Supply Chain 101: How Products & Services Reach Consumers

If you've ever walked into a store and picked up a product without thinking about how it got there, you’re not alone. Most people don’t consider the complex journey that products take—from raw materials to manufacturers, distributors, and ultimately to consumers.

But if you're an entrepreneur, eCommerce seller, or business owner, understanding the supply chain is crucial. It gives you insight into costs, logistics, and market dynamics—helping you make smarter decisions in your business.

In this guide, I’ll break down:

✅ The supply chain process for physical products
✅ How services follow a similar supply chain model
✅ Why understanding this can help you scale your business

Let’s dive in

What Is the Supply Chain?

The supply chain is the entire journey of a product or service from its origin to the final customer. Each step involves different businesses that add value, costs, and logistics to get the product to its destination.

At every stage, companies must manage profitability, expenses, and infrastructure—or risk going out of business.

The Product Supply Chain (Step-by-Step)

For this example, let’s look at a supplement you buy from a supermarket.

It might seem simple—you walk in, grab the product, and check out. But before that product got to the shelf, it went through several key stages:

1️⃣ Raw Materials (The Starting Point)

Every product starts with raw materials—whether it’s ingredients for supplements, metal for electronics, or cotton for clothing.

💡 Example: A supplement starts with herbs, vitamins, and minerals sourced from raw material suppliers.

• These raw materials are gathered, refined, and prepared for sale.
• The raw materials supplier’s customers are manufacturers who use these ingredients to make finished products.
• They sell the raw materials at a markup—for example, buying at $0.10 per unit and selling to manufacturers for $0.50 per unit.

2️⃣ Manufacturers (Turning Raw Materials into Products)

Manufacturers take raw materials and process them into finished goods.

💡 Example: A supplement manufacturer blends vitamins, presses them into tablets, and bottles them.

• Manufacturers buy raw materials and invest in machinery, automation, and labor to produce products efficiently.
• They then sell to distributors at a higher price—for example, buying raw materials for $0.50 per unit and selling the finished supplement for $1.00 per unit.

3️⃣ Wholesalers & Distributors (Getting Products to Marketplaces)

Wholesalers and distributors buy in bulk from manufacturers and resell to retailers.

💡 Example: A health supplement distributor buys 10,000 bottles from the manufacturer and then sells smaller quantities to supermarkets or online sellers.

• They mark up the price to make a profit—for example, buying at $1.00 per unit and selling to retailers for $2.00 per unit.
• They handle bulk storage, logistics, and regional distribution.

4️⃣ Retailers (Selling to Consumers)

Retailers buy products from wholesalers and sell directly to consumers through physical stores or online platforms.

💡 Example: A supermarket purchases the supplement for $2.00 per unit and sells it on shelves for $4.97 per unit.

• They cover operational costs (rent, staff, marketing, etc.) with the profit margin.
• Online retailers like Amazon, Walmart, and Shopify sellers also act as retailers.

5️⃣ Consumers (The Final Buyers)

Finally, the product reaches the consumer—the end of the supply chain.

💡 Example: A customer walks into a supermarket, picks up the supplement, and pays $4.97 for a product that originally started as $0.10 in raw materials.

At each stage, businesses added value, increased costs, and took on responsibilities like manufacturing, logistics, distribution, and marketing.

How This Applies to Your eCommerce Business

If you’re in Amazon FBA, dropshipping, private label, or wholesale, your business sits somewhere in this supply chain.

Which Supply Chain Model Fits Your Business?

✅ Private Label Sellers – Buy from manufacturers and brand the products.
✅ Wholesale Sellers – Buy from distributors or wholesalers and resell.
✅ Retail Arbitrage Sellers – Buy from retailers and sell for profit.
✅ Dropshipping – Act as the retailer, while manufacturers or wholesalers ship products directly to customers.

Understanding the supply chain helps you source better products, negotiate prices, and reduce costs.

Supply Chain in Services (Not Just Products!)

The supply chain concept also applies to services.

Let’s say you need to paint your office. Here’s how the supply chain works in a painting service business:

1️⃣ You (the customer) hire a painting company for $1,000.
2️⃣ The painting company buys paint supplies from a supplier for $200.
3️⃣ They hire a team of painters for $200 in labor costs.
4️⃣ They use vehicles and equipment, adding another $100 in costs.
5️⃣ The painting company makes $500 profit after covering expenses.

Even though it’s a service, there’s still a chain of costs, logistics, and suppliers involved.

Why Understanding the Supply Chain Matters for Entrepreneurs

1️⃣ Know Your Profit Margins – Every step in the supply chain increases costs. Understanding this helps you negotiate better deals and improve profits.

2️⃣ Source Products Smarter – If you buy from a wholesaler instead of a retailer, you’ll get lower prices and higher margins.

3️⃣ Avoid Business Disruptions – If a manufacturer raises prices or shuts down, knowing the supply chain helps you find alternative suppliers fast.

4️⃣ Identify Opportunities for Growth – As you scale, you might move up the supply chain—going from retail to wholesale, or from wholesale to manufacturing.

💡 Example: Many Amazon FBA sellers start with retail arbitrage, then move to wholesale, and eventually launch their own private label brands by working directly with manufacturers.

Final Thoughts: Master the Supply Chain & Scale Your Business

The supply chain is the backbone of every business—whether it’s physical products or services.

✅ Every product starts as raw materials and moves through manufacturing, distribution, retail, and finally to the customer.
✅ Each step adds value and cost, and businesses must manage profitability, logistics, and operations.
✅ Understanding the supply chain helps you make smarter decisions in eCommerce, Amazon FBA, private label, and wholesale.

If you want to build a profitable eCommerce brand, knowing where you fit in the supply chain is key to increasing profits and reducing risks.

🚀 Ready to build your brand? Learn how to start, systemise, and scale with my 24 Hour Brand System!

📌 Click here to get access → https://www.systemisefulfilment.co.uk/24hourbrand