Variations are there for a reason. They simplify the whole process for the shopper and tidy up the results page.
Some things to bear in mind (not sure how many of these only apply to Amazon):
- if they are set up as variations, then generally only one of them can appear in the organic results (PPC impressions are different and you have can have multiple) and the site will try and present the one that is most relevant to the search term
- when they are separate, if the customer lands on the listing and doesn't convert (maybe they landed on the black one but they really want a blue one), then they have no other options to choose from. They then leave and could go to another seller. But if you have the blue option you get the sale
- Also, they may want a black one but when they see you also do a blue one, they may buy both!
- (this one might be just for Amazon) Sales from all the variations funnel into one BSR and the lower the BSR the better the family will perform. If they are all separate, they all have their own BSR and fight for survival on their own
- reviews are shared (at least on Amazon). So if you have 100 reviews on the black one and 10 on each of the other 3, it will look like all 4 have 130 reviews. If you then launch a brand new colour and combine it into the family, that too will inherit the 130 reviews.