What do you understand by commerce? Briefly explain the classification of commerce with examples.

Commerce helps in making goods available to the consumers at right place, time, quantity, price and manner. All kinds of activities that form link between producers of goods and consumers of these goods and maintain a smooth and uninterrupted flow of goods between them fall under commerce.

Its two main aspects are:

  • Purchase and sale of goods.
  • Activities essential for smooth and uninterrupted flow of goods.

Commerce is classified into two categories:

Trade: Objective of trade is to make goods available to those persons who need them and are willing to pay for them. Trader is the person who is engaged in trade. Trade is of two types:

  1. Internal trade: When the trade takes place within the boundaries of the country, it is called ‘internal trade. It is further classified into wholesale trade, where buying and selling is in larger quantities and wholesaler is involved in such a trade and retail trade, where buying and selling is in smaller quantities and retailer is involved in such a trade.
  2. External trade: This trade takes place across the boundaries of a country or the trade between Nations. It is further classified into import trade, where a country buys goods from another country, export trade, where a country sells goods to another country and export trade, where the goods are imported from one country and the same are exported to another country.

Aids to trade: In this, all human activities are involved which eliminate the hindrances and facilitate the flow of goods from producers to consumers, It is divided into five categories.

Transportation: It is the activity concerned with the movement of goods. It eliminates the hindrance of place and creates place utility to goods. Land, air and water transportation are its three types:

Warehousing: It means preservation of goods to make them available as and when needed by consumers. It eliminates the hindrance of time and provides time utility to goods. Perishable goods like milk, meat etc, are preserved in warehouses.

Insurance: Due to accidents, fire or theft etc goods may be destroyed. To cover these risks, the business has to take an insurance policy and pay a certain amount called premium regularly. It eliminates the hindrance of risk.

Advertising: It facilitates the flow of goods between producers and consumers by bringing the knowledge about the products to consumers. It is done through TV, radio, newspapers, wall posters etc .

Banking: Banks accept deposits of money from public, withdrawal on demand and lends the same to the needy ones. It helps in removing the hindrance of finance and Credit Business cannot run if banks are not there.

Tags: B.ComBca

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