I've realized how ridiculous paying for merchandise is. We wear T-shirts for a product, turning us into walking advertisements. Not only that, but we are paying the companies to promote their work.

That's what consumerism does.

I can't recall the last time I bought merchandise.

Yeah, I've avoided buying much of any clothing with prominent branding since I was a teenager, specifically for this reason. I'll happily wear your logo if you pay me. I might even wear it if you give me the shirt for free. But, I'm not gonna pay you to do your marketing work for you.

I mean, at some level, sure, but the same is true for sports related clothing, or shirts advertising a political candidate, or apparel referencing a location. Generally speaking, I wouldn't recommend buying some sort of clothing with a product name or logo on it unless you think highly enough of that product that you'd encourage other people to try it. I certainly wouldn't suggest that being your main reason for buying a shirt or whatever, but if you are willing to wear it you should also be willing to suggest other people give it a shot.

This was my thought.

I buy merchandise because I like what the object is.  Or I support the cause of the idea.  I don't buy a lot of merch, but I've definitely bought a few Amiibo from games I like including Zelda, Metroid, Chibi Robo, and Yoshi.  I buy shirts for bands I like, and I don't mind if I'm advertising for them.  That was half the point.  Just consume wisely and realize this truth you've discovered.  But don't be resentful of the company for charging you for your "service."  That shirt, cup, pair of socks, whatever, cost money to produce and ship and it does contain an IP, which by itself worth a few bucks.  And if you really don't like this brand relationship you have, then ditch it and spend your money on things you find more equitable.

Sounds more like win win to me ... company gets advertising and I get products I enjoy. Not seeing anything wrong in this scenario. 

True. I won’t wear a bomber or a sweater if it has a gigantic name or logo like “Louis Vuitton”. It’s kind of offensive. But I’ll gladly use something that has the timeless straps of Gucci, or any small logo. It’s more discrete and makes more sense.

A lot of merchandise sits at home on a shelf, hardly advertising!

What's the alternative though, you expect to get clothes for free because they have a logo or character on them? xD

Yes it is. But people want to advertise themselves through other things, so it sells. It's symbiotic.