First, a couple of things to clear up.
If I came across as insulting you or anyone else, then I'm sorry - that was not my intention. I'm trying to express my confusion because I think we're talking across each other somehow, and I don't understand how.
Secondly, and related to that - when I said 'Perhaps I'm missing something?', that was intended as a genuine invitation to you to fill me in on what obvious/non-obvious thing I'm missing. Maybe I am in fact being stupid! It happens regularly. I'm not trying to be snarky, I'm trying to open the door to further discourse.
So with that out of the way - what am I missing? The problem seems straightforward to me, and I will try to lay out my thinking clearly here, not to imply that you don't understand any of this, but rather to make it easier for you to find and fill in the gap for me:
- physical shop buys trinket for $10, costs are estimated at $5, physical shop sells trinket for $16, making $1 profit
- online shop buys trinket for $10, costs are estimated at $3, online shop sells trinket for $14, making $1 profit
Result: physical shop goes out of business because (insert large percentage here) of customers see trinket in physical shop, decide they want it, then find it cheaper online and order it there; physical shop doesn't sell enough things in aggregate to cover its large fixed costs, and can no longer sustain the business. Even small savings are very valuable to a lot of people, as demonstrated, for example, by all the websites specialising in price comparison, and the behaviour of people during the sales season.
So from your replies you clearly think that's overly simplistic, but I don't understand why, and I'm asking for clarification in the spirit of discussion, if you're willing to entertain that.
I think the key difference is in this: "...there's more business value than direct sales..." but if you mean that enough people place enough value in try-before-you-buy to make it worth running a physical shop, then I would say that the massive decline in high-street stores in the last 10-15 years says otherwise. Side note that another problem shops face is choosing what stock to hold; a physical store almost never beats online stores for variety of inventory, which was another nail in the coffin so to speak.
So that's my hot take; by all means shoot me down - I don't mind if I've missed something obvious and if so I'd love to learn from the experience.
And if you were having a bad day yesterday for other reasons, then I hope today is going better for you.