Concept of Commerce

Commerce includes all those activities which are necessary for maintaining the free flow of goods and services from the producers to the ultimate consumers.

Branches of commerce

  1. Trade: trade refers to sale or exchange of goods and services. It is of two types: internal and external trade. Internal trade refers to the trade within the country. It is further divided into two parts wholesale trade and retail trade. In wholesale trade goods are bought in wholesale and sold to retailers. In retail trade goods are bought from whole-sellers and sold to the ultimate customers.  External trade refers to the trade outside the country. It is of three types: Import, Export and Entrepot. Import means purchasing goods from other country. Export means selling goods to other country. Entrepot means goods are imported for exporting to other country.
  2. Aids to trade: It means all those activities which help in the trading process. These are: transport and communication, banking and finance, insurance, advertising, and warehousing. Transport creates place utility by movement of goods from one place to another. Banking creates finance utility by providing financial assistance to the businessman. Insurance creates risk utility by providing cover against business risks. Warehousing creates time utility by storing the goods and advertising creates the knowledge utility by providing information to the customers. The following diagram will explain in detail about the commerce and its various types:

I hope you have understood the meaning and concept of commerce.

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