports customers. You just need to have some kind of branding indicating that this site is a part of umbrella brand. I can't see how this can hurt. In fact, this could even be done without completely different websites for every category. You could have one site with different category landing pages that lead to listing pages that only contain stuff from that category like Action Sports for example. Shopify has done a lot of these kinds of landing pages that are very effective. Have a look at these two which are aimed towards ebook authors and pet suppliers respectively:
http://www.shopify.com/sell/ebooks
http://www.shopify.com/sell/pet-supplies

But I think you've already got the separates website working? It's fine and could work well. What you're trying to do is really good. I have a lot more suggestions in mind which could make your sites a lot more effective and make more conversions/revenue eventually. I would be happy to discuss this in detail through a call.

You have to remember that Amazon did not get to where they are today overnight. I believe they were one of the pioneers in doing what they are doing today and they are often reinventing themselves. Your audience who is shopping for action sports will be very different than the audience who is shopping for home decor. If you must marry both brands, you must find a way that speaks to both audiences so they become loyal to the parent brand that they know they would get no matter if they are shopping for action sport or home decor items.

It can be challenging to simultaneously

(1) unify a brand that spans multiple websites, each with separate offerings and distinct audiences;

and

(2) make each individual website seem like a branded space in its own right -- something that an audience will embrace as expressive of their style and interests.

But it can be done. If you'd like to schedule a call, I'd be happy to gather examples of these "umbrella" brands (or "brand hierarchies", as they're sometimes described) -- some that I consider successful and others that come across as a bit schizophrenic.

We can take a look at what makes the difference for them. And, of course, I'd also be interested in suggesting some naming strategies that fit your particular business model ... once I learn more about the specifics.

To become Amazon in your country you must have a look at the other side. Grass feels greener at the other side, but it is when you reach the other side you can feel how green it is. Chris Lampen-Crowell started to feel the undertow four years ago. Gazelle Sports, the running-shoe and apparel business he founded in downtown Kalamazoo, Michigan, in 1985, had grown steadily for decades, adding locations in Grand Rapids and Detroit, and swelling to some 170 employees. The problem was not so much that customers had made a conscious decision to buy their running gear elsewhere, Lampen-Crowell says. Lampen-Crowell’s initial response was to double down on marketing his company’s own website. That was because, by 2014, nearly 40 percent of people looking to buy something online were skipping search engines like Google altogether and instead starting their product searches directly on Amazon.
By the fall of 2016, the share of online shoppers bypassing search engines and heading straight to Amazon had grown to 55 percent. “If the customer is on Amazon, as a small business you have to say, ‘That is where I have to go," Lampen-Crowell explains. Setting up shop on Amazon’s platform has helped Gazelle Sports stabilize its sales. Amazon, which did not respond to an interview request, touts its platform as a place where entrepreneurs can “pursue their dreams.” Yet studies indicate that the relationship is often predatory.
Harvard Business School researchers found that when third-party sellers post new products, Amazon tracks the transactions and then starts selling many of their most popular items itself. And when it is not using the information that it gleans from sellers to compete against them, Amazon uses it to extract an ever-larger cut of their revenue.
An entrepreneur at heart, he keeps his focus on finding ways to succeed and does not let his attention stray too far into questions of Amazon’s market power. “If you take this to the end, Amazon controls the rules”. It is easy to mistake Amazon for a retailer. After all, the company, which was founded in 1995, sells more books and toys than any other retailer, and is projected soon to become the top seller of clothing and electronics.

It now captures nearly $1 of every $2 that Americans spend online. To think of Amazon as a retailer, though, is to profoundly misjudge the scope of what its founder and chief executive, Jeff Bezos, has set out to do. Already, Amazon’s website is the dominant platform for online retail sales, attracting half of all online US shopping traffic and hosting thousands of third-party sellers. Its Amazon Web Services division provides 34 percent of the world’s cloud-computing capacity, handling the data of a long list of entities, from Netflix to Nordstrom, Comcast to Condé Nast to the CIA.

Now, in a challenge to UPS and FedEx, Amazon is building out a vast shipping and delivery operation with the aim of handling both its own packages and those of other companies.
By controlling these essential pieces of infrastructure, Amazon can privilege its own products and services as they move through these pipelines, siphoning off the most lucrative currents of consumer demand for itself. Amazon is “something radically new in the history of American business,” New Yorker writer George Packer has observed. Their actions sparked a broad movement against monopolies, which led, over the following decades, to the passage of a robust body of antitrust laws. The central purpose of these laws was to protect liberty and democracy from concentrated economic power, or what Franklin Roosevelt called “industrial dictatorship”.

By the time Bezos set up his bookselling operation on the Internet, however, these laws were no longer being enforced in accordance with their original purpose. “Antitrust laws have been largely reduced to a technical tool to keep prices low,” notes Lina Khan, director of legal policy at the Open Markets Institute. Therefore, so long as Amazon has appeared to benefit consumers, it has been allowed to grow using tactics that would once have drawn antitrust scrutiny. Amazon has an extensive history, for example, of selling goods at a loss to wrest market share from competitors that lack the financial backing to sustain similar losses.
Bezos, a former hedge-fund executive who has an unparalleled gift for selling his vision to Wall Street, has always been candid with investors about this strategy. In a letter to shareholders after the company went public in 1997, he wrote that he would prioritize “long-term market leadership considerations rather than short-term profitability. “Over the next six years, investors barely winced as Amazon lost $3 billion selling books and other items below cost. Likewise, when Quidsi, the firm behind Diapers. Bleeding red ink, Quidsi eventually agreed to Amazon’s offer.
“When you are small, someone else that is bigger can always come along and take away what you have,” Bezos has said. Amazon’s many tentacles provide it with novel ways to strong-arm suppliers.
Amazon’s dominance has been aided by Bezos’s prescient grasp of how the seemingly wide-open Web could be turned into a winner-take-all environment. In 2005, Amazon launched Prime, a membership program that provides free two-day shipping and other perks for $99 a year. With Alexa, Bezos has found a way to lure people even deeper into Amazon’s ecosystem. Alexa is the voice assistant that powers the company’s Echo speaker, and it makes buying from Amazon as effortless as a passing thought.
With Alexa, Amazon will “slowly but surely take control of your preferences,” predicts Scott Galloway, a professor of marketing at New York University. Although Amazon continues to earn relatively meagre profits compared with rivals like Walmart and Apple, its stock price has soared, almost doubling in value over the past 18 months and making Bezos the wealthiest person in the world. Investors see where this is heading. Last June, Amazon announced its intention to buy Whole Foods.
The deal gives Amazon a prominent foothold in the pivotal grocery industry and much else besides. With Whole Foods, Amazon gains new ways to cement its dominance online, including by extending its package-delivery infrastructure to 470 stores nestled among millions of urban consumers. And it allows the company to blur the distinction between online and offline retail, accelerating the spread of digitally driven commerce and, with it, Amazon’s power. Yet, just two months after the deal was announced, the Federal Trade Commission gave it the green light, concluding that the merger did not warrant an in-depth review.
As it grows, Amazon is exposing the deficiencies of the Reagan-era changes in how we think about corporate concentration. The number of new firms launched each year has fallen by nearly two-thirds since 1980, and many economists believe that corporate power is to blame. In a 2016 survey, independent retailers ranked competition from Internet retailers like Amazon as the biggest threat to their businesses, more worrisome than big-box stores or rising health-insurance costs. Local businesses “are in a much better position as small retailers to do that boot-strapping,” says Michael Levins, the founder of Innovative Kids, a book and puzzle producer that has been in business for 29 years.

While many communities are seeing local businesses disappear, they are also losing retail jobs. This past year, more people lost jobs in general-merchandise stores than the total number of workers in the coal industry. Even as Amazon expands its network of warehouses, it is not creating enough jobs to make up for the losses it is causing. This kind of wholesale upending of an industry happens periodically, and, as a rule, we do not run out of jobs.
As it moves into package delivery, Amazon is bringing its labour model along, relying in part on Amazon Flex drivers, who use their own vehicles, take directions from an app, and are paid a piece rate for each batch of boxes they deliver. The impacts are already being felt at the US Postal Service and UPS, whose hundreds of thousands of unionized employees constitute one of the last surviving corners of the working middle class. A few months ago, over the objections of the Teamsters union, UPS began placing ads for drivers who will use their own vehicles. As a result of the economic shifts that Amazon is helping to propel, the country is being divided into a starkly unequal geography.
It is not hard to imagine a future in which Amazon’s cashier-less supermarkets and nondescript bookstores populate better-off neighbourhoods, while other communities become increasingly barren of commercial activity. In the left-behind towns and neighbourhoods, the despair that has set in stems from more than just economic hardship. Ulmer published a detailed study of several matched pairs of cities.
Now, instead of actively seeking to disperse economic power, policymakers encourage its concentration. Many elected officials are as enthralled with Bezos as his investors are, and they have been equally willing to fund Amazon’s growth. This allowed Amazon to largely avoid collecting sales taxes for nearly two decades, giving it a price advantage that research shows helped drive shoppers to its site. Then, as Amazon’s warehouse expansion began to compel its compliance with sales taxes, the company started angling for local development incentives.
It is raked in more than $1.1 billion through these deals, according to Good Jobs First, and more than half of the warehouses that Amazon built between 2005 and 2015 received public subsidies. Then, last fall, Amazon set off a frenzied bidding war to land its second headquarters. In New Jersey, meanwhile, Senator Cory Booker, former governor Chris Christie, and Newark Mayor Ras Baraka put together an offer worth $7 billion. That is $2 billion more than Amazon says its new headquarters will cost.
She singled out several dominant companies, including Amazon, noting that “the platform can become a tool to snuff out competition.” And she argued that we should use antitrust policy to break up concentrations of power and broaden opportunity, presenting a progressive economic vision that has more to offer people than simply an enhanced social safety net. In recent months, a growing number of political leaders have started to make the case for restoring antitrust policy to its former strength and purpose. The US House of Representatives now hosts the newly formed Antitrust Caucus. Its founders include Congressman Ro Khanna , who, interestingly, hails from Silicon Valley, and who urged antitrust enforcers last summer to undertake a much more thorough review of the Amazon–Whole Foods merger than they did.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath