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
Retailers occasionally will purchase direct from source, depending on the industry you’re talking about (particuarly high-end resturants do this all the time.)
Broadly speaking, the reason most companies and consumers don’t is convenience. The consumer values money, but also values time. They will not go to 120+ manufactuerers and buy product by the pallet just because it is cheaper. I also don’#t want to travel 250-350 miles to the factory where it’s made (which may not be in my country, or even the same continent) to purchase a single product.
The retailer is by far the most convenient experience. The consumer only needs to go to 1-3 stores, and it able to purchase everything they need in one place in portions they can store in thier home or buiness.
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