Sale or exchange of goods and services is an necessary feature
of business. In the procedure of sale or exchange, goods pass through different
stages till these are lastly used or consumed by the customers, the last connection
in the series from manufacturer to customer. The procedure which fills the space
between producers and consumers is identified as commerce. All activities which
eliminate the gap between the producer and consumers are recognized as
commercial activities. It facilitates the allocation of goods and services among
the consumers.
In the words of Evelyn Thomes, “ Commercial activity transaction
with the buying and selling of goods, the exchange of commodities and delivery
of finished goods.”
According to Dr. Noel Branton, “Commerce comprises a group
of specialized activities which together form an essential part of the process
of production. It links supplies and consumers by means of trade and activities
auxiliary to trade such as transport, banking, insurance and warehousing. The
most important links are provided by a series of markets controlled by the
price system”
According to W.R. Spriegel, “Commerce is fundamentally
concerned with the move of goods and the collecting, grading, warehousing,
transporting, insuring and financing to connection with the transfer of goods.”
James Stephenson defines commerce as “The sum of total of
these processes which are engaged in the removal of barrier of persons (trade),
place (transport and insurance), and time (warehousing) in the exchange (banking)
of commodities.”
There is mistaken belief that trade and commerce are one and
the same thing. Trade is only concerned with buying and selling of goods,
whereas commerce has a wider range. It not only includes the activities
pertaining to trade, but it also includes the activities which assist in growth
of trade.
Mechanism of Commerce
Commerce can be divided into two parts:
1.
Trade: Trade refers to the actual buying and
selling of goods for cash or for credit. It adds economic values to the goods
produced in industry by distributing these among the consumers. Trade can be
further classified into
a)
Home Trade : Home trade is a trade which boundaries
to the limits of the country. Thus in home trade, buying and selling of goods
take place among the people within the nation. It is also known as inside trade
or domestic trade. Home trade can be further divided into
i)
Wholesale trade : The wholesale trade refers to
the large scale buying of goods from producer and selling them in small lots to
retailers. Thus, wholesalers are a tie between manufactures and retailers.
ii)
Retail Trade : Retail trade means buying of
goods by retailers from the wholesalers and selling of these goods to the
ultimate consumers. The retailers provide the services in the local market.
Thus, retailers are last link in the distribution chain from producer to the
consumer.
b)
Foreign Trade : Foreign trade means buying and
selling of goods between two countries. The theory of comparative costs is the foundation
of foreign trade. Every country can obtain the products which cannot be
manufactured by it gainfully. The countries having surplus goods, sell their
products in the international market. Foreign trade is also termed as external
trade or international trade. The foreign trade can be further classified as
follows :
i)
Export Trade: Export trade means selling of goods
to buyers of the foreign countries.
ii)
Import Trade : Import trade means buying of
goods from the sellers of the foreign countries.
iii)
Entrepot Trade : Entrepot trade refers to the
import of raw material or semi finished goods for the use of re-exporting them
after changing them into finished products.
2.
Aids to Trade : Aids to trade refers to the
resources which promote the transfer or exchange of goods. There are certain
hindrances in the exchange of goods which are removed by the aids to trade,
transport, warehousing, insurance, banking, advertisement and salesmanship are
the various aids to trade.
Trade removes the barrier of persons.
Transport removes the obstacle of place.
Insurance removes the encumbrance of risk.
Banking removes the difficulty of finance.
Advertisement and salesmanship remove the interruption of
knowledge.
