A perfect example of Econ 101 reasoning gone awry. It is funny how often people will deny things sitting right in front of them because "that wouldn't happen".
You'd think so and I really doubt it's as profitable as people suggest but even just looking at Amazon you can see many of the exact same products you'd find on AliExpress for far higher prices.
Dropshippers provide valuable service - I can get item in 2 days (on Amazon) versus 2-3 weeks or longer if I buy on Aliexpress. Express shipping (if available) on Aliexpress is often $100+ for item that cost a few dollars.
Also margins are getting squeezed on drop shipping. Several years ago the difference between price on Amazon and Aliexpress was very significant now it's often negligible and I just buy on Amazon.