CHAPTER 1

INTRODUCTION

It has been a year since the pandemic happened. In addition to its impact on public health,

coronavirus disease 2019 (COVID-19) has caused extensive economic shock. Many businesses,

may it be small or big, are being affected. Some owners had to close their businesses because of

the loss of sales they experienced, while others are laying off their employees because they

cannot provide salaries anymore. And as a result, many people lose their jobs and, they are

facing a lot of problems aside from thinking ways on how they can sustain their needs or their

families need, they also having a hard time finding a new job. According to Philippine Daily

Inquirer, about 4.5 million Filipinos have lost their jobs in the year 2020, with the unemployment

rate at 10.4 percent - the highest in 15 years, the government reported. However, it did not stop

Filipinos to found ways to survive the pandemic. Filipinos are known for being resilient that is

why amidst widespread of coronavirus, they were able to make or create something that could

help them sustain their needs. And the reason behind that is, opening their own small and

medium-sized enterprises.

Small and Medium-sized Enterprises or SMEs are generally regarded as the primary

driving force behind today's global economies, both in terms of contribution to national GDPs

and employment. It refers to businesses with sales, properties, or multiple employees that fall

below a certain threshold. Conversely, each country classified the Small and Medium-sized

Enterprises, or SMEs, differently. In the Philippines, SMEs are classified as a business with 10 to

199 employees and assets between Php3 million to P100 million. SMEs and Micro enterprises

account for 99.6% of all the establishments in the country. According to the Asian Development

Bank, SMEs are the backbone of Asian economies, making up 98% of all enterprises and 66% of
the national labor force from 2007-2012. SMEs cover under Wholesale and Retail Trade,

businesses like a retail store, convenience store, mini-grocery store and even those shops selling

online like thrifted Clothes and such. These businesses are seeing a rise in the middle of a

pandemic.

The focus of this study is mainly on online stores, specifically the online thrift store.

Since there are some restrictions in going outside, and some are afraid to go outside their houses,

people prefer to buy their needs and want online. This will prevent them from getting a virus, it

is much safer than going to the physical store, and it will lessen their expenses because they

don’t need to travel to buy the things they need. Also, there are plenty of products that you can

discover online, and you can buy them at a lower price. Moreover, because of shifting from

purchasing in the physical store to purchasing online, it becomes hard for the sellers to monitor

everything. Since the focus is on the online thrift store, they are catering to a bunch of customers

because they offer products or items second-hand so, it is much cheaper. And this where

discrepancies happen. SMEs only have few employees and, most of their employees have two to

three positions in the business. So, there is a big possibility that a problem may occur. And this

led the researchers to conduct the study. The study aims to uncover the variables affecting the

monitoring of internal control and inventory management of online thrift stores that will give

readers an idea, especially their fellow students as well as the people who plan to open an online

thrift store or any business that they plan to start, about what to consider in monitoring the

internal control and inventory management of their business to prevent the problem to occur.
BACKGROUND OF THE STUDY

Inventory Management is vital to the overall performance of every businesses, most

especially to Small and Medium-sized Enterprises (SMEs) in order to remain competitive,

improve and succeed in the marketplace. It is one of the most overlooked management fields of

small businesses, particularly, if the business doesn’t have enough manpower to monitor

inventories. As defined by [ CITATION Ste10 \l 13321 ], Inventory Management is defined as a

framework employed in firms in controlling its interest in inventory. It refers to the process of

keeping track of and controlling the company’s inventory as it is purchased, processed, stored

and used. It controls the entire flow of goods- from purchase right through to sale- to ensure that

business owners have the right quantity of the right item in the right place at the right time.

Online selling of products nowadays have been more popular, particularly during the

pandemic, as a result, many businesses have moved their operations online to better serve their

customers. One of those businesses that goes online are the Thrift Stores. A thrift store is a shop

that sells used items such as clothing, books, and furniture at low prices, allowing the consumers

to save money. The most common of thrift stores that sells used items online were clothes.

Thrifting, on the other hand, has become increasingly common in recent years, with young

people from all over the world flocking to the trend. Thrifting has always been a more cost-

effective way of shopping, and buying second-hand clothes is a great way to promote sustainable

fashion. Nowadays, especially during the pandemic, online platforms such as Shopee, Facebook,

Instagram and the like, are now emphasizing the importance of thrift shops. This medium makes

it easier for consumers to purchase used goods. According to an article published by Inquirer.net,

the rise of thrift culture has resulted in the emergence of “Online Thrift Shopping”. Shifting to
selling of thrifted items in Physical Store to Online has become one of the struggles that sellers is

currently facing, especially in terms of monitoring its inventories since they cater a large number

of buyers. Thrift Shops have limited manpower, whether it be a supplier of thrifted items or a

seller, and because of this, discrepancies would arise. Thrift store have a diverse and exclusive

inventory, making them a unique retail environment from many other stores. Unlike with normal

retail shops, normal retail shop owners have a limited number of distinct items from a limited

number of suppliers, and they can repeatedly re-order similar items from the same suppliers, on

the other hand, thrift stores are absolute opposite of that since each items that are sold is one-of-

a-kind. This led to researchers to pursue this topic because they wanted to know how thrifted

stores manage its inventories, particularly that it has a different approach when it comes to

recording and managing its inventory, also, to monitor its internal control. In addition to that,

there are only few studies regarding thrift stores, particularly when it comes to its inventory

management and internal control, the researchers of this study would like to contribute

something with regards to this problem particularly the owners of thrift stores, so that they will

also have an idea or knowledge about what are the variables affecting the monitoring of internal

control and its inventory management and would come up with solutions that would help their

business.

Aside from being a researchers of this study, as an Accountancy students, it would be

also an advantage to gain in-depth knowledge regarding inventory, inventory management and

internal control. This would be a way for them to explore more about other factors or variables

that affects the management of inventories and its internal control, aside from the basics that they

have learned and being taught to them and gain more knowledge with regards to this certain
topic since monitoring of internal control and inventory management has been one of the most

problems that businesses are facing.

STATEMENT OF THE PROBLEM

This study aimed at determining the factors that affects the monitoring of internal control

and inventory management of online thrift store. Specifically, it sought answers to the following

sub-problems:

1. What is the profile of Online Thrift Store in terms of?

 Capitalization

 Number of Employees

 Types of Products

 Profitability

2. What is the Online Thrift Store’s level of implementation of Internal Control in terms of?

 Segregation of Duties

 Quality Control

3. What is the Online Thrift Store’s level of implementation of Inventory Management in terms

of?

 Physical Inventory Count

 Inventory Report

4. Is there is a significant relationship between Monitoring of Internal Control and Inventory

Management of Online Thrift Store?

5. Do Monitoring of Internal Control significantly affects the Inventory Management of Online

Thrift Store?

STATEMENT OF HYPOTHESIS

To answer the stated problems, the researchers formulated the following null hypotheses.

Is there is a significant relationship between Monitoring of Internal Control and Inventory

Management of Online Thrift Store?

There is no significant relationship between Monitoring of Internal Control and

Inventory Management of Online Thrift Store.

Do Monitoring of Internal Control significantly affect the Inventory Management of Online

Thrift Store?

Monitoring of Internal Control does not significantly affect the Inventory

Management of Online Thrift Store.

SIGNIFICANCE OF THE STUDY

This study will help the owners on how will they monitor the internal control and

inventory management on the online thrift stores. The result of the study will be a great benefit to

the following:

Thrift Store Owners. The importance of this study is to have a big contribution to them may

use the findings of the study to help them increase the profitability, to attract retailers and

suppliers. This may help them expand their business.

Stakeholders. This study may help the stakeholders to express and implement policies that will

help them to effectively manage their working capital.

Suppliers. This study may help them to shorten their work and will able to determine the needed

product to be delivered through its inventory management.

Retailers. This study may help them to increase their profits and have an opportunity to their

offer to meet their supplier’s target market. This may also help them to enhance the product's

image.

Customers. This may help customers to satisfy their demands to the business through its fast and

accurate services because of its records to the inventory.

Future Researchers. The findings of the study can help them for academic purposes especially

in the area of internal control and inventory management.

CONCEPTUAL FRAMEWORK

Independent Dependent

Profile of Online Thrift Level of implementation Level of implementation

store owners of Internal Control of Inventory
Management
 Capitalization  Segregation of
 No. of employees Duties  Physical
 Types of Products  Quality Control Inventory Count
 Profitability  Inventory Report

Figure.1 Conceptual Framework

The conceptual framework of the study wherein Profile of the owners, Level of

implementation of Internal control, and Level of implementation of Inventory Management

determines on what are the effects of monitoring the internal control and inventory management

of online thrift store. The model paradigm shows the relationship between the dependent and

independent variable. The independent variable contains the profile of the owner such as the

capital of the business, number of employees that were applied even in an online arrangement,

type of products that they are selling, and their profits. The dependent variables composed of the

statement of the problems in this study. The Researchers will input the Statement of the

Problems and the variables and will proceed in the validation of the research instrument. Survey

methodology and data gathering will be used as a validated research instrument, and analysis and

interpretation of the data gathered. This will measure the statement of the problem in the study.

SCOPE AND DELIMITATION

This study is primarily focused on knowing the variables in monitoring the internal

control and inventory management of an online thrift store. The researchers aim to understand

how these variables occur that led to business owners faced problems. The study is limited to

thirty (30) online thrift store owners. Researchers focus on finding out the important role of

social media platforms and consumers’ perception and behaviour towards how the seller will

initiate in advertising the product. This also covers the quality of the products, trust in online

payments, benefits of online shopping.

The researchers encountered a few limitations during the research process. Since we are

in the middle of the pandemic, everything should be done online. Aside from that, the lack of

time in doing the research.