So I came up in the post-retail days of software, but I sold CDs (once upon a time) and have had a coffee or hundred with folks who came up a few years before I did, including ones who operated spiritually similar businesses with retail components. (My CD sales were over the Internet.)

Retail math is absolutely brutal. Consider software sold at a MSRP of $30, which might be squarely in the Scrappy Small Software Company Making A Go Of It range.

The retail store itself practices "keystoning" -- it won't pay more than $15 for that SKU. It also generally won't (and certainly not if it is a Best Buy / CompUSA) pay when one expects it to pay, before receiving the product. Nope, it pays after (depending on the contract) sell-thru or sell-thru plus return window expiry.

So who got the $15? Was it the software company? No, because CompUSA has better things to do than to talk to software companies, unless your company rhymes with Microsoft or Intuit. Instead, CompUSA purchased the software from a distributor. The distributor purchased it from a publisher; the publisher from the software house.

Suppose your software company self-published, to capture the margins. Bully on you. You make about $10 per unit.

Now let's return to that CD bit. Permit me to handwave, because it has been many years, but in quantity, shipped to your distributor, assume CD plus printed insert plus jewel case costs you $4.

So, when everything works out correctly, you make $6 on a $30 sale. You eat $4 per return (returned software is unsaleable; my standing instruction to our fulfillment provider was to destroy it if mail bounced back because even an unopened envelope is useless); assume that's negligible.

Ahh, but you get the massive, massive volume of the retail channel, right? Wonderful performance for midlist in retail is, drumroll, 10k units per year. You're doing better than almost all B2C software which isn't games.

It is the best time in the history of the world to be independent in software. Selling CDs over the Internet bad, not terrible. Selling downloads over the Internet was pretty spiffy. Selling SaaS over the Internet is the best model independent software makers have ever seen.

(The mobile folks are in a parallel universe which is very, very hit driven and which I wouldn't recommend to most people. Apple/Google are actually are capable of delivering volume -- more than BestBuy could even dream of -- and charge less as a percent for it, but it is in their interests to churn-and-burn who gets that volume, so it is a rough place to be.)

see also https://successfulsoftware.net/2008/04/21/selling-your-softw... which recounts a conversation which is substantially in line with unpublished conversations I had over the years. (Andy Brice, who runs that site, runs a business spiritually similar to my sold software business, but rather larger.)

I note that you might be suffering from a peculiar sort of availability bias. You're, IIRC, a gainfully employed professional who doesn't sell software for a living. As a gainfully employed professional, walking into a CompUSA and walking past a row full of shelves exposes you to evidence that there exists a software industry, even if you have no connection to the industry. If that row of shelves goes away, you might reasonably believe "Wow, the software industry went away.", but that is not in fact what happened. The software industry makes more money than ever, by a lot, but it does so in places which are inconvenient to you to stumble upon accidentally.