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
Yep, the (most) wholesalers don’t want to deal with consumers because gearing the business to sell in bulk to retailers is very different to selling lose product to consumers.
Retailers (most) want to deal with wholesalers so they have a single point for a large amount of their stocked range, rather than dozens or hundreds of relationships and orders and accounts they need to track. Employing someone to do that can often cost more than you would save in costs. Although larger retailers will see the economy of scale and will.
Exceptions in all cases, like a retailer who has a bestseller goes direct to manufacturer because the slight improvement in price makes a difference when you are selling thousands of the product.
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