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To sell direct or not? Hmm...
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Most readers don't look at categories. They search by terms they know/ are interested in. But they do look at reviews when they see an ad and are interested enough to click, which is why I focus on reviews across all my platforms (not just Amazon.)"
you are right that a lot of readers search, so having the right tags is quite important.
if you are closer to the top ranking, then you show up closer to the beginning of the best sellers pages. therefore, discoverability is enhanced--even in "obscure" categories, if readers are interested in that category, then they will find you more easily and they will be enthusiastic about your book b/c its in their favorite "obscure" category. this is niche marketing--targeting a niche, a narrow category (including tropes (which can also be achieved through the appropriate application of tags))--which is very important b/c once a book (or brand) has a loyal enthusiastic following, then they (your tribe) will proselytize your brand for you.
disclaimer: the idea of niche marketing is not mine--nor is the idea of tribes. for reference: Platform: Get Noticed in a Noisy World and Influence: The Psychology of Persuasion.

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Platform: Get Noticed in a Noisy World (other topics)Influence: The Psychology of Persuasion (other topics)
Honestly,
I don't even know what my ranking is (that is probably bad business, huh?) because I have my books on several sites, it is hard to keep track of all of that.
Went to look and nope, I am not ranked under 100 in any of them. I have heard that it is really hard to rank under 100 unless you focus on very obscure categories and that won't increase sales because the categories aren't popular.
Most readers don't look at categories. They search by terms they know/ are interested in. But they do look at reviews when they see an ad and are interested enough to click, which is why I focus on reviews across all my platforms (not just Amazon.)