How exactly does this help them?

There is a lot of competition in the gift/trinket space. You could buy that birthday present from any number of sellers. If seller #183 jacks up prices, you will go buy from seller #765 instead.

That's not how consumers work. The vast majority of the time they just buy whatever amazon shows them as the first result. They aren't comparison shopping at all. Even for consumers who do comparison shop it won't matter much when every major retailer, website, and grocery store is also setting personalized prices based on what they know about you.