Taxonony and URL

I got confused now by the taxonomy options in Meta Box.

The client has products under category & sub-category.

example:
/product/main-cat/sub-cat/product-1
/product/main-cat/product-2

Right now I don't get the categories & sub-categories in the URL.
That's what I get:
/product/product-1
/product/product-2

That's the taxonomy setup that I have:
https://cl.ly/142f0q0j3p2b

Permalink is set to /%category%/%postname%/

Post type "product" is also set as hierarchical.

Don’t understand why the product terms are not in the url.
What am I doing wrong?