What is Commerce 'Commerce'

Commerce is the conduct of trade among 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 how 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 the 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 domestic sourcing 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. Mobile Commerce

    Mobile commerce is the use of wireless handheld devices, such ...
  2. Electronic Commerce (e-commerce)

    Electronic Commerce (e-commerce) is a business model that enables ...
  3. Coinbase Commerce

    Coinbase Commerce allows merchants to accept multiple cryptocurrencies ...
  4. Core Retail Sales

    Core retail sales refers to aggregate retail sales in the U.S. ...
  5. New Home Sales

    New Homes Sales are an economic indicator measuring sales of ...
  6. Business Relations

    Business relations are the connections that exist between all ...
Related Articles
  1. Insights

    What Does the U.S. Secretary of Commerce Do?

    The Commerce Secretary overseas a vast business and commerce engine that drives the U.S. economy.
  2. Insights

    Top Ten US Economic Indicators

    We explain the most important economic indicators for the US economy.
  3. Tech

    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.
  4. 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.
  5. Insights

    Interesting Facts About Imports and Exports

    Learn how imports and exports exert a profound influence on the consumer and the economy.
  6. Investing

    What PayPal’s Recent Investment Means for Its Long Term Growth (PYPL, FB)

    Find out the reasons behind PayPal's most recent business acquisition and what it might mean for the company's long-term growth prospects.
  7. Investing

    E-commerce Earnings on the Rise

    E-commerce companies reported a healthy rise in earnings. But growth has come at the cost of operating margins for some.
  8. Investing

    Alibaba Chair Jack Ma Predicts New "Economic Environment"

    Alibaba's Chairman Jack Ma said the company's infrastructure of e-commerce, payments, and cloud solutions can be replicated across the world for ordinary consumers.
  9. Tech

    (BABA) Who are Alibaba's Main Competitors?

    Learn about China's dominant e-commerce company, Alibaba, including its main domestic competitor, JD.com, and other players in the market.
RELATED FAQS
  1. 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 >>
  2. What is the difference between CIF and FOB?

    Learn about the differences between FOB and CIF international trade agreements and the advantages and disadvantages for sellers ... Read Answer >>
  3. The risks businesses face in international finance

    When an organization engages in international financing activities, it takes on additional risk, including foreign exchange ... Read Answer >>
  4. Which factors can influence a country's balance of trade?

    Find out about the factors that affect a country's overall balance of trade and how it is used as an economic indicator. Read Answer >>
  5. What is a trade deficit and what effect will it have on the stock market?

    Learn what is a trade deficit is, also known as net exports, and what effect they have on the stock market. Read Answer >>
  6. How can I invest in electronic retailing (e-tailing)? (AMZN, W)

    Learn about the different ways to invest in electronic retail. Amazon.com and Alibaba are the two dominant players in electronic ... Read Answer >>
Hot Definitions
  1. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  2. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  3. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  4. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
  5. Watchlist

    A watchlist is list of securities being monitored for potential trading or investing opportunities.
  6. Hedge Fund

    A hedge fund is an aggressively managed portfolio of investments that uses leveraged, long, short and derivative positions.
Trading Center