What is the difference between service and merchandise retailer?

Various costs are incurred by both merchandising and service businesses. Both may hire employees, both may need equipment in order to be in business and both types of business structures have customers who pay for goods or services. The main difference between a merchandising company and a service industry company is that the merchandising company must stock inventory.

MerchandiseA merchandise business sells merchandise. Good examples of merchandising businesses include retail clothing, grocery stores and bookstores. Many people use the term "widget" to refer to any merchandise a business offers for sale when discussing business issues and dynamics. For example, a sale in which a customer receives two widgets for the price of one may refer to any type of merchandise. It could mean two pairs of shoes for the price of one or two boxes of pasta for the price of one. Service IndustryA service business sells things that are not tangible. A service company does not stock inventory, but it may need to stock tools and supplies. For example, a gardener comes to mow the lawn for a fee. He is selling a service. He may need to supply his own lawnmower, which is a cost of doing business. A maid sells the service of cleaning houses, but she may or may not need to bring her own cleaning supplies. After selling a service, there is no widget to pack up.