Hello!
Please explain me this because I can not figure out!
As I see producers sell their stuff to wholesales. Wholesales gather a bunch of different things and then sell it to retailers who communicate with the costumers and sell it to them.
For example a wholesale of stationery gathers pencils, papers, toners etc. Then they sell these in smaller amounts to retailers who after that deliver directly to the offices (to the costumers).
Why don’t wholesale just sell and deliver right away to the costumers and gain the extra money the retailers basically live on?
In: Economics
Because they don’t have the same services. The wholesalers have huge warehouse to stock massive amount of product and they also have a fleet of truck to get the product from the producer and to bring the material to a retailers. They have big truck to deliver large quantity.
Retailers offer different services, they usually have smaller buildings, so they have them to more locations to offer a better service to their consumers. They also have most of their building setup for sale, so they can’t keep a large stock of the product. As for the deliveries, those are made by different truck, smaller they are easier to use to deliver to the client.
So the retailer need different truck and building and personnel to offer their services, compare to the wholesalers. A wholesaler could start to deliver to consumer directly, but they would need to expand their company for that. Amazon kind of do both, they have huge warehouses, but they also have smaller one at key locations to make direct deliveries.
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