The Difference Between Merchandise And Merchandising
Updated 30 September 2022
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Businesses sell products or merchandise to customers using various techniques, including a type of promotional marketing they call merchandising. Though these two terms share some similarities, there is a difference between merchandise and merchandising, including their definitions and benefits. Understanding these distinctions can help you prepare for a career in industries, such as marketing or retail. In this article, we explore the key differences between merchandise and merchandising to help you understand these two concepts better.
The Difference Between Merchandise And Merchandising
While closely related, there is a key difference between merchandise and merchandising in business. Merchandise refers to the physical products a company manufactures or purchases to sell to consumers. Merchandising is the process of selling those goods to the public. The following are some important differences between merchandise and merchandising to help you understand both concepts:
The terms merchandise and merchandising have separate definitions. Merchandise is any good, such as a personal or commercial product. Typically, companies manufacture or purchase products to sell them to customers or other businesses. They often sell merchandise in a physical location, such as a retail store, or online through a website. Merchandise may also refer to the promotional items a company gives to customers at no cost. For example, a company may distribute magnets or water bottles at an event.
In contrast, merchandising is the process of presenting and promoting a company's goods. The goal of merchandising is to influence customers to purchase products. This means it often focuses on the placement or display of items to encourage customers to buy something. For example, a creative window display in a retail store is a form of merchandising. Some other examples are:
Themes for products
Live chat support on a website
Free shipping offers
Seasonal or holiday collections
Online product descriptions with images
Bundling, cross-selling and up-selling
Related: What Is Visual Merchandising? A Complete Guide To The Field
There are various types of merchandise and merchandising. While retail companies often specialise in one type of merchandise, some offer several types to differentiate their products and distinguish their business from others in the marketplace. These are the four types of retail merchandise:
Convenience merchandise: This type of merchandise refers to necessary products customers can purchase with minimal effort. For example, food and hygiene products are convenience merchandise.
Impulse merchandise: Unlike convenience products, impulse merchandise is a luxury product customers often desire but can go without, such as candy or magazines. Many retail stores place this type of merchandise near the checkout aisle to entice customers to purchase it.
Electronic and household merchandise: This broad category of merchandise refers to high-priced items customers purchase after researching and considering various options. Types of merchandise in this category include furniture and computers.
Specialised merchandise: Products in this category include unique or custom items customers purchase infrequently. This type of merchandise may be expensive, such as a new vehicle.
In contrast, there are typically two main types of merchandising, which are as follows:
Retail: This type of merchandising refers to any action designed to encourage customers to purchase directly from a company. For example, an electronics store offering a holiday sale engages in retail merchandising.
Wholesale: Companies use wholesale merchandising to sell products to another business that then sells to customers or manufactures other products. For example, a textile company may sell bulk fabric to a clothing manufacturer at a reduced price as a type of wholesale merchandising.
Both merchandise and merchandising have many benefits for companies. Merchandise allows companies to meet the needs and desires of their customers. A company's high-quality items can lead to customer satisfaction, which helps to improve its reputation. Most companies have a goal of selling products to increase their profits, which allows them to continue making and distributing items. For this reason, merchandise is a significant factor in the economy's success.
Similarly, merchandising is important for businesses because it directly impacts sales. When companies use merchandising successfully, they typically experience higher sales. This profitability can help companies compete with other businesses in the marketplace. It can also help companies present their products to customers in an attractive way, which often helps them gain new customers, increase their brand recognition and improve customer retention.
Typically, there is minimal distinction between jobs in merchandise and merchandising, though there are some subtle differences. A merchandise professional typically oversees a company's inventory, which is a list of products a company makes or purchases to sell to customers. An example of this position is a merchandise analyst or planner. These professionals monitor a company's inventory to evaluate customer data and then recommend the type of goods a company can sell to increase its profits. Other duties of a merchandise analyst can include the following:
Negotiating prices and contracts with wholesale retailers
Evaluating a company's sales and profits to determine consumer trends
Preparing reports and presenting data to managers or company leaders for strategic planning
Identifying strategies to increase a company's revenue through merchandise
Making recommendations to differentiate a company's merchandise from its competitors
In contrast, a merchandising professional is a merchandiser. There are several different types of positions, such as visual merchandisers who recommend ways to enhance a retail store's appearance to increase sales. While their duties vary, these professionals are usually responsible for promoting a company's products. They can perform tasks such as the following:
creating and implementing merchandising strategies, such as product discounts
managing the physical appearance of a store, including the placement of merchandise
communicating with customers to understand their needs and wants
preparing sales projections based on past merchandising campaign data
collaborating with other departments to explain merchandising strategies
Related: What Is A Merchandiser? Skills, Qualifications And Types Of Job Roles
Merchandising is often a cyclical process, meaning companies may differentiate their strategies based on various phases, such as seasons, holidays or school schedules. During each cycle, a company promotes certain products using various techniques, such as sales, in-store placement or advertising. These merchandising strategies reflect the current cycle. For example, a clothing store may display in-season clothing items at the front of the store and move other clothes to a sales rack at the back of a store. Merchandising cycles ensure companies can promote their products to customers throughout the year.
Merchandising And Other Concepts
Merchandising is a broad term related to promoting a company's goods. This concept shares similarities with other business terms, such as sales and marketing. Here are some differences between merchandising and these other concepts:
Merchandising vs. marketing
Marketing refers to the activities and processes related to communicating information about a company's brand. It often promotes a company's products or services. For example, a company may market itself to customers by using social media to share information about a new product. Merchandising is a form of marketing that occurs after customers become aware of a product and is a short-term strategy designed to entice customers to make a final purchasing decision. In contrast, marketing is a long-term plan that occurs in various stages.
Related: What Is A Marketing Plan? (Definition And How To Create One)
Merchandising vs. sales
Although closely related, merchandising and sales have two different functions. Merchandising leads a customer to make a sale. A sale occurs when a customer selects a product and completes the purchase of that item. For example, a large and colourful display at the front of a supermarket presenting a holiday gift catalogue can entice or inspire a customer to look at a specific product, which is merchandising. When the customer adds that product to their basket and completes the checkout process to purchase that item, it is a sale.
Merchandising company vs. service company
A merchandising company focuses on selling tangible products to customers, whereas a service company focuses on selling intangible services. Merchandising companies incur costs, such as materials and labour to sell products. Service companies incur fewer costs because they sell expertise and innovation. Examples of merchandising companies include dealerships, supermarkets and clothing stores. Examples of service companies include insurance providers, consultants and accountants. Both merchandising companies and service companies sell something to make a profit.
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