What is Commerce?

Commerce is the entirety of activities that facilitate the exchange of goods and services from the producer to the consumer. Commerce helps to promote trade but should not be confused with trade as trade is the actual exchange of products and services.

Commerce includes all the activities that assist in facilitating the exchange of goods and services from the manufacturer or the producer to the ultimate consumers. Majorly the activities are transportation, banking, insurance, advertising, warehousing, etc. that act as an aide in the successful completion of the exchange. Once the products are manufactured these cannot reach directly to the customer, the same has to pass through a series of activities. The first wholesaler will purchase the product and with the use of transportation, the goods will be made available to the stores and at the same banking and insurance service will be availed by him to have protection against the loss of goods. The retailer will then sell to the ultimate consumer. All these activities come under the commerce head.

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Commerce helps facilitate the movement of goods from the producer to the consumer; so it encompasses the transportation of goods. The following are some of the benefits of commerce;

1.Commerce tries to satisfy increasing human wants

Human wants are never ending. They can be classified as ‘Basic wants’ and ‘Secondary wants’. Commerce has made distribution and movement of goods possible from one part of the world to the other. Today we can buy anything produced anywhere in the world. This has, in turn, enabled man to satisfy his innumerable wants and thereby promoting social welfare.

2.Commerce helps to increase our standard of living

Standard of living refers to the quality of life enjoyed by the members of a society. When a man consumes more products, his standard of living improves. To consume a variety of goods, he must be able to secure them first. Commerce helps us to get what we want at the right time, right place and at right price and thus helps in improving our standard of living.

3.Commerce links producers and consumers

Production is meant for ultimate consumption. Commerce makes possible to link producers and consumers through retailers and wholesalers and also through the aids to trade. Consumers get information about different goods through advertisements and salesmanship. The manufacturers are regularly informed about the likes and dislikes of the consumers through marketing research. Thus, commerce creates contact between the centers of production and consumption and links them.

4.Commerce generates employment opportunities

The growth of commerce, industry and trade bring about the growth of agencies of trade such as banking, transport, warehousing, advertising, etc. These agencies need people to look after their functioning. Increase in production results in increasing demand, which further results in boosting employment opportunities. Thus, development of commerce generates more and more employment opportunities for millions of people in a country.

5.Commerce increases national income and wealth

When production increases, national income also increases. In a developed country, manufacturing industries and commerce together accounts for nearly 80% of total national income. It also helps to earn foreign exchange by way of exports and duties levied on imports. Thus, commerce increases the national income and wealth of a nation.


6.Commerce helps in expansion of aids to trade

With the growth of trade and commerce, there is growing the need for expansion and modernization of aids to trade. Aids to trade such as banking, communication, advertising and publicity, transport, insurance, etc., are expanded and modernized for the smooth conduct of commerce.

7.Commerce helps in growth of industrial development

Commerce looks after the smooth distribution of goods and services made available by the industry. Without commerce, the industry will find it difficult to keep the pace of production. It helps to increase demand for goods on one hand and, on the other hand, it helps industries by getting them the necessary raw materials and other services. Hence, Commerce helps in attaining better division of labor and industrial progress.

8.Commerce encourages international trade

Through commerce, we can secure a fair and equitable distribution of goods throughout the world. With the help of transport and communication development, countries can exchange their surplus commodities and earn foreign exchange, which is very useful for importing machinery and sophisticated technology. It ensures the faster economic growth of the country.

9.Commerce benefits underdeveloped countries

Underdeveloped countries can import skilled labor and technical know-how from developed countries. While the advanced countries can import raw materials from underdeveloped countries. This helps in laying down the seeds of industrialization in the underdeveloped countries.

10.Commerce helps during emergencies

During emergencies like floods, earthquakes and wars, commerce helps in reaching the essential requirements like foodstuff, medicines and relief measures to the affected areas.

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