Trade, business and commerce has been part of human civilization since time immemorial. Beginning from the barter system, where people traded one good for a proportionate amount of the other, trade and commerce has come a long way to being completely digitised.
So what is Trade & Commerce?
Trade is essentially the exchange of goods for another useful tradeable commodity. Once upon a time, this used to be other goods, and this system of trade came to be known as the barter system. Later the exchange of goods changed into exchange of goods for precious metals like gold, and soon gold was minted into coins by kings during their time. However due to the unavailability of gold in such large amounts, paper money was introduced. This paper is made from cotton and linen fibres and is called rag paper. This is the most common form of money used in trade today, and based on the country in which trade is done, the currency changes. Trade occurs between either 2 parties, or more. If the trade occurs between 2 parties, it is called a bilateral trade, and if it occurs between more than 2 parties it is called a multilateral trade.
Commerce, on the other hand, is anything that aids in the exchange of goods and services from manufacturer to consumer. These activities include banking, advertising, transportation, insurance, warehousing etc.
They act as aid in the achievement of exchange.
Now that we know the meaning of trade and commerce, we can dive deeper into the detailed differences between Trade and commerce.
- Scope: The scope of trade is narrow, whereas the scope of commerce is broad. What this essentially means is that trade is simply buying and selling of goods between 2 parties, but the scope of commerce includes much more than that. Commerce includes the roles played by trade, aids of trade like banking, advertising etc., marketing services, documents of trade, commercial organisations etc.
- Type of Activity: Trade is considered a social activity because it involves people and goods and their interaction in society, but no direct link to the economy. However commerce is considered an economic activity because it directly contributes to the economy.
- Nature: Trade deals with the supply and demand side of goods and services, whereas commerce deals solely with the demand side of goods and services.
- Link: Trade occurs primarily between buyers and sellers, whereas commerce occurs between producer and manufacturer.
- Capital: Trade generally requires more capital than commerce.
- Employment opportunities: Since more amount of activity is done in commerce, it generally employs more people and generates more employment opportunities than trade does.