Excessively tight retail margins also degrade the customer experience. As a manufacturer, you generally want retailers who can provide good pre- and post-sales support. If a retailer makes almost nothing from selling a product, they aren't particularly inclined to help customers. They'll spend more time upselling accessories or additional warranties than actually advising the customer and will just deflect all problems to the manufacturer.
Online stores often indirectly benefit from brick & mortar retailers - customers browse in store, then buy online. Again, hence RPM.
If I do eat into my margins, there's a good possibility that the online retailers will figure it out and demand a discount too. Big online retailers have good market intelligence resources and considerable negotiating power, so they can demand as good or better wholesale prices than anyone else despite having very low overheads.
Left unchecked, everything converges to the margin. I'm making just enough money that it's worth keeping production running, most retailers are making just enough money to justify the shelf space, but we're just barely scraping by. I can't afford to invest in R&D, so I just churn out cheap me-too products. Retailers with high overheads will be driven out of business, leaving only the most efficient of box-shifters. Customers get low prices, but very little more. Sound familiar?
If we use the Amazon and Best Buy example, if I'm selling to both Amazon and Best Buy, and Amazon cuts its sale price to the end customer, in the short term this doesn't affect me. Amazon is still paying me wholesale.
Long-term however, if Best Buy is unable to compete with Amazon's price to customers, it may stop being a customer altogether. Amazon may now be my biggest, or even only, customer. At that point, they WILL ask for further discounts on the wholesale price.
Jeff Bezos has openly and repeatedly said that he read a lot of Sam Walton's writings to help shape the vision for Amazon. CNBC did a 2-part documentary on Walmart a few years back (a "CNBC Original"). The two parts were shot years apart. In part 1, they showed a couple of entrepreneurs who had triumphantly become Walmart vendors, and were delighted that they now had such a huge retail distribution channel. In part 2, many of those vendors had soured, since Walmart had put pressure on them to offer increasingly lower wholesale prices etc.
For these vendors, Walmart was often their ONLY large customer, so they had little power in negotiations.
When the USSC ruled that manufacturers had a right to set the prices for their products, suddenly there was a lot more competition in the online market. The big discounters still got a lion's share of business, but it wasn't impenetrable like it used to be. The flip side is that some of the smaller guys came up with the idea of password protected member's only sites with discounted prices which were impossible for the bigger guys to duplicate because of their volume.
One common response to this is to charge different wholesale prices to different channels, but this can also be difficult to control or subject to price-fixing regulations.
Keeping the margins high for resellers = spending more on sales and marketing for your product.
I don't think non-commodity products in competitive markets should be subject to price-fixing rules in terms of setting the market price, but that's how it is in many jurisdictions today.
Even if the price discrepancy isn't quite that bad, if an outlet does not feel it is worth their while price matching they just drop the product to make room for more profitable brands. The brand then suffers due to the lower visibility.