What’s the added value of wholesalers and retailers?

Question

Goods flow:

Manufacturers -> wholesalers -> retailers -> consumers.

But I imagine it’s the same goods that’s being transferred through all these steps. So, what’s the value added here between all these steps?

For example, why don’t retailers directly buy from manufacturers?

Why don’t consumers directly buy from wholesalers or even the manufacturers themselves?

In: Economics

Answer 1

Logistics will play a big role here. A direct factory to consumer transaction may require the consumer travel 1,000 miles and the manufacturer to set up a retail operation on site. That doesn’t work well for buying 1 box of toilet paper.

It can actually cheaper for the factory to send a full truckload of toilet paper to a wholesaler or distribution center, then a truckload of mixed goods to a retailer where you can then buy that TP along with a few other items.