What does 'Commerce' mean

Commerce is the conduct of trade amongst economic agents. Generally, commerce refers to the exchange of goods, services or something of value, between businesses or entities. From a broad perspective, nations are concerned with managing commerce in a way that enhances the well-being of citizens, by providing jobs and producing beneficial goods and services.

BREAKING DOWN 'Commerce'

Commerce normally refers to the macroeconomic purchase and sale of goods and services by large organizations at scale. The sale or purchase of a single item by a consumer is defined as a transaction, while commerce refers to all transactions related to the purchase and sale of that item in an economy. Most commerce is conducted internationally and represents the buying and selling of goods between nations.

When properly managed, commercial activity can quickly enhance the standard of living in a nation and increase its standing in the world. However, when commerce is allowed to run unregulated, large businesses can become too powerful and impose negative externalities on citizens for the benefit of the business owners. Many nations have established governmental agencies responsible for promoting and managing commerce, such as the Department of Commerce in the United States.

The Rise of E-Commerce

The idea of commerce has expanded to include electronic commerce in the 21st century. E-commerce describes any business or commercial transaction that includes the transfer of financial information over the Internet. E-commerce, unlike traditional commerce between two agents, allows individual consumers to exchange value for goods and services with little to no barriers.

E-commerce has changed the ways in which economies conduct commerce. In the past, imports and exports conducted by a nation posed many logistical hurdles, both on the part of the buyer and the seller. This created an environment where only larger companies with scale could benefit from export customers. Now, with he rise of the Internet and e-commerce, small business owners now have a chance to market to international customers and fulfill international orders.

Companies of all shapes and sizes can engage in international commerce. Export management companies help domestic small businesses with the logistics of selling internationally. Export trading companies help small businesses by identifying international buyers and sourcing domestic companies that can fulfill the demand. Import/export merchants purchase goods directly from a domestic or foreign manufacturer, and then they package the goods and resell them on their own as an individual entity, assuming the risk but taking higher profits.

RELATED TERMS
  1. International Commerce

    The buying and selling of goods between sovereign nations. International ...
  2. Mobile Commerce

    The use of wireless handheld devices such as cellular phones ...
  3. Social Commerce

    A type of electronic commerce that employs social media to promote ...
  4. Department of Commerce

    The cabinet department in the U.S. Government that deals with ...
  5. Electronic Commerce - ecommerce

    A type of business model, or segment of a larger business model, ...
  6. Energy And Commerce Committee

    A established by in 1975 by the United States House of Representatives ...
Related Articles
  1. Small Business

    Understanding Electronic Commerce

    Electronic commerce is the buying and selling of goods and services over an electronic network.
  2. Investing

    Commerce Bancshares Rises Ahead of Q2 Earnings (CBSH)

    Wall Street expects the community bank to deliver a year-over-year increase in revenue and a decline in profits.
  3. Investing

    Commerce Bancshares Q2 Earnings Beat, Rev Miss (CBSH)

    The community bank reported mixed second quarter results, resulting in a beat on the bottom line, but a miss on the top line.
  4. Taxes

    Internet Sales Tax's Effect on Interstate Commerce

    Find out how a national Internet sales tax could affect interstate commerce, and why some bigger online retailers are lobbying for such a tax.
  5. Insights

    Is the Payment Processing Industry Evolving? (PYPL, TGT)

    Learn about the many changes in commerce and payment systems that are happening in the rapidly evolving payment processing industry.
  6. Investing

    Salesforce.com Finalizes Demandware Acquisition

    Usually, completing a $2.8 billion acquisition of a publicly traded company takes time, both to clear regulatory hurdles and gain shareholder approval. But cutting through the red tape wasn't ...
  7. Taxes

    How an Internet Sales Tax Will Affect Your Small Business

    Learn about how the Marketplace Fairness Act may impact small business owners should it pass in the House and what the act requires from business owners.
  8. Investing

    Growth and Politics In Exports

    An export is a good or service that is shipped from one country to another for sale or trade.
  9. Insights

    Interesting Facts About Imports And Exports

    Imports and exports exert a profound influence on the consumer and the economy. Learn what affects these figures, and in turn how these figures affect the economy.
  10. Small Business

    In Small Business, Success Is Spelled With 5 "C"s

    Incorporating these steps will help your business thrive in a competitive market.
RELATED FAQS
  1. How does the International Chamber of Commerce define the term 'Free on Board' (FOB)?

    Find out more about the International Chamber of Commerce, Incoterms rules and how the International Chamber of Commerce ... Read Answer >>
  2. What is the difference between CIF and an incoterm?

    Learn the difference between CIF and an Incoterm. CIF is one of the 12 Incoterm established in 1936 by the International ... Read Answer >>
  3. What does it mean to invest in money center banks?

    Invest in foreign and domestic banks when you invest in money center banks. You'll find these financial centers in many major ... Read Answer >>
  4. What is the role of the nation-state in globalization?

    Learn about the evolving role of the nation-state in an increasingly globalized world as fewer boundaries restrict international ... Read Answer >>
  5. What is a trade deficit and what effect will it have on the stock market?

    A trade deficit, which is also referred to as net exports, is an economic condition that occurs when a country is importing ... Read Answer >>
  6. What's the difference between a commodity and a product?

    Understand the difference between commodities and products, and learn how they are connected to each other and to market ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center