1. Not everything is sourced from a store that people can go to. I've gotten a lot of inventory from other countries (think amazon.co.uk selling the same ASIN for half the price), which people won't do and also shipping would raise the price if bought individually.

2. Some stuff is bought on sale, which may be over by the time the item sells

3. Yes, people absolutely pay a premium for not having to go in store. Even stuff I can buy online people often pay more on Amazon. I do a lot of drop shipping from retailers directly to customers.