Introduction To Commerce: Meaning, Importance, Characteristics, Functions, Scope Of Commerce And Activities Which Aid Commerce


  1. Meaning And Definition Of Commerce
  2. Importance Of Commerce
  3. Characteristics Of Commerce
  4. Functions Of Commerce
  5. Scope Of Commerce
  6. Activities Which Aid Commerce:
  7. Division Of Trade


Commerce has been defined in various ways by various authors, but a comprehensive definition of “Commerce is the act of buying and selling of goods and services to satisfy human wants so as to earn a living.


1. Through Commerce the exchange of goods and services are made possible.

2. Commerce brings about development of a nation as well as a city.

3. Commerce creates employment opportunities for the citizens of a country through insurance, advertising.

4. Commerce makes the storage of goods or raw materials through warehousing.

5. Commerce encourages import and export, thereby bring about specialization.

6. Commerce improves the standard of living because more people earn their living through commercial activities.


Commerce has the following characteristic:

1. Economic Activity: Commerce is an economic activity. A trader buys and sells goods to earn wealth. It is expressed in monetary terms.

2. Profit: The native of commerce is to earn profit. Gifts of goods to friends and relative is not commerce. Profit drives the engine of commerce.

3. Marketing: Commerce involves marketing. It involves the exchange, distribution and production. It is done on regular basis. Marketing is done to create goods and satisfy customers.

4. Utility: Commerce creates place and time utility to satisfy consumers needs. It transports goods from place to place to create place utility. It creates time utility.


1. Commerce facilitate mass production thus people all over the world can enjoy goods and services produced both within and outside the country.

2. It facilitates the raising of capital for individual needs and investment through services of bank and other financial institutions.

3. It offers employment opportunities to large number of people.

4. It assists in making people raw materials and finished goods from production points to consumption points through transportation.

5. It fastens unity among nations, thus nations become interdependent as they engage in trading activities.


This involves all the activities which ensure the distribution and exchange of goods and services for the satisfaction of the people.

Different Activities Engaged In, By people in commercial occupation, include-

a. Trading

b. Transporting

c. Warehousing

d. Insurance

e. Banking

f. Advertising

g. Communication

h. Tourism

The Scope Of Commerce is illustrated below:


1. Trade (We have Home Trade And Foreign Trade)

Home Trade: Retail And Wholesale.

Foreign Trade: Export, Import, Entreport.

2. Aids To Trade

– Banking

– Advertising

– Warehousing

– Tourism

– Communication

– Insurance


There are certain activities which makes Commerce possible and they are as follows:

1) Banking: Banking Aid trade by helping people to safeguard their money and other valuable items as well as offering loans to business men and women.

2) Insurance: Insurance is a provision made against risks and insurance companies helps to restore people to their formal position, they should incur any risks/loss insured against.

3) Advertising: Advertising is the process by which awareness is created about existing goods and services and through Advertising , buying and selling is enhanced.

4) Warehousing: Warehousing is the act of storing goods ahead of demand for them, and through Warehousing trade will not be disrupted as goods produced are stored ahead of demand for them.

5) Transportation: Transportation is the movement of goods and people from one place to another and transportation aids trade.

6) Communication: Communication is the process of sending and receiving information between two people, group and others.


Commerce is divided into two:-

1) Home Trade

2) Foreign Trade

(1) Home Trade: This is a trade that is carried out within a particular country. It is also known as domestic trade.

Home trade is divided into two;

a) Wholesale Trade: Wholesale trade involves buying in bulk (large quantities) from the producers or manufacturers and selling in small quantities to the retailer’s.

The people that engage in wholesale trade are called wholesalers.

b) Retail Trade: Retail trade involves buying of goods in small quantities from quantities to the final consumer.

The people engaged in retail trade are called retailers.

(2) Foreign Trade: This is a trade carried out between two or more country’s. It is also called International trade.

Foreign Trade is divided into three;

a) Import Trade: This is the process by which goods are brought into a country from another country.

b) Export Trade: This is the process by which goods are sent out of a country to another country.

c) Entreport Trade: The process by which goods imported are re-exported by back to the country or another country. It is the re-exportation of of imported goods.

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