The small shop economic model is not flawed because the tire sells for $25. The economic model is not flawed because the online guy sells it for $10
The shop buys those tires ten at a time and might sell 20-30 a year. They pay about $13 for each tire. Performance buys those tires a 1000 at a time and gets a huge break on the pricing and sells many thousand a year. They probably pay $8-9 and offer them as a loss leader beacuse it looks good, then they make some of that(loss) back on shipping.
The shop charges more because the product costs more. Then there are all the other associated costs. Ever price wharehouse and retail space? fifty cents a foot versus ten bucks a foot. Right there operating capital is twenty times mail order.
If you still believe that a business can remain a business by selling items for less than they cost, please figure your expenses for the year and send me the balance plus twenty percent, as you must have developed a system to get by while taking in less than you expend.