Studying e-Commerce for accounting students

E-COMMERCE is the buying and selling of products or services over the Internet. Also known as electronic commerce, money and data are transferred over the Internet to facilitate the online transactions. Electronic funds transfer, online transaction processing, automated data collection, electronic data interchange, and mobile commerce are some of the tools used in e-commerce. With e-commerce, buyers and sellers are able to transact without the barriers of distance and time.

There has been an upward trend in the growth of e-commerce worldwide in the last 14 years. According to online providers of market and consumer data, buyers spend an average of 36% of their budget on online purchases and that the number of such buyers may reach 2.14 billion in 2021.

As more people turn to the Internet for their shopping needs, the future looks promising for e-commerce. These days, for instance, people aged 24 or younger are more comfortable with e-commerce. They find it less of a necessity to touch and try a product before purchasing. For this group of buyers, lifestyle branding and social media presence are more important considerations when deciding on their purchases. Influence from this young group of buyers is also spreading to the older generation who are becoming more open to online shopping. In Malaysia, examples of the more popular online marketplaces are Lazada, 11Street, Shopee and Lelong.

Impact on businesses

E-commerce generally requires only minimal infrastructure for the seller. On the other hand, companies using traditional business methods, spend significant amounts of money in setting up their physical infrastructure. Such brick and mortar businesses are increasingly finding themselves being outperformed by the more competitive e-commerce businesses.

The management of information systems and finance are some of the background processes in operating a business. While these activities are not as visible as the marketing functions, they are still nevertheless affected by the implications that e-commerce brings. For example, businesses need to consider various remittance and payment processes using fintech or financial technology in order to provide convenient payment methods, such as e-wallets and in-app purchases, for their online customers.

Accounting for e-commerce

A vital operational component of any business is the financials. For the e-commerce business, the accounting aspect can be a challenging task. Areas such as sales tax, inventory management, transaction volumes, sales returns and accounts receivables collection can be daunting when it comes to e-commerce transactions. Examples of the complexities include the imposition of a 6% service tax in Malaysia on digital service providers from 2020, integrating and automating the inventory management system, payment of various fees for online transactions that could considerably reduce profits, managing thousands of monthly transactions, and the handling and categorising of customer returns. These are just a few of the complexities of e-commerce which the accountant has to address in order to enable accurate financial decision making.

Additionally, the accounting profession needs to consider that e-commerce brings changes to organisational structures and business processes and strategies. For instance, information systems such as the Enterprise Resource Planning Systems (ERPs) which have simplified and automated accounting tasks, will mean that businesses will want to hire financial personnel who have working knowledge of such systems. Audit practices and procedures will also need to be adjusted to accommodate e-commerce transactions.

As can be seen above, a business would require qualified personnel with the skills and knowledge to manage the financial and accounting complexities that come with e-commerce. However, the lack of workforce with e-commerce expertise and knowledge has been cited as one of the major hindrances to rapid growth of e-commerce. The lack of qualified personnel prevents small e-commerce businesses from developing quickly as qualified personnel tend to work for larger corporations. Indeed, accounting professionals who are well versed in e-commerce are valuable as they can provide much needed financial perspectives when devising suitable strategies for the e-commerce business.

E-commerce courses can expose accounting students to how e-commerce relates to financial functions in the current business environment. Integrating e-commerce to accounting studies offers accounting students a more practical perspective of the environment that businesses operate in. In this way, learning institutions can meet the demands of employers sourcing for accounting graduates with knowledge and skills to handle e-commerce. The e-commerce component can be a core or elective subject or it can be integrated into the various finance and accounting subjects.

Universities are generally viewed as a source of potential recruits to fulfil the demands of businesses. One such university in Malaysia offering e-commerce-related subjects is Universiti Tunku Abdul Rahman in Perak. As part of its accounting undergraduate degree programme, subjects offered relating to e-commerce include Information Technology for Management, Accounting Information Systems, Applied E-Commerce, and Introduction to Internet of Things.


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