This is just my personal opinion, but selling online is SO much cheaper than selling in a storefront. My guess it is a good marketing strategy to sell low and sell quantity. The online shops that try to sell at LQS prices undoubtedly sell much less unless it it free shipping. When you add shipping to the product you often pay more than at a local shop.
I don't know about their manufacturing their own, I think they just have their name put on the fabrics...perhaps they do some design work. It is like buying a generic brand at the grocery store...they don't make their own ketchup, some other company - often a name brand Co. will make it and label it for them.