Definition: A merchandiser is a business that purchases inventory and resells it to customers for a profit. Retailers and wholesalers are good examples of merchandisers because they typically buy goods from manufacturers to market and sell them to the public consumers.
What Does Merchandiser Mean?
It is uncommon, but some manufacturers also act as merchandisers. Apple, for instance, pioneered the idea of making a computer manufacturing company into a retail store. Other computer manufacturers, like Dell, focused on merchandising efforts in the mail order and direct marketing areas. Nonetheless, both of these companies can be considered manufacturers and merchandisers.
Since most merchandisers have to purchase their inventory from other companies, there is a standard operating cycle that takes place every period. Depending on the type of business, the merchandiser operating cycle can occur once an accounting period or several times. Every cycle includes these three steps.
First, the merchandiser purchases products to sell to customers. These products are recorded to the merchandise inventory account with a debit when they are purchased.
Second, the inventory is marketed and sold to customers either on account or in cash. Cash sales are recorded with a debit to cash and a credit to revenues. Sales on account are recorded with a debit to accounts receivable until the cash is actually paid. When the customer pays off his or her account, the cash account is debited.
Third, some of the cash from the inventory sales is used to purchase more inventory. This is probably the most important part of the entire cycle. Controlling inventory turnover is extremely important for all merchandisers. Buying too much could lead to cash flow shortages and buying too much can create dissatisfied customers. Managers usually use the merchandise purchases budget to help make buying decisions.