Commerce or trade is a for-profit activity that consists of the exchange of goods or services between a producer or supplier and a consumer or demander. The exchange or transaction occurs in the economic market, which can be a physical or virtual space.
Commerce is an activity that corresponds to the tertiary economic sector, which is characterized by satisfying the needs of final consumers, companies or industries, through products obtained from nature and manufactured by industries, in exchange for money.
It differs from the activities of the primary sector, which is characterized by the exploitation of raw materials, and the secondary, which is in charge of processing for the industrial sector.
- Commerce is an economic activity of the tertiary sector.
- Allows the exchange of goods and services for money.
- Fair Commerce is a business model that promotes a paradigm shift in the production system and mass consumption.
- The principles of fair Commerce are: the sustainable use of natural resources, the use of production systems that minimize the negative impact on the environment and the hiring of labor under decent conditions.
The origin of Commerce dates back to the last period of Prehistory, which corresponds to the Neolithic , between the years 8000 and 5000 BC. C. During this period, the human began to carry out agricultural activities that caused an innovative and radical change in their lifestyle.
Cultivation was the basis of food production and allowed human beings to establish themselves in towns to work the land. The human being changed the nomadic life, in which he lived in constant search of food and shelter, for a sedentary lifestyle.
As human populations increased and expanded, they also expanded cultivated land and incorporated animal husbandry. The surplus of merchandise, food and animals were exchanged with neighboring populations, which gave rise to the first commercial actions, through barter: a direct exchange between one merchandise and another.
With the creation of the coin as a means of payment, around the 6th century BC. C., the commerce acquired another mechanics and the goods or services had a symbolic value equivalent to a support in coins made of metal, such as bronze or gold.
Other important technological advances that changed the course of human history were the steam engine, the railway (which allowed Commerce routes to expand), and the internet and globalization, which generated various changes in lifestyle more exponentially.
Today, Commerce is a global activity with almost no borders except for nations with closed economies. The growth of the market occurs simultaneously throughout the planet and is developed through various payment methods, currencies (physical and virtual), forms and delivery times.
importance of Commerce
Trading is an activity that has lucrative purposes, that is, it seeks to make a profit. The parties that participate in Commerce, the merchant and the consumer, seek to satisfy a need through exchange.
In commercial exchange, the parties involved obtain a benefit: the one who sells obtains profits to satisfy his needs and the one who buys acquires a good or service to satisfy a particular need.
The development of internal Commerce strengthens the economy of a nation and contributes to expanding Commerce abroad. Commercial activity is conditioned by various factors, such as the availability of capital to invest, natural resources, laws that encourage and promote internal commercial development, among other factors.
types of Commerce
Commerce is categorized into two general groups, based on its scope:
- Internal Commerce. It is the one that occurs internally or within the limits of a nation.
- Foreign or international Commerce. It is the one that occurs between two or more countries and is conditioned by the legislation of each nation and by international treaties.
In addition to its scope, the Commerceof products and services is directly related to technological advances, both for the diffusion of the business and for logistics.
The main types of Commerce include the following:
- Business to business (B2B). Its name in English means “business to business” and refers to corporate Commerce in large quantities or by unit between a supplying company, which is the supplier, and a demanding company, which is the customer.
For example : The technology company Intel provides both hardware products for the manufacture of devices and information technology solution services for different companies.
- Business to Consumer (B2C). Its name in English means “business to consumer” and refers to direct Commerce between companies and end consumers.
For example : The Walmart supermarket chainmarkets products from various vendors to individuals.
- Consumer to business (C2B). Its name in English means “consumer to business” and refers to direct Commerce between an individual or professional and companies.
For example : A graphic designer who sells his work to an image bank platform, such as Shutterstock. The platform, in turn, markets the content to individuals and other companies.
- Consumer to consumer (C2C). Its name in English means “consumer to consumer” and refers to direct Commerce between individuals, both for used and new goods.
For example : An entrepreneur who makes ceramic pieces and markets them exclusively through his social network.
- Wholesale Commerce. Corresponds to transactions of products in large quantities, or “wholesale“, between a company and other smaller businesses.
For example : A wholesale supermarket chain sells to the final consumer at one price and, in addition, sells at a cheaper price only to retailers who buy large volumes of merchandise to supply their stores.
- Retail commerce. Corresponds to transactions of products in small quantities or by unit between a store or merchant and final consumers.
For example : A neighborhood cafeteria that offers the service to consume in the store or orders to go.
Free Commerce agreements
Free Trade Agreements ( FTA) are agreements between two or more countries that allow the criteria of each region to be unified so that economic and tariff barriers are reduced, so that they can trade between their markets.
Some examples of free trade agreements are:
- Central American Common Market (MCCA).
Made up of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.
- Community and Common Market of the Caribbean (CARICOM).
Made up of Antigua and Barbuda, Bahamas, Barbados, Belize, Commonwealth of Dominica, Grenada, Guyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Montserrat, and Trinidad and Tobago.
- Andean Community of Nations (CAN).
Made up of Bolivia, Colombia, Ecuador and Peru.
- Southern Common Market (MERCOSUR).
Made up of Argentina, Brazil, Paraguay and Uruguay. Venezuela was a member but due to political and human rights issues it was suspended from 2017.
- Central American Integration System (SICA).
Made up of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and the Dominican Republic.
- African Economic Community (AEC).
Made up of Benin, Cape Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
There are different organizations of international rank that ensure the establishment of trade rules and understanding between nations that exchange goods and services. Among the main organizations, the following stand out:
- World Trade Organization (WTO). Created in 1995 with headquarters in Switzerland, it is made up of 164 member countries. Its objective is to guarantee fluidity and the greatest possible freedom, intervene to resolve differences and supervise policies in commercial exchanges between countries, among other functions.
- Organization for Economic Cooperation and Development (OECD). Created in 1961 with offices in Paris, it is made up of 38 states. Its objective is to promote public policies, in collaboration with governments, that contribute to the equality, well-being and prosperity of people. In addition, they establish international standards and propose solutions or improvements based on data obtained as results of various studies.
- World Bank (WB). It is a world association of five institutions, created in 1944 with offices in Washington DC, United States, and made up of 168 countries. Its objective is to work to reduce poverty and generate prosperity in developing countries.
Fair trade is a model of exchange of goods and services that prioritizes the well-being, dignity and rights of people, in addition to the preservation of the environment. It is a business model that promotes a paradigm shift in the productive and mass consumption system from practice, through various actions, such as:
- The sustainable use of natural resources (especially non-renewable ones).
- Production systems that minimize the negative impact on the environment.
- Decent work.
Fair trade contributes to optimizing resources, achieving production effectiveness and consuming responsibly. These are some of the measures that serve to stop the current consumption system, which leads to the depletion of non-renewable resources, overproduction and the accumulation of untreated waste.
Knowing the traceability of products and services implies that companies disclose their production process in a transparent and comprehensive manner. Obtaining raw materials from sustainable sources, hiring human labor under decent conditions and marketing that promotes the development of local entrepreneurs are some of the actions promoted by fair trade.