Commerce refers to all those activities which are necessary for bringing goods from the place of production to the place of their consumption.
According to Evelyn Thomas, “Commercial occupations deal with the buying and selling of goods, the exchange of commodities and the distribution of finished products”.
Commerce includes not only trade but also services such as transport, warehousing, packaging, insurance, banking and sales promotion which are incidental or auxiliaries to trade. The main characteristics of commerce are as follows:
(i) Economic activity:
Commerce is an economic activity because it consists of activities which are undertaken for earning profits. A trader buys goods with the aim of selling them at a profit
(ii) Exchange of goods and services:
Commerce involves exchange and distribution of goods and services. Goods may be purchased or produced for sale. Commerce comprises both trade and aids to trade.
(iii) Profit motive:
The motive of commercial activities is to earn profits. Any activity which does not have the aim of profit will not be a part of commerce. For example, if a trader offers some goods as a gift to his friend it is not commerce.
(iv) Regularity of transactions:
An isolated transaction does not imply commerce. For example, if a person sells his typewriter it is not commerce.
(v) Creation of utilities:
Commerce creates several types of utilities. It creates place utility by carrying goods to the place where they are needed. It makes goods available as and when demanded thereby creating time utility. By creating these utilities commerce helps to increase the volume of trade.
(vi) Part of business:
Commerce is a part of business. It is also a branch of economics. Economics is the study of human beings as consumers and producers.