Understanding Commerce: Trade, Wholesale and Retail

• Commerce includes all activities related to exchanging goods/services, from production to consumption.
• Commerce encompasses distributing products via various processes.
• Key components of commerce: buying, selling, transportation, warehousing, insurance, and financing.

Types of Commerce

• Trade is the buying/selling of goods/services for profit.
• Trade divides into internal (domestic) and external (international) categories.

Internal Trade

• Internal trade (domestic trade) involves the exchange of goods/services within a country's borders.
• Internal trade is divided into wholesale and retail trade.

Wholesale Trade

• Wholesale trade involves bulk purchases from manufacturers/producers, selling to retailers/intermediaries.
• Wholesalers generally do not sell directly to consumers.

Retail Trade

• Retail trade involves selling goods/services directly to end consumers.
• Retailers buy from wholesalers/manufacturers, selling in smaller quantities to consumers.

External Trade

• External trade (international trade) involves the exchange of goods/services between two or more countries.
• External trade includes: import, export, and entrepot trade.

Import Trade

• Import trade is purchasing goods/services from a foreign country and bringing them into the home country.

Export Trade

• Export trade is selling goods/services produced in the home country to a foreign country.

Entrepot Trade

• Entrepot trade is importing goods from one country, then exporting them to another.

Aids to Trade

• Aids to trade are activities that smooth the flow of goods/services from producers to consumers.
• Aids to trade include: transport, warehousing, insurance, banking/finance, advertising, and communication.

Transport

• Transport involves moving goods from one place to another.
• Transport creates place utility by making goods available where needed.
• Transport modes: road, rail, water, and air.

Warehousing

• Warehousing is storing goods from production/purchase until needed for sale/consumption.
• Warehouses create time utility by ensuring goods are available when needed.
• Warehousing protects goods from loss or damage.

Insurance

• Insurance protects against risks like fire, theft, accidents, and natural disasters.
• Insurance provides financial compensation for losses from these risks.

Banking and Finance

• Banking/financial institutions provide funds for business activities like production, distribution, and trade.
• They facilitate payments and collections.
• Banks offer services like loans, overdrafts, and credit facilities.

Advertising

• Advertising informs and persuades potential customers to buy goods/services.
• Advertising helps create demand and increase sales.
• Advertising media: print, electronic, and outdoor.

Communication

• Communication is the exchange of information between buyers and sellers.
• Communication facilitates trade by providing information about products, prices, and availability.
• Communication means: postal services, telephone, internet, and email.

E-Commerce

• E-commerce (electronic commerce) involves online buying and selling of goods/services.
• E-commerce allows businesses to reach a wider customer base.
• E-commerce offers convenience and cost savings for businesses and consumers.
• E-commerce includes B2B, B2C, C2C, and B2G transactions.

Advantages of Commerce

• Commerce facilitates the distribution of goods and services.
• It creates employment opportunities.
• It improves the standard of living.
• It promotes economic growth.
• Commerce increases government revenue.

Disadvantages of Commerce

• Commerce can lead to consumer exploitation.
• It may result in environmental pollution.
• Commerce can create income inequality.
• It may promote unethical business practices.

Business

• Business is a broad term including all activities related to production, distribution, and sale of goods/services for profit.
• Commerce is a subset of business, specifically focusing on the exchange of goods/services.

Trade Barriers

• Trade barriers are government-imposed restrictions on international trade.
• Trade barriers include tariffs, quotas, and other regulations.
• Trade barriers protect domestic industries from foreign competition.

Tariffs

• Tariffs are taxes on imported goods.
• Tariffs increase the price of imports, making them less competitive with domestic goods.

Quotas

• Quotas are limits on the quantity of goods that can be imported.
• Quotas restrict the supply of imports, leading to higher prices.

World Trade Organization (WTO)

• The World Trade Organization (WTO) is an international organization regulating international trade.
• The WTO aims to reduce trade barriers and promote free trade among member countries.

Balance of Trade

• The balance of trade is the difference between a country's exports and imports.
• A trade surplus occurs when exports exceed imports.
• A trade deficit occurs when imports exceed exports.

Balance of Payments

• The balance of payments is a broad measure of a country's international transactions.
• It includes trade in goods/services and financial flows like investments and loans.

Foreign Exchange

• Foreign exchange is the buying and selling of different currencies.
• The exchange rate is the price of one currency in terms of another.

Globalization

• Globalization is the increasing integration of national economies through trade, investment, and migration.
• It has led to increased competition and opportunities for businesses to expand into new markets.

Supply Chain Management

• Supply chain management involves coordinating all activities in the production/delivery of goods/services.
• It includes sourcing raw materials, manufacturing, and distributing to customers.

Logistics

• Logistics involves planning, implementing, and controlling the efficient flow/storage of goods, services, and information from origin to consumption.
• Logistics is an important part of supply chain management.

Marketing

• Marketing is creating, communicating, and delivering value to customers.
• It involves identifying customer needs/wants, developing products/services to meet them, and promoting/distributing them.

Sales

• Sales involves exchanging goods or services for money.
• Sales is a critical function for businesses, generating revenue.

Customer Service

• Customer service provides assistance/support to customers before, during, and after a purchase.
• Good customer service builds customer loyalty and improves business reputation.