How Merchandising Businesses Work

Businesses can fall into any one of three categories which include manufacturing, merchandising, and service. A merchandising business works closely with the manufacturing entities. These two enjoy a symbiotic relationship as one cannot work without the other.

A merchandiser stocks goods from a manufacturer to sell to consumers from physical or online stores. Merchandising businesses are the most common type of businesses that consumers interact with daily. Each time you visit a retailer and buy commodities such as groceries, you have interacted with a merchandising business.

A merchandiser may stock one type of goods, such as shoes. It is also common to have merchandising businesses stock a wide variety of goods in one shop or location. The merchandiser usually buys goods from manufacturers or producers such as farmers at a wholesale price. According to consumer needs, they then add a mark-up to these prices and sell the goods to consumers in smaller quantities.

Example of Merchandising Businesses

Merchandising businesses form the bulk of companies that consumers deal with daily for finished goods. From household goods to groceries, shoes, and clothing, merchandisers are available in every business community.

One such example of a merchandiser is Walmart. Walmart is a chain of discount superstores, grocery, and department stores found all across America. It stocks all types of merchandise from leading and small manufacturers such as Nike, Apple, and other manufacturers.

Walmart has relationships with all kinds of producers and manufacturers to stock their products. This multinational sells goods at retail and wholesale prices, bridging the gap between the manufacturer and the consumer seamlessly. Such huge merchandisers become a one-stop-shop for consumers introducing convenience into the shopping experience for consumers.

Significance of Merchandising Businesses

Merchandising businesses are crucial to the consumer and the manufacturer for various reasons. We can sum up the significance of merchandisers to consumers in the following points:

  • Merchandising businesses provide a wide range of products for consumers to choose from. They give the consumer choice in terms of quality, quantity, and price.
  • Merchandisers break down the quantity of goods into the amount that consumers need and can afford at a time.
  • Merchandisers hold inventory so that consumers are sure to find the product they need in stock at a merchandiser’s outlet.
  • Merchandisers also provide marketing information to consumers about different products that they stock. They do this through point-of-sale displays, sales personnel, and other forms of advertising.

Merchandising businesses also play a crucial role towards manufacturers. Some of the ways in which they do this include:

  • Merchandisers bridge the gap between the producer or manufacturer and the final consumer of a product in the supply chain.
  • Merchandisers provide a platform on which manufacturers can sell their goods in smaller quantities.
  • A merchandiser can enhance a product’s image by way of the display arrangements in their shops
  • Most merchandisers will promote the goods they stock to their consumers at no extra cost to the manufacturer.

Merchandising businesses also contribute to the economy by contributing to the Gross Domestic Product (GDP). The GDP of an economy determines the wages that private and government organizations can pay employees. A country with a strong GDP will provide better living wages; therefore, merchandisers play a significant role in how a country’s economy performs.

Types of Merchandising Business

As mentioned earlier, merchandising businesses are among the most common types of companies that consumers interact with. They offer tangible goods that consumers need for their day-to-day activities. These goods are usually produced by a manufacturer and sold by the merchandiser. A merchandiser does not provide services, only tangible goods.

Examples of merchandising businesses include:

  • Car dealerships
  • Supermarkets
  • Shoes and clothing stores

Merchandising Business vs. Merchandising

These two terms can be easily confused to mean the same process. While nothing could be further from the truth, it is obvious to see why these two terms have been used interchangeably before.

The root word for merchandiser is merchant, which means a trader. On the other hand, Merchandising refers to how goods are set up or displayed to capture the interest of a consumer. Merchandising is the practice of setting up an attractive display of various goods to increase the sale of the same goods.

Most merchandisers will practice merchandising to help push up the sales of particular products in the market. Manufacturers will often provide point-of-sale marketing materials to support the merchandising efforts of the merchandisers.