Commerce relates to two types of activities, viz., (i) Trade and, (ii) Auxiliaries to trade.
- Trade : Trade is an essential part of commerce. It refers to sale, transfer or exchange of goods. It helps in making the goods produced available to ultimate consumers. Trade may be classified into two broad categories : internal and external.
- Auxiliaries to trade : Activities which are meant for assisting the trade are known as auxiliaries to trade. Auxiliaries to trade are briefly discussed below :
(i) Transport and communication : Production of goods generally takes place in particular locations. For instance, tea is mainly produced in Assam and cotton in Gujarat and Maharashtra. But these goods are required for. consumption in different parts of the country. The hindrance of place is eliminated by transport—road, rail or coastal shipping.
(ii) Banking and finance : Business activities cannot be undertaken unless funds are available for acquiring assets and meeting the day-to-day expenses. Necessary funds can be obtained by businessmen from a bank.
(iii) Insurance: Business involves various types of risks, Factory building, machinery, furniture, etc. must be protected against fire, theft and other risks.
(iv) Warehousing : Warehousing helps business firms to overcome the problem of storage and facilitates the availability of goods when needed.
(v) Advertising : Advertising is one of the most important methods of promoting the sale of products, particularly consumer goods such as electronic goods, automobiles, soaps, detergents, etc.