Erotica author Selena Kitt has opened an alternative store to Amazon, selling only erotica titles, called Excitica. There's a fairly comprehensive blog post explaining the reasoning here (warning, this is a blog and NOT the site but the ads are a bit nsfw anyway):
Personally, I can see this as only benefitting everyone.
It's good for people who don't even like erotica and don't want to see it: You can't search for this stuff on Amazon (or most other book stores) easily, leading to authors trying to game the system just to get into search results. They either tone down the covers and blurbs, so you risk picking up something you didn't mean to because you didn't understand the euphemism being employed in the blurb, or you end up with the kind of thing that set off the great W.H. Smith debacle of last year, where step-parent erotica was landing in the results for searches for kids books.
It's good for the authors: Since you can't search for this stuff easily, having a place where you can ought to improve visibility. I'm surprised nobody did this before, even if only as a front where authors could submit books but the purchasing was actually done via the major retailers. The market for erotica has exploded since e-books took off, since nobody can see what you're reading anymore (that and FSoG)
It's good for readers: Because, as mentioned, you can't search for this stuff! You either have to luck into it, follow an author you like and look at their "readers who liked this also bought..." or other sideways methods to find new material. And again, the erotica market is huge and growing, so the audience is there.
I kind of hope it takes off, it seems win/win all around to me. (And that's speaking as someone who finds sex scenes beyond fade to black to be rather boring--I usually skip them. There's only so many ways you can insert A into B, really.)