Commerce: Trade and Its Kinds

Once goods have been produced by industry, they must reach the people who want to use them — and that is the job of commerce. Commerce may be defined as the sum total of all those activities which are concerned with the transfer or exchange of goods and services from producers to consumers, and which remove the various hindrances that come in the way of that exchange — the hindrance of persons, place, time, risk, finance and information. Commerce is therefore wider than trade: it includes trade itself, plus all the auxiliary or supporting services that make trade possible, which BIEAP commerce students study as "aids to trade" or "auxiliaries to trade" in the next section.

Trade is the branch of commerce that deals directly with the buying and selling of goods and services for a price, involving the actual transfer of ownership from the seller to the buyer. It removes the hindrance of persons — that is, it connects the person who has the goods with the person who wants them. Trade is classified into two broad categories:

A. Internal (Home or Domestic) trade — buying and selling that takes place within the geographical boundaries of one country, with payment usually made in the country's own currency. Internal trade is further divided into:

• Wholesale trade — buying goods in large quantities, typically directly from producers or manufacturers, and selling them in smaller lots to retailers. A wholesaler acts as a link between the producer and the retailer.
• Retail trade — buying from wholesalers or producers and selling in small quantities directly to the final consumer for personal use. A retailer is the last link in the chain of distribution before the goods reach the consumer.

B. External (Foreign or International) trade — trade that takes place between two or more countries, usually involving different currencies, customs regulations and shipping documentation. It is further divided into:

• Export trade — selling goods produced in one's own country to a buyer in another country.
• Import trade — buying goods produced in another country and bringing them into one's own country for use or resale. …