Today I Googled a site looking for some Moda fabrics. It went straight to Amazon and Ebay. Question: Howcan they sell fabric below retail prices and still make a profit? How much mark up is in fabric? Are there places where people can buy large lots of discontinued fabric?

There are outlots that sell discontinued fabric or older lines that are no longer sold in the quilt shops, but I have never been to one. I bought some fabric on eBay and it was very nice--cheap too. I will be looking for answers here also.
Sue

Which items, for example, were really cheap?

Most of all the fabric on Amazon is sold by third parties, not directly from Amazon.

I saw some charm packs that didn't look incredibly cheap to me- $8-$10.

And the fabric you might have seen for $4.99 - that's for a 1/2 yard cut, hardly inexpensive. ;)

The mark-up for fabric used to be close to 100% (wholesale to retail), but I don't know if there have been recent changes to that.
Keep in mind that shipping would come out of that, as well as all the fixed overhead costs of running a shop, leaving.....well, depends on well run the shop was, right?