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As a reseller or wholesaler, if you halve your margin you have to sell double the quantity to make the same amount (a big ask!). That's why many resellers go bust when discounters pop up (and often go bust as well) in the same market. Given that the wholesaler may be giving better prices to the discount reseller, when the competition goes bust, all of a sudden part of the wholesalers market has dried up and they are quite often faced with supplying at reduced margins to the very people that caused their distribution margins to decrease in the first place. Discounting whilst initially good for the customer, ultimately results in reduced competition, less choice and little or no service. The ultimate result of this is dictatorial monopolies (supermarket chains for example) who market only those products which they make the most margin on, to the exclusion of other, often better quality (and locally produced) products.
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