It's not bad, small merchandise (5)
I believe the answer is:
goods
'merchandise' is the definition.
(goods can mean merchandise or wares)
'it's not bad small' is the wordplay.
'it's not bad' becomes 'good' (similar in meaning).
'small' becomes 's' (abbreviation - e.g. clothes size).
'good'+'s'='GOODS'
(Other definitions for goods that I've seen before include "Merchandise, possessions" , "- - and chattels" , "Wares" , "Merchandise; freight" , "Commodities" .)