The Internet is changing the world of retail. It's always been a tough business, but local market's were somewhat protected and wholesale costs were carefully guarded. MAP was strongly enforced by the vendors. That traditional 3 tier distribution scheme required markups along the way for everyone to make money. It's costs the Manufacturer $5 to make, they sell 1000 of them to the distributor at $10. The distributor has to pay their warehouse rent and cover transportation, so they sell 20 of them to the retailer at $16. The retailer has to pay higher rent, stay open longer hours and employ staff to serve one customer at a time, they sell the item for $32.
It costs more to sell one item to a single person at the retail level than it does to sell 10 items at the wholesale level. You can walk into any retail store and spend $2 on a portion of brine. The retailer has lost money on that transaction if that is all you buy. The wholesaler or distributor on the other hand requires a minimum order, say $500-$1000 from the retailer. They don't just sell one item.
If the retailer wants to save money, they can approach the vendor directly for distributor pricing. If I spend $5000 with Brightwell or Seachem in a single transaction, I could buy at very low pricing. That's a hard pill to swallow for a retailer, they have a small market space. But if I have a website and a warehouse, I can sell the same items for less money than than the retailer, but make a higher margin on the individual sales! The market flattens and the wholesalers and retail stores loose business.
There are many instances of the Internet price being lower than the local wholesale price the retailer must pay for the same item. Makes it hard to earn a living.
A retail store can not stay in business competing with Internet pricing. They stay in business by providing service and convenience that offsets the Internet experience. Or, as my Economics professor used to point out, it's all based on opportunity costs.
Without a healthy margin, a business can not succeed. And in the world of retail, that means lots of small transactions, requiring time on the part of the shop owner or staff. That translates into needing to markup goods 2-3x their cost to continue to keep the doors open. Some items such as tanks have a very low margin, other items such as food may have a high margin. Then of course, we have inventory that dies........
-Rob