I guess many folks don't think it is worthwhile developing an encounter around dealing with a town merchant.  But this should be a great spot to begin an adventure.

You learn while talking to the town merchant that he has a buyer for a such-and-such and he thinks one may be found at that-place.  INSTA-QUEST!

This seems to be a great way for a party to learn where a whole stash of treasure may be found.

But beneath that, what about the encounter of finding a merchant with THE-THING you want to buy and then negotiating for it with him.  I recommend keeping your eyes away from his daughter.

Imagine how extraordinary it would be to find a merchant with the sorts of things adventurers need.  I start by imagining a romanticized merchant in the American West.  He had seed, and farming tools, and possibly a cast iron stove to sell, bolts of cloth, shoes, a sparing few jackets and hats, pipes and tobacco, earthen ware, iron and steel cookware, knives, barrels, buckets, basically the things the agrarian society needed to survive and hopefully prosper.  He wouldn't likely carry weapons although he may have ammunition and powder.  He wouldn't have cabinetry or wagons or many other things that would be specialties of other tradesmen made to order.

Our merchants are assumed to have pretty darn near everything.

In this case think of what a liability it would be to have a stash of weapons and some armor for sale.  Think of the typical "gun store" in the US today.  Iron bars on the windows and SERIOUS SECUIRTY SYSTEMS.  I would think a merchant that was allowed to stock and sell weapons would have to have a basement with a substantial door to secure these things.  Therefore you would need to go into the store and tell the shop keeper what you wanted, Hey, I'd like a Longsword my friend.  If he liked the cut of your jib he might respond by saying, Give me a moment and I'll see what I have.  He'd trundle down the stairs and come back with one to show you and he'd be able to tell you about the others in the chest downstairs.  You wouldn't be able to thumb through the racks because he'd be too worried about getting robbed.  And at night he couldn't just lock the door and think everything was safe and sound unless the place was a fortress.  Therefore he would almost certainly have some kind of a vault for weapons, armor and other unusually valuable things.

All this leads to support the idea that visiting the local merchant should be just as much an encounter as tipping a pint at the pub.

Then we get into the phase of negotiations.  Everyone would need to recognize the merchant needs to earn a profit.  He has to sit on the item until it sells.  The longer it sits, the higher the margin he needs to earn.  Some items he may already know he has a buyer, but the more unusual or expensive, the more he will try and drive the price down.  Bartering would be subject to the same forces.  If he is giving up something, he has to get more in return so he can feed his family.

Finally, a merchant is likely to be very secretive about his sources.  He has to keep restocking his shelves and he probably has regular shipments.  But he also has to have a network to get those unusual items his patrons want.  That may be a side event going on in a kingdom that intersects the players campaign.  There are many possibilities.  And finally, I try to remember that the players have to be earning money just to feed themselves too.  If they are going somewhere already, could they get paid to deliver a shipment for the merchant?  The party loses the flexibility to change their mind once they leave with the shipment, so sometimes that may be a burden, but for the budding band or merry men, that could at least pay for the trip.  And how would this be executed?  Well the party would have to trust the merchant quite well.  He likely wouldn't let the goods go without being paid for them and there would have to be a good likelihood that the purchaser would pay more for them.   He couldn't let the party take the stuff for free with a promise they would bring him back his share.  So how would that work out?

Anyway, how do you think we could make better merchant encounters?

Good ideas and tips in here. Thanks.

My classic is wait until the group is over laden with stuff to sell or gold to buy and they arrive at the store to find he's been robbed by bandits and has no gold to buy from them or goods to sell.

The dilemma of going after bandits while flush with items and/or gold is a nice worry for players. 

You could always run the switchup too where the merchant gets a cut of the bandit's take to keep sending them adventurers.