It started with a problem.
Wholesale trade — the sale of goods in large quantities to buyers who resell rather than consume — developed alongside the growth of commercial manufacturing in the seventeenth and eighteenth centuries. As production became larger scale and geographically concentrated, manufacturers needed distribution partners who could buy in volume, store inventory, and sell to smaller retailers or consumers. The price discount for bulk buying reflected genuine cost reductions: fewer transactions per unit sold, lower packaging costs, and economies in delivery. Colonial American merchants functioned as wholesalers, buying goods from English manufacturers in large lots and reselling to local retailers or consumers.
Historical sources below ↓Then something changed.
The wholesale tier created price segmentation: a commodity had a price at each tier of the distribution chain, with the difference between tiers covering the costs and margin of each intermediary. This segmentation made the final price paid by a consumer the result of multiple layers of margin addition. Disintermediation — removing a layer of the distribution chain — became a recurring business model innovation: selling directly to retailers rather than through wholesalers, or selling directly to consumers rather than through retailers. Each disintermediation required the seller to absorb the functions previously performed by the removed intermediary.
What a builder can learn.
Our interpretation: every distribution tier exists because it performs a function that someone in the chain needs done — storage, aggregation, delivery, sales, service. When that function can be performed more cheaply or better another way, the tier is at risk of being disintermediated. For a business builder, understanding which tier of the distribution chain you occupy and what function you perform for the parties above and below you is essential to understanding where disruption would come from and what would cause buyers to bypass you.
A door still open.
A hypothesis worth testing: if a small business identified the full chain of intermediaries between its supplier and its final customer, and mapped what function each tier performed and what margin each tier added, would it find a tier that was performing a function the market no longer needed or that technology could perform cheaper?
What function do you perform in your distribution chain that cannot easily be performed by the tier above or below you — and how confident are you that function will still be valuable in five years?
Follow the evidence.
History is sourced below. Business lessons are editorial interpretations; future possibilities are questions to test, not predictions.
Prepared from primary-source histories. First edition: 25 Sept 2026.