Introduction
“Commerce is the sum total of all those
processes, which are engaged in the
removal of hindrance of persons
(trade), place (transport and insurance)
and time (warehousing) in the
exchange (banking) of commodities.”
Every human being is engaged in
some kind of activity. These activities
are undertaken with some motive.
When the object is to create wealth for satisfying human needs, these are
categorized as economic activities. If such activities are undertaken only to serve
some cause without any economic motive i.e., to satisfy social, religious, cultural or
sentimental requirements, these are called non-economic activities.
The motivating force for doing some work is to satisfy human wants. Human wants
are unlimited and go on multiplying. The resources to satisfy the needs are limited.
The use of scarce resources for satisfying human wants is very important.
The allocation of available resources is done in such a way that optimum
satisfaction is achieved. The production of goods and services and making them
available to consumers is the essence of economic activities. The distribution of
goods and services from producers to the ultimate users is facilitated by commerce.
Content
Meaning:
Commerce refers to all those activities which are necessary to bring goods and
services from the place of their origin to the place of their consumption. In the
words of Evelyn Thomas, “Commercial occupations deal with the buying and
selling of goods, the exchange of commodities and the distribution of the finished
products.
” According to Thomas, commerce deals with only the trading part of commerce
and ignoring many other activities known as aids to trade which are also very
important. 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 suppliers 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.
James Stephenson has given an exhaustive definition of commerce. He says that,
“Commerce is the sum total of all those processes, which are engaged in the removal
of hindrance of persons (trade), place (transport and insurance) and time
(warehousing) in the exchange (banking) of commodities.”
Generally, trade and commerce are taken as synonymous words. While trade
involves buying and selling of goods, commerce has a wider meaning. Commerce
includes trade and aids to trade. Besides trade, it includes all those activities which
help the expansion of trade. The aids to trade include transport, banking, insurance,
warehousing, advertisement and salesmanship.
Without the help of such agencies, it is not possible to take goods from one place
to another for making them available to consumers who are spread all over the
world. The services of various agencies which facilitate transportation of goods,
finance various activities, provide storing facilities, help in advertising goods and
undertake various risks are not only helpful but are necessary for the growth of
commerce.
Nature of Commerce:
Commerce is considered to be a part of business. It is that activity of business which
is concerned with the exchange of goods and services. Some persons feel that
commerce and business are synonymous.
The following characteristics will help in understanding the nature of commerce:
(i) Economic Activities:
Economic activities are taken up with a motive to earn profits. Commerce deals
with those activities which are undertaken for profit. So only economic activities
are included in commerce. It is the motive which is important and not the activity.
Some activity may both be economic and non-economic. A trader buys goods to sell
them again and earn profit while a consumer buys goods for consumption. In the
first case a motive is to make profit while in the second situation the motive of profit
is absent. For a trader buying goods is an economic activity and a part of commerce
while the purchase of goods by a consumer is non-economic activity, hence out of
the purview of commerce.
(ii) Exchange of Goods and Services:
Commerce involves an exchange of goods and services for profit. The goods may
be produced or procured from other sources. The purchase of goods should be to
re-sell them. It means that goods should be purchased for trading purposes.
(iii) Earning Motive:
The motive for undertaking trading activities is to earn profit. Profit is an incentive
or reward for undertaking commercial activities. Any activity which does not have
the incentive of profit will not be a part of commerce. If a trader gives some goods
as charity, then it will not be a part of commerce because profit motive is missing.
But if the same trader sells goods to customers, it will form a part of commerce
because profit motive is present. So, earning motive must be present in activities or
transactions.
(iv) Creation of Utility:
Commerce creates place and time utility in goods. The goods may not be consumed
at the place of production. These may be needed at different places. The goods are
taken to those places where they are in need. Transportation facilities help in
creating place utility in goods. The goods are also needed at different periods of
time.
It may not be possible to produce goods whenever they are demanded. The
producers go on producing goods as per their capacity. The goods are stored up to
the time they are not demanded. The production is done at one time and consumers
get them as per their needs. The storage facilities create time utility in goods. Both
place and time utilities are helpful in increasing the volume of trade.
(v) Regularity of Transactions:
The transactions should be regular. No isolated transaction will be a part of
commerce. The sale of old furniture for replacing it by new is not a part of
commerce. At the same time the sale of furniture by a furniture trader is commerce
since the transactions are regular.
Conclusion
Since the beginning of trade, people
have been trading goods and services.
From the start of bartering to
creating money to building trade
routes, people have tried to trade
goods
and
services
and
build
distribution systems around this.
Most of the time, corporations buy
and sell goods and services on a large
scale when they do business today. A
consumer's sale or purchase of a
single item is called a transaction. All
the sales and purchases of that item in an economy are called Commerce. Most
trade happens between countries, and most goods are traded from one country to
another.
It's important to know that "commerce" and "business" are different. Commerce is
only about how things are bought and sold. It has nothing to do with how or what
a company makes. Distribution has many parts, such as logistical, political,
regulatory, legal, social, and economical.
Sources
https://www.yourarticlelibrary.com/essay/essay-on-commerce-meaningnature-and-other-details/42028
https://economictimes.indiatimes.com/definition/commerce