MEANING AND OF FEATURES OF COMMERCE
Commerce is a wide term that refers to all those activities which help in the exchange of goods and services from producers to consumers. It includes not just buying and selling, but also transportation, storage, banking, insurance, advertising, and communication — basically, all services that support trade.
Commerce is one of the important branches of business. The other branches include industry (which produces goods) and direct services (like doctors, teachers, etc.). Commerce acts as a link between producers and consumers, helping them connect even if they are located in different parts of the country or the world.
In simple words, commerce means all the activities that remove the obstacles in the process of exchange. These obstacles may include:
- Place (overcome by transportation)
- Time (overcome by warehousing)
- Risk (overcome by insurance)
- Finance (overcome by banking)
- Lack of information (overcome by advertising and communication)
Example to Understand Commerce
Imagine a farmer who grows mangoes in Maharashtra:
- The mangoes are packed and transported to Delhi (Transportation)
- They are stored in a cold storage until they are sold (Warehousing)
- A bank provides a loan to the wholesaler to purchase the mangoes (Banking)
- The mangoes are insured during transport to protect against loss (Insurance)
- The seller advertises the mangoes in the market (Advertising)
- A retailer finally sells them to a customer in Delhi
DERIVATION OF THE WORD “COMMERCE”
The word commerce is derived from the Latin word “Commercium”, which itself comes from two parts:
- “Com” = together
- “Merx” or “Mercis” = goods or merchandise
So, the word “Commerce” originally means “exchange of goods together” or “trading of merchandise”.
Over time, the word has grown in meaning and now refers to all kinds of trade-related activities that help in the smooth flow of goods and services.
DEFINITIONS OF COMMERCE
ACCORDING TO EVELYN THOMAS
“Commercial occupation deal with the buying and selling of goods, the exchange of commodities and the distribution of the finished products.”
ACCORDING TO W. R. SPRIEGEL
“Commerce is basically concerned with the transfer of goods and the collecting, grading, warehousing, transporting insuring and financing in connection with the transfer of goods.
ACCORDING TO DR. NOEL BRANTON
“Commerce comprises a group of specialised activities which together form an essential part of the process of production. It lines Supplies and consumers by means of trade and activities auxiliary to trade such as transport, banking, insurance and warehousing. The most fimportant links are provided by a series of markets controlled by the price system.”
ACCORDING TO DR. E. THOMAS
“Commerce is a term that embraces all those functions involved in making, buying, selling and transport of goods.”
ACCORDING TO J. STEPHENSON
“Commerce means the sum total of those process which are engaged in the removal hindrances of person (trade) place (transport & insurance) and time (warehousing) in the exchange (Bank & Finance of Commodities.”
FEATURES OF COMMERCE
1. Exchange of Goods and Services
The most basic feature of commerce is that it involves the exchange of goods and services. Commerce begins when a producer sells a product or service and ends when the consumer receives it. This exchange may happen between individuals, businesses, or countries. For example, a manufacturer in Punjab may sell woolen clothes to a retailer in Delhi. This transfer of goods in return for money is at the heart of commerce.
2. Removal of Barriers in Trade
Commerce plays a key role in removing various barriers or obstacles that come in the way of smooth trade. These obstacles include problems of distance or place, time, risk, finance, and communication. For instance, transportation removes the place barrier by moving goods from one region to another, and warehousing removes the time barrier by storing goods until needed. Similarly, banking helps with finance and insurance protects against risks like theft, damage, or loss.
3. Link Between Producers and Consumers
Commerce acts as a bridge between producers and consumers. Producers may be located in one region while consumers live in another. Commerce helps in connecting these two ends through trade and services like advertising, distribution, and marketing. For example, a farmer growing apples in Himachal Pradesh can sell them in the markets of Mumbai or Chennai through the channels of commerce. Without commerce, producers would find it difficult to reach their target customers.
4. Involves Buying and Selling
Another major feature of commerce is that it always involves buying and selling. It does not matter whether the buying and selling happen at a local shop, in a shopping mall, through a wholesale market, or through an online platform — all these are part of commerce. Buying and selling form the foundation of trade, and trade is a key element of commerce. For example, a wholesaler buying goods from a manufacturer and selling them to a retailer is participating in commerce.
5. Creation of Utility
Commerce helps in the creation of utility, which means making a product more useful for the customer. There are different types of utility:
- Place utility i.e. created by transporting goods to places where they are needed),
- Time utility i.e. by storing goods and making them available when needed),
- Possession utility i.e. by transferring ownership through sale).
For example, cold storage adds time utility to perishable goods like fruits and vegetables by keeping them fresh for longer periods.
6. Wide Scope and Activities
Commerce has a very broad scope. It is not limited to just buying and selling. It includes all the aids to trade such as transportation, banking, warehousing, insurance, advertising, packaging, and communication. These services ensure that the goods are produced, delivered, promoted, and sold effectively. Commerce covers both domestic trade i.e. within a country and international trade i.e. between countries.
7. Part of Economic Activity
Commerce is an economic activity, which means it is done with the aim of earning money or profit. It is not a social or personal activity. For instance, if you exchange gifts with your friend, it is not commerce. But if a shopkeeper sells goods to customers to make profit, that is commerce. All the activities done in commerce are directed towards meeting human wants and generating income.
8. Profit-Oriented
Commerce is done with a profit motive. Every individual or organization involved in commerce — be it a manufacturer, wholesaler, retailer, or service provider — tries to earn a profit through the activities of buying, selling, transporting, or financing. This profit is the reward for taking business risks and investing resources. For example, a trader buys goods in bulk at a lower price and sells them at a higher price to earn a profit.
9. Helps in Economic Development
Commerce plays a major role in the economic development of a country. It encourages production, distribution, and employment generation. It improves the standard of living by ensuring the availability of goods and services. Commerce also increases the national income and helps in the growth of infrastructure such as roads, railways, ports, and warehouses. Countries that have strong commercial systems tend to grow faster.
10. Requires the Use of Modern Technology
In today’s world, commerce has become technology-driven. From online shopping to digital payments, logistics tracking to social media advertising, commerce now involves the use of computers, smartphones, internet, and software. E-commerce websites like Amazon or Flipkart are perfect examples where commerce is done through digital means. This feature shows how commerce has evolved with time and how it adapts to changing business environments.
11. Dynamic in Nature
Commerce is not a fixed or rigid system. It is flexible and dynamic, which means it changes according to economic conditions, customer preferences, government policies, and global events. For example, during the COVID-19 pandemic, traditional shops were closed, and many businesses shifted to online selling. Commerce continuously adapts to such changes and finds new ways to keep goods and services flowing.
CONCLUSION
In summary, commerce is a vast and essential part of business that includes not only trade but also all the supporting services that make trade possible. Its features — such as exchange, utility creation, profit motive, economic role, and adaptability — show how commerce is closely linked to human needs, technology, and economic progress. Commerce connects the producers with consumers, removes barriers in distribution, and ensures that goods and services reach the right place at the right time.
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