Q:

What is a merchandising business?

A:

Quick Answer

A merchandising business is a company that purchases finished goods for the purpose of reselling them to customers to earn a profit. Distributors and retailers are both common examples of companies that buy goods for resale. Distributors buy from manufacturers and sell to retailers who then sell to consumers.

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Full Answer

The way in which a merchandising business makes a profit is by acquiring goods at a reasonable cost, adding value and then marking up the price to customers. A distributor or wholesaler's value is to store bulk items purchased from manufacturers and then distribute them to retail customers as needed. The storage and transportation of the items are among the core values added by distributors.

Retailers add value to customers and mark up the price of goods beyond what they pay distributors. Retailers break down bulk cases of products and hold them as consumable units for customers. Holding the inventory allows customers to access the goods as needed and to purchase them in reasonable quantities. Retailers also add value by providing various levels of service to consumers to enhance the purchase experience. These services range from basic helpfulness and checkout procedures to more extensive assistance in the buying process. Clothing stores, bookstores and supermarkets are all examples of retail merchandising companies.

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