Commerce is concerned with facilitating the exchange of goods and services

in the economy. It is sub-classified as trade and auxiliaries to trade. Many

think that trade and commerce are the same terms and can be used
interchangeably. But the fact is both the terms are different from each other
and carry different meanings. Trade simply means buying and selling of
goods and services in return for money or money’s worth. The scope of
commerce is wider than that of trade, which not only refers to the exchange of
goods and services but also includes all those activities that are vital for the
completion of that exchange. To further comprehend the understanding of
these two terms the basic comparison is given below:

Comparison Chart

BASIS FOR
COMPARISO TRADE COMMERCE
N

Meaning Trade means the Commerce means exchange of

exchange of goods goods and services between the
and services between parties along with the activities
two or more parties such as insurance, transportation,
in consideration of warehousing, advertising etc that
money or money’s completes that exchange.
worth.

Scope Narrow Wide

Type of Activity Social Activity Economic Activity

 Frequency of Isolated Regular
Transactions

Employment No Yes
opportunities

Link Between buyer and Between producer and consumer

seller

Demand and Represents both Represents only the demand side

supply side

Definition of Trade
In trade, the ownership of goods or services is transferred from one person to
the another in consideration of cash or cash equivalents. Trade can be done
between two parties or more than two parties. When the buying and selling
take place between two persons, it is called bilateral trade whereas when it is
done between more than two persons, then it is called multilateral trade.

Earlier the trade was little cumbersome since it followed the barter system
where goods were exchanged in return for other goods or commodities. It is
hard to evaluate the exact value because of the different commodities involved
in the exchange. With the advent of money, this process became more
convenient for both the sellers and buyers.

Trade can be domestic as well as foreign. Domestic trade means within the
border of the country, and foreign trade means across the borders. Foreign
trade is done through investment in securities or funds and can be termed as
imports and exports.

Definition of Commerce
Commerce includes all the activities that help in facilitating the exchange of
goods and services from the manufacturer or the producer to the ultimate
consumers. Majorly the activities are transportation, banking, insurance,
advertising, warehousing, etc. that act as an aide in the successful completion
of the exchange.

Once the products are manufactured these cannot reach directly to the
customer, the same has to pass through a series of activities. The first
wholesaler will purchase the product, and with the use of transportation, the
goods will be made available to the stores and at the same banking and
insurance service will be availed by him to have protection against the loss of
goods. The retailer will then sell to the ultimate consumer. All these activities
come under the commerce head. In short, it can be said that commerce is the
branch of business that helps to overcome all the hindrances that arise in the
facilitation of exchange. Its major function is to satisfy human wants both
basic and secondary by making the goods available to different parts of the
country. No matter where the goods have been manufactured the commerce
has made it possible to reach the world – wide.

Key Differences between Trade and Commerce

Following are the major differences between trade and commerce:

1. Trade is selling and buying of goods and services between two or more
parties in consideration of cash and cash equivalents.Commerce
includes the exchange of goods and services along with activities viz.
banking, insurance, advertising, transportation, warehousing, etc. to
complement the exchange.
 2. Trade is a narrow term that merely includes the selling and buying
whereas commerce is a wider term that includes exchange as well as the
several revenues generating activities that complete the exchange.
3. Trade is generally done to satisfy the need of both the seller and the
buyer which is more of a social perspective. Whereas the commerce is
more economical in nature because of the involvement of several parties
whose primary aim is to generate the revenue.
4. Trade is generally a single time transaction between the parties that may
or may not reoccur. Whereas in commerce the transactions are regular
and occur again and again.
5. The trade involves two parties: the seller and the buyer who facilitates
the exchange without employing anyone in between. Whereas in
commerce exchange is done with the support of several departments
thereby giving them employment opportunities.
6. Trade provides a link between the seller and the buyer, the direct parties
involved in the exchange. Whereas the commerce provides a link
between manufacturer and the ultimate customer, who are not direct
parties, with the help of several sides of distribution.
7. Trade represents both the side of demand and supply where both the
parties know what is demanded and what is to be supplied. Whereas in
commerce only the demand side is known i.e. what is demanded in the
market and then making that available through various channels of
distribution.

Conclusion
Hence it can be concluded that trade is the branch of commerce that deals in
only the exchange of goods and services whereas commerce are the
comprehensive term that includes all the major activities that facilitate the
exchange and generates the revenue for all. Thus, we can say commerce is the
branch of business that keeps everything together and makes the successful
completion of the distribution of goods and services