The term “merchant” is commonly encountered when discussing online stores and marketplaces. Broadly speaking, a merchant is an entity that offers products or services and conducts sales either online or offline.
In addition, merchants offer a variety of payment methods, both online and cash. Often, merchants partner with banks to simplify the transaction process, enabling them to accept payments via credit cards or digital wallets.
To gain a better understanding of merchants—their functions and how they operate in both online and offline businesses—check out the following article.
What is it Merchant?
In online business, a merchant is a store that offers products or services through e-commerce platforms or marketplaces. Today, there are countless online stores available across various shopping platforms.
Through e-commerce or marketplaces, merchants can reach a larger audience and conduct sales more easily.
Additionally, operating an online store is generally more cost-effective compared to running a physical store or managing an independent online shop without using a marketplace or e-commerce platform.
What’s even more appealing is that payment and shipping options are provided by the platform. This means merchants don’t have to manage these partnerships themselves. This convenience is what attracts many people to venture into online business and join as merchants on e-commerce sites or marketplaces.
Some also define a merchant as an entity that sells products or services and operates its own online or offline business.
Merchants often establish partnerships with various institutions, both financial and others, to make business transactions smoother and more efficient.2
Functions of a Merchant
In essence, a merchant’s function is similar to that of an offline business: to sell products or services for profit. Thus, a merchant also serves as a provider of goods or services to be sold on a marketplace and can also be referred to as a supplier.
It can be said that the relationship between a marketplace and a merchant is mutually beneficial. Merchants don’t have to create their own marketplace website, which can be costly and involve a fairly complex process.
Moreover, products offered online through a marketplace are easier to discover. The marketplace also assists with promoting these products and services, while earning profits from the merchants in return.
The more merchants that join, the greater the variety of products and services available. Additionally, marketplaces can earn revenue from transaction fees charged to buyers for each purchase.
Benefits of Becoming a Merchant
Becoming a merchant offers numerous advantages. Here are some of the key benefits:
1. Wider Reach
Marketplaces offer a wider market reach, as their marketing coverage extends nationwide. Additionally, marketplaces already attract a large number of visitors, making them an ideal platform for selling. Business owners simply need to register their business and can immediately start offering products and services to customers.
2. Diverse Payment Options
Nowadays, merchants no longer have to handle cumbersome bank transfers themselves. Marketplaces offer a wide range of payment options, including bank transfers, virtual accounts, debit and credit cards, as well as digital wallets.
Having a variety of payment options makes it much easier for customers to complete their transactions.
3. Comprehensive Shipping Services
Additionally, merchants don’t have to go through complicated procedures to partner with shipping services.
For each transaction, customers can simply choose their preferred shipping service, and merchants either deliver the goods to the selected service or have a courier pick up and deliver the items to the destination address.
4. Easier Product Catalog Management
Merchants also don’t have to manually update product photos, add new products, or manage pricing for discounts.
This is because marketplaces make it easy for merchants to update information at any time. Merchants can also monitor competitors’ prices, allowing them to set their products at competitive and appropriate price points.
So, What Do Merchants Actually Offer?
Merchants offer both physical and non-physical products, such as services. Physical products refer to tangible items that can be touched, including electronics, household tools, food, books, beverages, basic necessities, and other goods.
Since marketplaces are accessible to many merchants, it’s natural that multiple merchants will offer similar products.
Meanwhile, non-physical products or services offered by merchants can include software installation, air conditioner or household appliance repair, pest control services, online courses, and much more.q
To learn more about the products or services offered by a merchant, customers can directly inquire using the messaging feature provided.
Types of Merchants in Marketplaces
In general, merchants can be individuals or legal entities. An individual merchant is owned by a single person and does not operate as a registered legal business entity.
Meanwhile, a legal entity merchant is a type of merchant that operates as a registered business entity. This means it follows regulations and policies related to the establishment and operation of a legally recognized business.
So now, you know what a merchant is and the benefits of joining a marketplace as a merchant.
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