Commerce

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.