Your Profit friends may have often heard the words merchant. But do you know what a merchant is? Maybe, all this time you have still confused it with a seller or a regular shop.
So, you don’t get confused anymore, check out the information about merchants in this article, okay?
What is a Merchant?
If interpreted in Indonesian, merchant means merchant.
However, if we look deeper, merchants can be defined as business actors who sell goods or services to customers, both offline and online, to make a profit. In this case, business actors can mean individuals or legal business entities.
In practice, merchants can operate in various scopes. Starting from small scale to large scale. Both physically based and those that move exclusively online.
Difference between Merchant and Seller and Retailer
Looking at the definition, you might be a little confused and think what the difference is between a merchant and a seller. To recognize it, let’s first examine the similarities and differences.
Judging from the similarities, merchants and sellers are both business actors who are involved in sales activities to generate economic profits.
However, if we look at the scope, seller is more specific and refers to business actors who sell goods. Meanwhile, merchants refer to business actors who buy and sell goods to make a profit.
Indirectly, this implies that merchants need a higher level of expertise and experience in the field of buying and selling goods than sellers.
So, at this point you start to think again. Does merchant = retailer because both involve buying and selling activities? You’re not wrong, just not quite right.
The reason is, merchants can sell goods directly to consumers or through various distribution channels, both online and offline. Where retailers are one of the sub-categories of merchants in the world of sales.
In the next section, you will get a more detailed explanation about this.
Merchant Category
As previously mentioned, in today’s digital era, the operational scope of merchants has experienced development. In the past there were only wholesale merchants and retail merchants, now new categories have emerged, namely e-commerce merchants and affiliate merchants. The following is the explanation.
1. Wholesale Merchant
Wholesale merchants are business actors who buy goods in large quantities and resell them to retailers in smaller quantities. Therefore, wholesale merchants play two roles at once, namely as merchants and retailers.
In the business-to-business (B2B) model, wholesale merchants act as suppliers. Meanwhile, in the business-to-consumer (B2C) market, they function as intermediaries.
2. Retail Merchants
Retail merchants are generally known as people or businesses where customers buy goods in a transaction. They act as intermediaries between producers or wholesale merchants to customers.
Merchant retailers do not create or produce any products. They only take part in the sales process and reach customers.
3. E-commerce Merchants
Entering the digital world, there are e-commerce merchants or e-commerce traders who are involved in selling goods online. They use marketplace platforms such as Shopee, Tokopedia, Amazon, eBay, or their own website to sell goods.
The concept of e-commerce merchants is relatively new in the sales field. However, this business is increasingly popular in the digital era because operations are often cheaper than having a physical storefront.
4. Affiliate Merchants
Still from the digital world, there are affiliate merchants or affiliate merchants who use affiliate networks to help facilitate sales.
Affiliate merchants are not actually part of the main sales process. They are employed by manufacturers or wholesale merchants to utilize their networking to sell goods to retail merchants or end users.
They do not get direct profits from product sales, but rather from commissions on successful sales.
How Digital Merchants Work
Because merchant terminology is currently mostly associated with its affiliation with financial institutions (banks) or marketplaces, a new definition has emerged. By saying that merchants are shops or business actors who collaborate with banks in providing payment services and/or marketplaces as distribution channels.
Just like shops in general, merchant operations are selling goods. However, what differentiates it from ordinary shops is the service side or payment system.
If shops usually carry out cash transactions, merchants who have collaborated with this bank provide cashless payment services, such as e-wallet, QRIS, debit or credit. Therefore, how digital merchants work includes the following steps:
- First, the business owner must register his online or offline shop with the partner (bank and/or marketplace) chosen to collaborate.
- When your shop is registered as a merchant, now you have a kind of “virtual office” which functions as a medium for receiving every transaction.
- Immediately after the transaction process is successful, the business owner can immediately provide the product to the consumer.
Advantages of Being a Digital Merchant
Becoming a merchant member not only provides convenience in the transaction process, but also various other benefits that you can enjoy. Here are some of them.
1. Reach a Wider Market
Each merchant has its own customer base. By joining it, you have the opportunity to reach a larger market share and get more customers.
2. Offers Easy Payment Methods
In general, merchants collaborate with payment service providers to support non-cash payments, such as credit cards, debit cards, QRIS, virtual accounts and e-wallets. This makes the payment process easier, more practical and safer.
3. Increase business credibility
Another benefit that merchants can experience is the ability to increase business reputation and credibility. Moreover, currently more customers are using cashless payments. Shops or businesses that do not provide this payment system can make customers reluctant to visit.
4. Monitor buying and selling transactions more easily
With this system, business actors are not only helped in the transaction process, but also in terms of managing business finances. The reason is, every transaction made will be recorded systematically and in real time so you can monitor cash flow and find out financial reports easily.
5. Analyze Sales Results More Practically
Because all transactions are recorded in the system, it will be easier for you to analyze sales results and formulate the next policy or business strategy.
6. Get Exposure during Promo Programs
Joining as a merchant allows your business to get greater exposure when the partner you choose is holding a promo program. However, to get this privilege, there are usually special requirements or conditions that must be met by the merchant.
7. Has Higher Business Scalability
Utilizing the right technology and systems will help you manage business growth without having to deal with technical and operational dramas that could hinder your business.
At this point, it’s clear what a merchant is, how it differs from a seller, how it works and its advantages. Hopefully this information helps as Labamu is always there for you.
From now on, you can manage all transaction recording and business administration matters easily through just one application. Come on, immediately download the application via Google Play or the App Store.
