Commerce · Ch 3 — Classification of Business Activities
Commerce — Meaning and Its Two Components
Commerce — Meaning and Its Two Components
3. Commerce — Meaning and Its Two Components
Commerce is the sum total of all those activities that are necessary to remove the hindrances that stand between a producer and a consumer, so that goods and services can move smoothly from the point of production to the point of consumption. It covers not only the buying and selling of goods, but also every activity that assists that buying and selling.
Goods produced by industry face several hindrances before they can reach the consumer, and each hindrance is removed by a distinct activity that commerce provides:
| Hindrance | What it means | Removed by |
|---|---|---|
| Hindrance of Persons | Producer and consumer do not know each other | Trade (wholesalers, retailers) |
| Hindrance of Place | Goods are produced far from where they are consumed | Transportation |
| Hindrance of Time | Goods are produced at one time but demanded at another | Warehousing |
| Hindrance of Risk | Goods may be lost or damaged (fire, theft, accident) in transit or storage | Insurance |
| Hindrance of Finance | Trade requires funds to purchase, store, and move goods | Banking |
| Hindrance of Information | Buyer does not know a product exists, or where to obtain it | Advertising and Communication |
Commerce is therefore made up of two components, working together:
- Trade — the actual activity of buying and selling goods, transferring their ownership from seller to buyer, and thereby removing the hindrance of persons. (Covered in detail in Section 4.)
- Auxiliaries to Trade (also called Aids to Trade, or Services) — the supporting services of banking, insurance, transportation, warehousing, advertising, and communication, which remove the hindrances of finance, risk, place, time, and information respectively, and without which trade itself could not function smoothly at any real scale. (Covered in detail in Section 5.)
Commerce is bigger than "buying and selling" …
The sum total of activities connected with the removal of hindrances of person, place, time, risk, finance, and knowledge, so that goods and services move smooth …
The branch of commerce dealing with the actual buying and selling of goods, transferring their ownership fr …
The supporting services — banking, insurance, transportation, warehousing, advertising, and communication — that remove the hindrances tra …