Aids to Trade (Auxiliaries to Trade)

Trade -- the actual act of buying and selling -- is rarely enough by itself to move goods efficiently from a producer to a distant, unknown consumer. A set of supporting services, known as the aids to trade or auxiliaries to trade, removes the specific obstacles that stand in the way, and each aid is associated with the particular obstacle it removes.

• Transport and communication overcome the hindrance of place -- goods produced in one location are of no use to a consumer elsewhere until they are physically carried to where they are wanted, and information (prices, orders, market news) must travel just as fast as the goods themselves.
• Banking and finance overcome the hindrance of capital -- production and trade both need funds well before any sale is realised, and banks bridge this gap through loans, overdrafts, and other credit facilities, besides providing safe channels for receiving and making payments.
• Insurance overcomes the hindrance of risk -- goods in transit or in storage face the risk of fire, theft, accident, or natural calamity, and insurance spreads this risk over many parties in exchange for a premium, so that a single loss does not ruin one trader.
• Warehousing overcomes the hindrance of time -- many goods (agricultural produce, for instance) are produced seasonally but consumed throughout the year, and warehouses store goods safely until they are actually required.
• Advertising and salesmanship overcome the hindrance of information/persuasion -- a producer and a prospective consumer are usually strangers to each other, and advertising and personal selling create the awareness and interest needed to bring them together. …