What is commerce? Definition and meaning

Commerce, a branch of business, is concerned with the buying and selling of goods and services for money or in kind. It includes all the processes related directly or indirectly with the exchange of products and services. The term generally refers to doing business on a scale large enough to require transportation from seller to buyer, which may be across a town, a state or county, or from country-to-country.

The term ‘commerce’ is usually synonymous with ‘trade’, which also means buying-selling or exchanging goods and services between people, firms, countries or other entities in some way.

Commerce generally focuses on the distribution side of the business, rather than production. Some economists and other writers, however, say that it is a component of business that includes all the activities and functions related to the transference of goods and services from producers – including production – to consumers.

What is commerce?Commerce is the act of trading – buying and selling goods and services – either by bartering, with cash, credit card, face-to-face, by telephone, correspondence, or online. It is an activity that humans have been engaging in for many tens of thousands of years.

Everything businesses produce are aimed at consumers. To facilitate demand there needs to be an adequate distribution channel – this is where commerce comes in.

The term includes the legal, political, social, economic, cultural and technological systems that operate within any country or internationally. It may refer to an environment or system that affects the business prospects of national economies.

According to BusinessDictionary.com, commerce is:

“Exchange of goods or services for money or in kind, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.”

Commerce versus a transaction

Commerce generally refers to the macroeconomic purchase – buying in a large scale – of goods and services. This contrasts with a transaction, which is the buying and selling of a single item by a consumer.

Commercial marketplaceFor a monkey, climbing trees comes instinctively, as does swimming for a fish, flying for a seagull, and hunting for a tiger. For human beings, commerce, knowing what to do in the marketplace, wheeling and dealing, bartering, negotiating, making deals – these activities are second nature to us. We have been involved in commercial activities for so long that they are today programmed in our genes.

Commerce includes all the transactions related to the purchase and sale of that product or service in an economy. In most cases (not all), it refers to international trade – the purchase and sale of goods and services between countries.

US Department of Commerce

When managed properly, commercial activity can rapidly improve the standard of living of a country’s population and enhance that nation’s standing in the world. However, it needs to be regulated, otherwise large corporations may become too powerful and detrimental to the majority of citizens.

In the United States, the Department of Commerce exists to promote and manage business activity. It is the Cabinet department of the US government, concerned with promoting economic growth. The Department’s mission is:

“To promote job creation and improved living standards for all Americans by creating an infrastructure that promotes economic growth, technological competitiveness, and sustainable development.”

Among its duties are gathering demographic and economic data for business and government decision making, and helping establish industrial standards. It’s main purpose is to create employment, promote economic growth, encourage long-term, sustainable development, and improve the standard of living of all US citizens.

The UK equivalent is the Department for Business, Energy and Industrial Strategy (BEIS).

John F Kennedy 'commerce' quoteJohn F Kennedy (1917-1963), the 35th President of the United States, once said: “Let both sides seek to invoke the wonders of science instead of its terrors. Together let us explore the stars, conquer the deserts, eradicate disease, tap the ocean depths, and encourage the arts and commerce.” (Image: whitehouse.gov)

What is e-commerce?

E-commerce, which is short for ‘electronic commerce’, is a type of business or commercial transaction that occurs across the internet. Put simply, it refers to trading – buying and selling things – online.

It covers a wide range of business types, from online shops, auction sites, music marketplaces, trading in foreign exchange and financial instruments, to the exchange of goods and services between corporations.

Over the past two decades, it has dramatically changed how many of us earn our living, shop, and go about our daily lives.

Barack ObamaBarack Obama, the 44th President of the United States, said regarding America’s relationship with Cuba: “Fifty years of isolating Cuba had failed to promote democracy, setting us back in Latin America. That’s why we restored diplomatic relations, opened the door to travel and commerce, and positioned ourselves to improve the lives of the Cuban people.” (Image: whitehouse.gov)

On the Internet, consumers can electronically buy and sell goods and services without the barriers of distance or time.

Experts believe that e-commerce will eventually represent more than half of all retail sales in the UK and several other countries by 2025.

In many sectors, the boundaries between conventional and electronic business activities are already becoming blurred. As more and more business enterprises across the globe move sections of their operations onto the Internet, these boundaries are likely to disappear completely.

Social commerce, a relatively new term, is a type of online commercial activity that uses social networking websites to help in the trading of goods and services. It uses online communities, ratings, social advertising, shares, and shops inside social networking websites to purchase and sell things.

Yahoo first used this term in 2005 to describe a series of collaborative shopping tools such as shared pick lists, ratings and other user-generated content-sharing advice.

According to etymonline.com, the term ‘Commerce’ has been used in the English language since the 1530s. It came from Middle French Commerce (14c), which originated from Latin Commercium, meaning ‘trafficking, trade’. Com- means ‘together, while –merx (genetive mercis) means ‘merchandinse’.

Video – Impact of the Internet on commerce

For thousands of years, humans have been engaged in trade, and this has happened in pretty much the same way. A merchant and a customer meet face-to-face in the marketplace, and exchange one product for money or another product. The Internet has changed all that.