I agree with Point 2 & 3 of @
skanchur.
Addressing your concerns:
Lost packages: It happens. During Thanksgiving, USPS dropped multiple pallets of products and got signature from the warehouse personnel that all orders were delivered. Some packages were indeed not delivered but per the tracking information, it was delivered. Each group handled differently. Some took responsibility right away. Some asked the members to contact Amazon and try for a refund. If Amazon didn't refund, they paid the members. I believe one group asked the members to agree for half payment. Some of this is hearsay.
Going out of business: The one that keeps everyone up at night. Simtec closed their buying group after settling everyone, so that was good. There is a relatively new FB group where members actively share their experience and some company owners are part of the FB group responding to concerns. Also some member who lives near the warehouse, drop their products regularly. I hope they will notice if things are not good.
How does it make sense for the companies: These companies are wholesale distributors. My guess is they sell to companies outside the USA. For example, Apple products are costlier (or sometimes same) outside the USA with hardly any deals like we see in the USA.
Effort: It doesn't take much travel effort like an MO liquidation but it requires one to be organized. IMO, if one can't maintain a simple excel file, they shouldn't do this.
Every time an order is placed, I add an entry and track it with multiple statuses until it is paid. Some go to the extent of tracking the cashback portal payment status.
I'm new to FT so I don't check the platform often. If you need my response, please tag me in your reply.