Premier University, Chittagong.

Title of the Re
Report
“Study of the Scope and Limitations
L s of Accounting for E-
E
C
Commerce Sector”

Submitted to
Ms. Sumana Podder
Lecturer (Discipline of Accounting),
Department of Business Administration,
Faculty of Business Studies
Studies,
Premier University, Chittagong.

Submitted by
Tasmia Jahan Tanima
Batch: 32nd
Discipline: Accounting
Program: BBA
Section: A
Student ID: 1503210108742
Date of Submission: July 11, 2020.
 Letter of Transmittal
11th July, 2020.
Ms. Sumana Podder
Lecturer (Discipline of Accounting),
Department of Business Administration,
Faculty of Business Studies,
Premier University, Chittagong.

Subject: Submission of Term paper report on “Study of the Scope and Limitations of
Accounting for E-commerce Sector.”

Dear Madam,

Here is the term paper report that I have been assigned on the topic as per your requirement.
The paper has been completed by the knowledge that I have gathered from my BBA program
and also you have instructed me.

I am thankful to you and would be happy if you read the report carefully and I will be trying
to answer all the questions that you have about the term paper report. I have tried my best to
complete this report meaningfully and correctly, as much as possible.

Thanking you.

Yours obediently,

………………………

Tasmia Jahan Tanima

Student ID- 1503210108742
Batch – 32nd
Discipline of Accounting
Program – BBA
Premier University, Chittagong.
 Acknowledgement
Thanks to Almighty Allah for giving me strength and ability to understand my supervisor’s
instructions, learn and complete the report.

I also admire all the help I have got from my Supervisor (Ms. Sumana Podder). I can’t deny
her supports to me for preparing the report since the first date I have started. Although, there
were some unpleasant situations have been occurred in the middle of allocated time. For
completing the Term paper report she has did all her works via online media. And has
directed me to do properly all the necessary works.

Due to the unexpected crisis my supervisor and I both of us could not meet in the university.
In fact, University was closed for uncertain time. But she has instructed me via online. I have
tried my best to obey her words properly. Again, I would like to Thanks my supervisor.
 Table of Content

Topic Details Page

Executive Summary…………………………………………………………………. 3
Chapter 01: Introduction 4
1.1Introduction………………………………………………………………………... 5
1.2Objectives………………………………………………………………………….. 5
1.3Methodology………………………………………………………………………. 6
1.4Scope………………………………………………………………………............. 6
1.5 Limitations…………………………………………………………………........... 7

Chapter 02: An Introduction to E-Commerce Sector 8

2.1Brief Introduction………………………………………………………………….. 9-10
2.2 History of E-commerce…………………………………………………………..... 10-13
2.3Definitions from different source………………………………………………….. 13-14
2.4The Advantages of E-commerce…………………………………………………… 14-17
2.5 The Disadvantages of E-commerce……………………………………………….. 18-19

Chapter 03: Uses of E-commerce with the Focus on Accounting 20

3.1Diverse sectors where E-commerce is used/ Application of E-commerce in
different sectors………………………………………………………………………... 21-25
3.2Following are the major business application areas where E-Commerce is used
widely………………………………………………………………………………….. 25-27
3.3Accounting for sectors where e-commerce is used………………………………… 27-28
3.4 Impact of Accounting on E-commerce in diverse sectors…………………………. 28-29

Chapter 04: Challenges of E-Commerce 30

4.1Overall Challenges of E-Commerce……………………………………………….. 31-33
4.2Ecommerce security challenge – The biggest and the most important challenge…. 33-36
4.3Challenges of E-commerce different companies face……………………………... 36
4.3.1 Amazon faces with the E-commerce…………………………… 36-37
4.3.2 Alibaba faces with the E-commerce……………………………. 38
4.3.3 Challenges for E-commerce Merchants (like Visa/MasterCard)………. 38-40
4.4 Challenges of E-commerce in Bangladesh………………………………………... 40-41
4.5 E-Commerce challenges that consumer face……………………………………… 41-44

Chapter 05: Application of E-commerce in Organization from the Perspective of

Bangladesh 45
5.1 Brief Introduction about E-Commerce Organizations in Bangladesh…………….. 46
5.2The lacking of Organizations in Bangladesh while using E-commerce with the
focus of Accounting……………………………………………………………………. 46-49
5.3More Accounting Challenges of E-commerce Organizations of Bangladesh face… 49-50
5.4 How to overcome the lacking regarding Accounting for Bangladesh E-commerce
using organizations or companies……………………………………………………… 50
5.4.1 They can choose an accounting solution………………………………………… 50-52

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5.5 The Future of Bangladesh Ecommerce…………………………………………….. 52-55
5.6 Conclusion and Recommendations………………………………………………… 55-56

References....................................................................................................................... 57-59

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 Executive Summary
The term paper has been considered on the topic, “Study of the Scope and Limitations of
Accounting for E-commerce Sector”. E-commerce business is not a new concept. Data have
used from online articles, journals, previous research papers, organizations’ practice,
challenges they face in their operation, why accounting practice is important for day to day
operation for e-commerce organizations for the purpose of achieving main objective. For
business companies who are doing E-commerce the report is worthy. And also the future
potential E-Commerce businesses can be helpful through the report’s solutions about problem
of E-commerce Accounting and recommendations. They can be known earlier about the
limitations and challenges they would face in future. As accounting is not an avoidable unit
for any kind of business. For E-commerce business also accounting should keep regularly. In
this report the report has been discussed details on E-Commerce business formation
categories.

The study is an academic research which contained small sort of information. There are some
advantages E-commerce business has from the perspective of business persons and
customers. Although, there are some disadvantages. The concept of E-commerce is not only
bounded in selling of goods or products. Financial accounting accrual is enterprise revenue
and expenses should be a relationship based on rights and responsibilities, through its
duration and impact of occurrence for accounting. The study has been focused deeply on all
the challenges of E-commerce business face which are common to the world-wide
marketplace. It has been focused on challenges and issues that different companies have
faced while keeping accounting related records.

Finally, the study has been recommended some probable suggestions that Bangladesh E-
commerce companies can follow. And by focusing and executing those companies can solve
their all problems regarding accounting and technological. They would not be back to date
from abroad anymore. Hoping that Bangladesh E-commerce sector has so many future
potentialities and E-commerce of Bangladesh in the near future will be a flourish sector than
today.

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Chapter 1
“Introduction”

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1.1 Introduction

The topic is about “Study of the Scope and Limitations of Accounting for E-commerce
Sector”. It can say that the study will focus on range of E-commerce with the focus of
Accounting and also figure out limitations that are available and may be for Bangladesh E-
commerce sector. Electronic commerce, commonly known as e-commerce, is the buying and
selling of product or service over electronic systems such as the Internet and other computer
networks. Electronic commerce draws on such technologies as electronic funds transfer,
supply chain management, Internet marketing, online transaction processing, Electronic Data
Interchange (EDI), inventory management systems, and automated data collection systems.
Modern electronic commerce typically uses the World Wide Web at least at one point in the
transaction’s life-cycle, although it may encompass a wider range of technologies such as e-
mail, mobile devices and telephones as well. Electronic commerce is generally considered to
be the sales aspect of e-business. It also consists of the exchanging of data to facilitate the
financing and payment aspects of business transactions. That’s the reason there is a major
influence of accounting in E-commerce business.

Even today, some considerable time after the so called ‘dot com/Internet revolution’,
electronic commerce (e-commerce) remains a relatively new, emerging and constantly
changing area of business management and information technology. In the emerging global
economy, e-commerce and e-business has increasingly become a necessary component of
business strategy and a strong catalyst for economic development. The integration of
Information and Communications Technology (ICT) in business has revolutionized
relationships within organizations and those between and among organizations and
individuals. Hence, E-commerce business should think about proper accounting system.
Accounting for E-commerce is no less than recent trend of the universe.

1.2 Objectives
 To determine the nature of E-commerce
 To examine how E-commerce can be used in the field of Accounting
 To identify the challenges of E-commerce related with Accounting

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1.3 Methodology

Approach to the Study: The study has been collected information from secondary sources
such as online articles.

Type of Research Design: The research is a descriptive research. There is no statistical

calculation for quantitative judgment. It is qualitative that’s why the research has been
followed the design of descriptive research. It has been made through collecting information
from online researches.

Data Collection from Secondary Sources: The research has been collected essential data
from available secondary sources. Such as-

 Internet ( Wikipedia, Investopedia and so on)

 Online research papers
 Journal articles
 International authors books (PDF)

Type of Data Used: As all of the data and information have been collected from secondary
sources. And those were available from past. Basically, we consider previously available data
as secondary data.

1.4 Scope

The term paper name implies it’s detailed. General purpose of the study was to make a
research on E-commerce and also focus on Accounting for that. Duration of the term paper is
almost four months. Here the study will cover minimum details about E-commerce sector
introduction, Uses of E-commerce with the focus on Accounting, Challenges of E-commerce
and Application of E-commerce in organizations from the perspective of Bangladesh. As “E-
commerce” reflects the word ‘E’ that meant Internet is also focused in the study. The
interested readers of the study may be future researchers related to the topic, my honorable
Supervisor, my other respected Teachers, some of my fellows or younger who would like to
read. Especially, the study has been focused on Bangladesh E-commerce business
organizations. Anyone can read and may be able to acquire significant information from the
study. They can get proper aid from the study by those they can take any action in their
practice.

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1.5 Limitations

The study has not been able to reach depth of the objective it has been planned before.
Though its objective and purpose was clear still, it has lack in details about the purpose. The
duration of the study was insufficient. Due to final examination the study might not able to do
it’s going task for almost thirty to forty days within the allocated time. There are some lacks
in physical meeting and physical conversation. As all the data have been used, were
secondary (collected from readymade papers and internet) data may be the study might not be
able to prepare or arrange as those should have been. And also accurately regarding the topic
of the study there was no previous researches have been conducted in the research area. Thus,
the limitations of the study are cleared that it may not be able to provide appropriate
information as per readers’ requirement. Lack of experience in doing such kind of study is the
main limitation of the study.

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Chapter 02-
“An Introduction to E-
Commerce Sector”

Page | 8
2.1 Brief Introduction

E-commerce means using the Internet and the web for business transactions and/or
commercial transactions, which typically involve the exchange of value (e.g., money) across
organizational or individual boundaries in return for products and services. Here we focus on
digitally enabled commercial transactions among organizations and individuals. E-business
applications turn into e-commerce precisely, when an exchange of value occurs. Digitally
enabled transactions include all transactions mediated by digital technology and platform;
that is, transactions that occur over the Internet and the web. E-commerce means electronic
commerce. It means dealing in goods and services through the electronic media and internet.
E-commerce involves carrying on a business with the help of the internet and by using the
information technology like Electronic Data Interchange (EDI). E-Commerce relates to a
website of the vendor on the Internet, who trades products or services directly to the customer
from the portal. The portal uses a digital shopping cart or digital shopping basket system and
allows payment through credit card, debit card or EFT (Electronic fund transfer) payments.
(net)

Hence, e-tailing is a subset of e-commerce, which encapsulates all “commerce” conducted

via the Internet. It refers to that part of e-commerce that entails the sale of product
merchandise and does not include sale of services, namely railway tickets, airlines tickets and
job portals.

There are three types of destinations that cater to retail sales:

i. Traditional retail- brick-and-mortar

ii. Corporatized retail- brick-and-mortar

iii. Corporatized retail- e-tailing

E-commerce businesses may also employ some or all of the followings:

o Online shopping for retail sales direct to consumers via Web sites and mobile apps,
and conversational commerce via live chat and voice assistants.
o Providing or participating in online marketplaces, which process third-party business-
to-consumer (B2C) or consumer-to-consumer (C2C) sales
o Business-to-business (B2B) buying and selling;
o Gathering and using demographic data through web contacts and social media

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 o Business-to-business (B2B) electronic data interchange
o Marketing to prospective and established customers by e-mail or fax (for example,
with newsletters)
o Engaging in retail for launching new products and services
o Online financial exchanges for currency exchanges or trading purposes (Wikipedia)

Electronic commerce or e-commerce (sometimes written as E-Commerce) is a business

model that lets firms and individuals buy and sell things over the internet. E-commerce
operates in all four of the following major market segments:

 Business to business

 Business to consumer

 Consumer to consumer

 Consumer to business

E-commerce, which can be conducted over computers, tablets, or smart phones, may be
thought of like a digital version of mail-order catalog shopping. Nearly every imaginable
product and service is available through e-commerce transactions, including books, music,
plane tickets, and financial services such as stock investing and online banking. (
investopedia)

2.2 History of E-commerce

History of E-commerce dates back to the invention of the very old notion of "sell and buy",
electricity, cables, computers, modems, and the Internet.

1970-1979: The ability to use these technologies appeared in the late 1970s and allowed
business companies and organizations to send commercial documentation electronically.

1980-1989:

1990-1999: E-commerce became possible in 1991 when the Internet was opened to
commercial use. Since that date thousands of businesses have taken up residence at web sites.
At first, the term E-commerce meant the process of execution of commercial transactions
electronically with the help of the leading technologies such as Electronic Data Interchange
(EDI) and Electronic Funds Transfer (EFT) which gave an opportunity for users to exchange

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business information and do electronic transactions. Although the Internet began to advance
in popularity among the general public in 1994, it took approximately four years to develop
the security protocols (for example, HTTP) and DSL which allowed rapid access and a
persistent connection to the Internet. It was founded in 1994 by Jeff Bezos and was one of the
first American E-commerce companies to sell products over the Internet. One more company
which has contributed much to the process of E-commerce development is Dell Inc., an
American company located in Texas, which stands third in computer sales within the industry
behind Hewlett-Packard and Acer. Launched in 1994 as a static page, Dell.com has made
rapid strides, and by the end of 1997 was the first company to record a million dollars in
online sales. The company's unique strategy of selling goods over the World Wide Web with
no retail outlets and no middlemen has been admired by a lot of customers and imitated by a
great number of E-commerce businesses. The key factor of Dell's success is that Dell.com
enables customers to choose and to control, i.e. visitors can browse the site and assemble PCs
piece by piece choosing each single component based on their budget and requirements.
According to statistics, approximately half of the company's profit comes from the web site.
In 1999 Jeff Bezos was entitled as the Person of the Year by Time Magazine in recognition of
the company's success. Although the company's main headquarters is located in the USA,
WA, Amazon has set up separate websites in other economically developed countries such as
the United Kingdom, Canada, France, Germany, Japan, and China. The company supports
and operates retail web sites for many famous businesses, including Marks & Spencer,
Lacoste, the NBA, Bebe Stores, Target, etc.

2000-2009: In 2000 a great number of business companies in the United States and Western
Europe represented their services in the World Wide Web. At this time the meaning of the
word E-commerce was changed. People began to define the term E-commerce as the process
of purchasing of available goods and services over the Internet using secure connections and
electronic payment services. Although the dot-com collapse in 2000 led to unfortunate results
and many of E-commerce companies disappeared, the "brick and mortar" retailers recognized
the advantages of electronic commerce and began to add such capabilities to their web sites
(e.g., after the online grocery store Web van came to ruin, two supermarket chains,
Albertsons and Safeway, began to use E-commerce to enable their customers to buy groceries
online). By the end of 2001, the largest form of E-commerce, Business-to-Business (B2B)
model, had around $700 billion in transactions. After the dot-com collapse Amazon lost its
position as a successful business model, however, in 2003 the company made its first annual

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profit which was the first step to the further development. According to all available data, E-
commerce sales continued to grow in the next few years and, by the end of 2007, E-
commerce sales accounted for 3.4 percent of total sales. In 2008 Amazon penetrated into the
cinema and is currently sponsoring the film "The Stolen Child" with 20th Century Fox.
According to the research conducted in 2008, the domain Amazon.com attracted about 615
million customers every year. The most popular feature of the web site is the review system,
i.e. the ability for visitors to submit their reviews and rate any product on a rating scale from
one to five stars. Amazon.com is also well-known for its clear and user-friendly advanced
search facility which enables visitors to search for keywords in the full text of many books in
the database. E-commerce has a great deal of advantages over "brick and mortar" stores and
mail order catalogs. Consumers can easily search through a large database of products and
services. They can see actual prices, build an order over several days and email it as a "wish
list" hoping that someone will pay for their selected goods. Customers can compare prices
with a click of the mouse and buy the selected product at best prices. Online vendors, in their
turn, also get distinct advantages. The web and its search engines provide a way to be found
by customers without expensive advertising campaign. Even small online shops can reach
global markets. Web technology also allows to track customer preferences and to deliver
individually-tailored marketing.

Amazon.com, Inc. is one of the most famous E-commerce companies and is located in
Seattle, Washington (USA). At the outset Amazon.com was considered as an online
bookstore, but in time it extended a variety of goods by adding electronics, software, DVDs,
video games, music CDs, MP3s, apparel, footwear, health products, etc. The original name of
the company was Cadabra.com, but shortly after it become popular in the Internet Bezos
decided to rename his business "Amazon" after the world's most voluminous river. Amazon
is one of the first E-commerce businesses to establish an affiliate marketing program, and
nowadays the company gets about 40% of its sales from affiliates and third party sellers who
list and sell goods on the web site. In 2007, Fortune magazine ranked Dell as the 34th-largest
company in the Fortune 500 list and 8th on its annual Top 20 list of the most successful and
admired companies in the USA in recognition of the company's business model.

2010-2019: History of E-commerce is a history of a new, virtual world which is evolving

according to the customer advantage. It is a world which we are all building together brick by
brick, laying a secure foundation for the future generations.

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History of E-commerce is unthinkable without Amazon and E-bay which were among the
first Internet companies to allow electronic transactions. Thanks to their founders we now
have a handsome E-commerce sector and enjoy the buying and selling advantages of the
Internet. Currently there are 5 largest and most famous worldwide Internet retailers: Amazon,
Dell, Staples, Office Depot and Hewlett Packard. According to statistics, the most popular
categories of products sold in the World Wide Web are music, books, computers, office
supplies and other consumer electronics. (Kenneth C. Laudon, 2008)

2.3 Definitions from Different Sources-

According to Pallavi Dinodia- Electronic commerce, commonly known as e-commerce,

consists of the buying and selling of products or services over electronic systems such as the
Internet and other computer networks.

The World Trade Organization defines e-commerce as, "e-commerce is the production,
distribution, marketing, sales or delivery of goods and services by electronic means."

Roger Clarke’s definition of E-Commerce is “The conduct of commerce in goods and

services, with the assistance of telecommunications and telecommunications-based tools”

Some people use the term `electronic trading' to mean much the same thing. Others use
'electronic procurement', 'electronic purchasing' or 'electronic marketing'.

Note, however, that 'EC' is often used in a much broader sense, to mean essentially the same
as 'electronic business', as defined above. Examples of EB that are not EC include registration
and licensing processes, student enrolment, and court administration.

Note that EC comprises many segments, some of which have their own names. For example:

 'Electronic catalogues' refers to means whereby sellers can communicate their

offerings to potential buyers;

 'Electronic data interchange (EDI)' refers to a particular family of standards for

expressing the structured data that represent EC transactions; and

 'Electronic auctions' for a particular set of mechanisms for setting prices.

According to Wikipedia - E-commerce (electronic commerce) is the activity of

electronically buying or selling of products on online services or over the Internet. E-

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commerce is in turn driven by the technological advances of the semiconductor industry, and
is the largest sector of the electronics industry. (Wikipedia)

In other words, it is a business that electronically manages both the collections and payments.

According to Investopedia: Modern electronic commerce typically uses the World Wide
Web for at least one part of the transaction's life cycle although it may also use other
technologies such as e-mail. Typical e-commerce transactions include the purchase of online
books (such as Amazon) and music purchases (music download in the form of digital
distribution such as iTunes Store), and to a less extent, customized/personalized online liquor
store inventory services. There are three areas of e-commerce: online retailing, electronic
markets, and online auctions. E-commerce is supported by electronic business.

A more complete definition is: E-commerce is the use of electronic communications and
digital information processing technology in business transactions to create, transform, and
redefine relationships for value creation between or among organizations, and between
organizations and individuals.

The main types of electronic commerce are: business-to-business (B2B); business to-
consumer (B2C) business-to-government (B2G); consumer-to-consumer (C2C); and mobile
commerce (m-commerce).

One of the most popular activities on the Web is shopping. It has much allure in it — they
can shop at their leisure, anytime, and in their pajamas. Literally anyone can have their pages
built to display their specific goods and services. (Tanzila & Muhammad, 2012)

2.4 The Advantages of E-commerce

Advantage #1: E-commerce overhead is low

The cost of rent, utilities, and employees makes retail space expensive. Lower operation costs
make it possible for many E-commerce sellers to beat out brick-and-mortar prices.

Online retailers need less space — they can run an E-commerce site out of a garage and use
drop shipping to avoid a warehouse full of inventory. As an online store grows, so will the
need for employees, but the stakes are lower and adjusting is easier when they’re not tied to a
commercial lease. (Ahangari, 2013)

Advantage #2: Online stores are always open

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An online shop never closes. Whether it's a holiday, a blizzard, or some other event keeping
people home, they can place an order around the clock, from anywhere. For those who work
non-traditional hours and would rather stay home, shopping online is a convenient
alternative.

Advantage #3: E-commerce customers aren’t limited by geography

Whether it’s someone from the next town, the next state, or even across the ocean, an online
store has the potential to reach customers worldwide. This is especially important for
specialized businesses that may not have a big, local audience, but have eager customers
scattered across the globe.

The proliferation of mobile devices gives people the power to purchase on the go — right in
the palm of their hand. There’s never been a time when the impulse to buy has been easier to
indulge.

Advantage #4: Promoting featured products on E-commerce is easy

Making changes to a website is simpler than rearranging a physical space.

Take Zappos for example. In the screenshot below, there's a summer promotion for women’s
sandals followed by a block of popular categories. Depending on the season or new items
they want to feature, Zappos can change the design of their landing page without much effort.

A customer’s path is harder to control in a physical space than it is online. Promotions and
specials can be front and center when customers hit their landing page.

Advantage #5: E-commerce allows for a customized user experience

Data about a customer’s past purchases and online activity offer insight into their interests
which can be used to deliver a personalized experience. Sharing products targeted to a
shopper’s tastes is a way to appeal to customers with a deeper level of familiarity.

Organization’s horizontal scroll features more items to explore showing related products —
in this case a nice selection of music-related products since it’s attached to the account of a
music nerd. Their use of customer data to create a custom shopping experience is one of
many facets of Amazon’s success.

Advantage #6: Purchasing is instantaneous

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The site for high-end fashion retailer Tabitha Simmons is full of stunning product shots,
helpful descriptions, and easy navigation, making the path to checkout seamless.

Shopping offline requires walking around, finding what they’re looking for, making your way
to the checkout, and standing in line — most of which you can skip online. E-commerce was
made for optimal convenience.

Advantage #7: Retargeting and remarketing can further sales

Retargeting uses cookies from previous visits to display ads. Even if someone doesn’t make a
purchase, retargeting is a marketing tactic that can gain business by keeping their brand in
front of potential customers. They’ll see retargeting ads on websites unrelated to the page
they’ve visited.

Take this ad on the Onion from the music retailer Sweetwater, for example. Because of my
previous interactions on their site, a very specific ad for electronic music instruments popped
up. Inviting people back to their site with retargeting ads brings them that much closer to
making a purchase.

Remarketing uses the information from someone’s past purchases and site interactions to
send emails about sales and promotions for related products. Remarketing is a more laser-
focused marketing tactic that requires a customer’s email address.

Zappos uses remarketing to their advantage, emailing ads like the one below. I’ve bought
skate shoes from Zappos before, and this email promoting Vans certainly speaks to me as part
of this target demographic.

Advantage #8: E-commerce is a great way to gather customer information

How many of us automatically say, “no” when a cashier asks for our email address at
checkout? And how many of us automatically enter this same personal information and more
online? I know I’m guilty.

Newsletter signups and other forms that gather information are keys to building a contact list
— and they’re way more efficient than a clipboard and pen on a countertop or having
employees ask.

REI uses a simple, unobtrusive email signup to send in-store news and promotions. E-
commerce simplifies staying in touch with their audience.

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Advantage #9: E-commerce tracks a customer’s journey

Data from resources like Google Adwords and site analytics can tell them how someone
found them. Unlike traditional advertising where ROI can sometimes be murky, data gleaned
from analytics gives them insight into where people came from and what they’re looking for.

In addition to online advertising, SEO can help people find them through organic searches.

Advantage #10: It’s easy to scale up or down

Expanding or decreasing their E-commerce business is easy, especially if they use drop
shipping to eliminate the need for a lot of space. Adding items or narrowing their store down
to the top sellers is a simple process. Expanding or downsizing is more complicated when
they have retail space.

Advantage #11: E-commerce sites can handle high-volume orders

If their business has a sudden surge of action because of something like a shootout on social
media, most hosting is set up to handle an increase in traffic. Retail spaces can get
overwhelmed scramble to deal with a sudden spike in business.

Advantage #12: E-commerce attracts customers through content

Clear, useful content will help them reach potential customers. Tutorials and product demos,
blogs, and other digital media give value to their audience and position their brand as an
authority in industry. When people see that they know what they’re talking about, they’ll trust
their product descriptions and feel confident purchasing from them.

Sweetwater’s blog gives practical information about all things music and recording, and
promotes the products they carry.

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2.5 The Disadvantages of E-commerce

Disadvantage #1: The internet can break

The sky is blue, server’s crash, and websites go down. When people’s need for instant
gratification is derailed, it can be hard to win them back. A broken site sends the message that
you’re not reliable.

Not only can the architecture that holds a site together fail, but there’s also the looming
presence of identity theft. Sharing your credit card number, even on a trustworthy-looking
site, is still scary for a lot of people.

Disadvantage# 2: It takes effort to accurately portray your products

Chewy has plenty of photos full of color and detail that show off their pet-related toys and
products. Using multiple photos from different angles fills in many of the blanks created by
an online experience.

One of the advantages of retail is that people can interact with your products, inspect
workmanship, and see how something fits. An online store relies on photos to capture a
product’s details. Poor-quality images can skew color and misrepresent a product. Product
returns are what happen when what shows up in someone’s mailbox doesn’t match what they
saw online. And an unhappy customer, as we all know, has plenty of time to bash your brand
on social media.

Disadvantage#3: There’s a lot of competition online

We can't talk about the competition without talking about Amazon. Their scope and
bottomless pockets make them difficult to outdo. Amazon isn't the only corporation making
business tough for smaller retailers — there’s plenty of competition in almost every niche.

There are businesses whose ad budgets snatch up the high-profile keywords on Google
Adwords and push the price for clicks to ridiculous heights. There are retailers who can offer
better or free shipping. And there’s always the battle for who has the lowest prices.

Setting yourself apart from the competition means finding different marketing perspectives
and building a strong brand identity. With so many vying for the same target audience, you
need to make sure you're not overlooked in a sea of sameness.

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Disadvantage #4: Customers expect instant service

In this age of digital media, our brains are conditioned for immediate gratification. If an
Instagram post sits unlike for more than a minute, a text or email goes unanswered for more
than an hour, or a video doesn't load immediately, our patience runs thin.

This expectation for immediate feedback extends to every facet of our online interactions.
Our expectations as consumers are unrealistic, and when they aren't met, it's all too easy to
voice one’s discontent online. (Emmanuel, Quimbo, & Zorayda Ruth, 2000)

Disadvantage #5: Shipping can be unpredictable

Lost or stolen packages, broken merchandise, and slow delivery make shipping products
challenging. No matter how well or how quickly products are packaged, there’s no guarantee
they’ll reach their destination in tip-top shape or on time.

Disadvantage #6: There’s unlimited time to comparison shop

If you see a must-have item in the mall, you're likely to buy it on the spot. E-commerce gives
people the freedom to take their time. This unrestrained shopping experience leaves a huge
window to comparison shop — frugal online shoppers will have no problem finding the best
deals.

This leaves online retailers are in a constant state of competitive pricing, sometimes scraping
by with the tiniest profit margins for the pleasure of repeat business.

Disadvantage #7: Retails spaces aren’t going away

According to Forbes, E-commerce sales represent slightly less than 10% of total retail sales.
Despite everything we hear about the demise of shopping malls, there are many brands who
maintain a strong retail presence.

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Chapter 03
“Uses of E-commerce with
the focus on Accounting”

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3.1 Diverse sectors where E-commerce is used or Application of E-commerce in
different sectors

Nowadays, anything is affected by the internet, especially commerce, create value directly
between people, so transfer commerce to e-commerce is necessary among competitive market
not only offline channel but also in the online channel. Companies need to the public their
information and promote their brand, retailers find out it is easy to gain profit through E-
commerce. (A, K., & G., 2007)

a) Retail and Wholesale

It is the best common application of E-commerce, used by millions of users all over the
world. Online Retailing is basically the selling of goods from B2c through electronic stores
that are designed using the electronic catalog and shopping cart model, it grows quickly.
Simply, E-commerce has opened up an entirely new way for people to shop and deal, retail
and wholesale easily penetrate to our life because of its convenience and transparent.

With the ability to truly understand your customers' buying behavior, combined with insights
regarding your product characteristics, Option can provide you with the possibility to identify
the most efficient promotions, guarantee product availability, improve margin, and boost
sales.

In today’s situation where your products, prices, and availability easily can be compared with
your competitors globally with just a mouse click, the competition is tough, no matter if you
have an e-commerce, multichannel (omnichannel), retailer or wholesaler set-up. Your
customers expect instant delivery, to any geographical location, with the lowest possible cost.
You also need to adopt a unique customer experience in terms of what to promote, how to
present your products, and continuously improve your rating on the search engines. Finally
there’s a massive amount of data generated that is supposed to help you but the question is
how? In this situation things can easily be seen as impossible, which is true if you do not
adopt new ways of working.

We combine our experience, your knowledge together with standard applications for
advanced analytics and supply chain optimization. This means that we can help you

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understand your future demand and what activities to run to increase sales, while also
optimizing the inventory you need to have in order to guarantee availability over time.

When focusing on sales growth we provide with information such as:

 What different promotion attributes such as discounts, advertising, extra display has
true impact on your sales and to what extent?

 How should you combine them for future promotions in order to boost sales for your
various types of customers and how much sales growth can you expect?

 What products and offerings should be exposed for the individual customer to
improve the customer experience?

In these cases, we are equipped to handle large amounts of data. Our solutions use advanced
analytics in order to find correlations and connections that are impossible for the human eye
to detect. These insights can then be transformed into decisions when setting up future
promotions, loyalty programs and newsletters. To improve margins, we work with our
service optimization method to understand your demand variability in a completely different
way compared to traditional methods. Since this approach is highly automated, it fits a
business environment with significant changes in the product portfolio or a large spread of
product portfolios perfectly. Especially if there are large amount of products, wide spread of
customer demand, high volume down to slow movers, a lumpy demand pattern, or short
product life cycles. Through this, we are able to identify what safety stock levels you need to
have in order to guarantee availability over time and at the lowest possible cost.

b) Online Marketing

In building and developing the brand of each company, besides traditional advertise activities
like TV, newspaper, etc. Internet in general and E-commerce in particular play an important
role in the success of marketing activities. Specifically, E-commerce help users collect the
customers' data: Consumer behaviors, preferences, needs, buying patterns and so on. It means
the internet can do market research, monitor customer behaviors and market trends. The way
it uses data of customers is intellectual, when somebody has habitually bought tampon for a
fixed period of time and for a long time she doesn't buy any tampon from that sites but the
account still actives, that store will offer her a good deal of tampon or it can guest that she
pregnant and offer her baby clothes. Not only data collection activities but also companies

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can use E-commerce for publishing information, it can attract customers and create their
brand awareness, which is an important factor when among so many competitors.

Online Marketing is the act of driving awareness and action toward a business that sells its
product or service electronically. Ecommerce marketers can use social media, digital content,
search engines, and email campaigns to attract visitors and facilitate purchases online.

Ecommerce marketing is just one community of marketers who can use the principles of
digital and inbound marketing to convert visitors into customers. However, ecommerce
marketers don't necessarily use these marketing channels the same way a traditional brand or
content marketer would. To give you a sense of what an ecommerce marketing strategy looks
like, here are some common marketing channels and how you'd use them to build an online
store.

c) Social Media Marketing

Brands, publishers, contractors, and growing businesses all launch pages on today's most
popular social networks to connect with their audience and post content that audience is
interested in. As an ecommerce marketer, you can do the same thing, but the campaigns you
run might look a bit different, and not every social network is a good fit for your needs.

Ecommerce websites are highly visual — you have to show off the product, after all — so
your success on social media depends on your use of imagery to drive attention and traffic to
your product pages. Instagram is an appropriate platform for ecommerce businesses because
it enables you to post sharp product photography and expand your product's reach beyond its
purchase page. You can take your social media posts a step further by creating stoppable
content, which is content that enables visitors to buy right away. That can include anything
from strategically placed display ads within a social feed to additional tags that take users
directly to a shopping cart. These methods help you eliminate friction from the buying
process. An ecommerce business is no stranger to product reviews, either. Using a Facebook
Business Page to share product praise is a perfect fit for businesses that already solicit
customer reviews across their online store.

d) Finance

The development of E-commerce led to financial development, a hard-to-see application of

E-commerce. E-transactions are the necessary part of E-commerce. And to a large extent,

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financial companies also use E commerce there are features like transferring of money from
and to their own accounts, paying online bills and also e-banking. Stock is also an application
of E-commerce finance, no more standing at stock exchanges to follow any details of your
stock; nowadays everything is up-to-date every second. The statistic shows in 2016, nearly
60% of China’s 700 million internet users used online banking to purchase e-commerce items
— a growth of 16% from the previous year, in 2017, that number is 13.8%, and YOY keep its
value year to year, average 15%. With this development speed cash less prospect is in our
mind.

It has been transformational in how e-commerce impacts banking. Trips to a physical bank
branch are no longer necessary by utilizing the vast array of online services offered by major
banks. This includes the basics of direct deposits of paychecks, online bill paying, and many
other convenient banking services. Financial service companies that compete with banks can
offer many things, besides basic banking, to their customers online. One powerful application
of e-commerce is to provide financial services that extend the things offered by banks.
Fintech companies may offer regular banking services plus other services, such as trading in
foreign currency exchange (Forex), investments, and insurance. These offers are possible to
make in ways that are cost-effective and highly-competitive.

e) Manufacturing

Supply chain operations also use E-commerce. There are companies that create an electronic
exchange and facilitate purchase and sale of goods, trading market information and back
office information like inventory control. This is a solution that speeds up the flow of the raw
materials and finished goods among the business community members. Manufacturing
requires a web of various components, contracts personnel etc working intricately together
and in synch in order to produce goods or services. Manufacturing requires components,
assemblies, transportation, storages, paper works, etc. E-commerce applied to the supply
chain management process helps in reducing the overall costs drastically and improves
quality and efficiency by automating most of the supply chain.

f) Digital Distribution

It is the distribution of digital media such as games, music, videos, software. Online Content
distribution may be streamed or downloaded. One of the most popular streamed channels is
Netflix, a successful replacement of traditional television and with the downloaded channel,

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we all know the existence of Amazon e-book, which is delivery e-book to us through the
internet and we can access everywhere, convenience features of digital distribution. With the
development of the digital distribution, we're now enjoying entertainment on the internet and
hard to see music CD, movie DVD or video game disc.

E-Distribution is a distribution concept which refers to electronic buying and selling of goods
and services over a public network without the use of physical media, normally by
downloading from the internet straight to a consumer's device.

For E-Distribution it is possible to start from a wider and a narrower definition. The first
refers to the online ordering in conjunction with the physical delivery of the goods. In the
narrower definition, the products ordered online via the Internet that is delivered in digital
form. In this case we speak of digital distribution. The term E-Distribution is typically
applied to freestanding products; downloadable add-ons for other products are more
commonly known as downloadable content. An online service for distribution of application
software is usually called application store or app store. The Content of E-Distribution can be
books, music, software, games or multimedia content, also. The technological advance of
recent years makes it more significant strengths of the Internet for the distribution digital
products. The digital distribution offers the possibility of a global market to operate,
continuous availability of the products to guarantee the first time and creates a direct access
to consumers. E-Distribution is emerging as the most important distribution tool in recent
times. In fact, it has the potential of altering the very way business is conducted.

3.2 Following are the Major Business Application Areas Where E-Commerce is used
widely

1. Sale, Purchase of Goods:

By using E-Commerce, consumers can buy the various products and services from the
different manufacturers. Industries can purchase raw materials, components etc. using E-
Commerce. Sellers can sell their products by using E-commerce.

2. Real Estate Market:

Online real estate services are provided by websites that show listing of houses, shops and
flats put up for sale and rent. Online real estate sites play supporting role for property dealers.

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Now builders can use virtual reality technology on their website to demonstrate three
dimensional floor plans to buyers. This helps real estate companies to attract buyers. So
transactions normally can be initiated online but materialize offline in a face to face contact
of parties. Many websites are providing online real estate services.

3. Online Banking:

Online Banking is also known as electronic banking, Net banking, virtual banking and
internet banking online banking is defined as automated delivery of new and traditional
banking products and services through electronic and interactive communication channels.
Customers can access online banking services by using electronic devices like personal
computer, laptop, palmtop, ATM, kiosks etc.

4. Delivery of Goods:

E-Commerce allows the delivery of products. For example, the computer software is directly
downloaded by the software manufacturer on computer of the customer.

5. Import and Export:

Electronic payments are playing a great role in import and export business. The internet has
simplified the import and export business. By using E-commerce importers can make
enquiries about the products, their manufacturers, price, quality, other terms and conditions
etc.

Exporters can also make enquiries about suitable customers. Payments can be made by
electronic modes including digital means like internet payment or internet money transfer.

6. Supply Chain Management:

A supply chain is a set of relationships between a number of companies who have a

symbiotic relationship with each other in that one company supplies commodities or services
to other companies which, in turn, supply commodities or services to other companies, and so
on.

An important point about an application such as this one is that information should be kept
confidential as it flows across the internet.

7. E-Tailing:

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E-tailing refers to retailing over the internet. Thus an E-tailer is a B2C business that executes
a transaction with the final consumer. E-tailers can be pure play businesses like
amazon(dot)com or businesses that have evolved from a legacy business, Tesco(dot)com. E-
tailing is a subset of e-commerce.

3.3 Accounting for Sectors Where E-commerce is used

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 categorizing 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 organizational 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 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

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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.

3.4 Impact of Accounting on E-commerce in Diverse Sectors

E-commerce is conducted through a network of business activities, belonging to the network

for business operations and management information systems of its nature. E-commerce
support including computer technology, network technology, communication technology, as
the subject of e-commerce, parties to the transaction may abandon the traditional "one on
one, face to face" transactions, and instead online trading model, not only greatly simplified
transactions process, while promoting commercial activities carried out smoothly. In recent
years, the development of e-commerce, serious impact on traditional accounting systems, and
digital business environment also influence the decision of the accounting work environment.

Mainly in the main assumptions and accounting assumptions phases two aspects: First, the
accounting entity belonging to a particular organization refers to the range of activities of
accounting tool provides for a summary of all the accounting elements of special space,
which generally refers to business entities inner space. With the development of network
technology and computer technology, more and more companies have set up Internet
companies. However, these types of companies without a clear spatial extent, and no fixed
form, the traditional concept of the accounting entity assumption is not clear. Second, the
impact on accounting assumption phase. E-commerce to break the traditional accounting of
time, space limitations, to achieve real-time financial information, dynamic collection,
dissemination and use, and thus more refined division of accounting period. This change to a
certain extent simplified accounting period, in time to provide data analysis for business
decision-making and management in order to facilitate appropriate responses made. In the
traditional financial accounting, historical cost principle is one of the important principles.
Historical cost principle with strong objectivity, reliability and verifiability, and thus use
more common. But the historical cost information under specific conditions likely to provoke
criticism from different quarters, such as inflation. In the current network environment, the
historical cost principle more vulnerable. First, the network enterprise management products
for the financial products, such as securities, stocks, etc., there is a big change in the market
price, so that the historical cost financial accounting information derived from the lack of
sufficient accuracy. Secondly, the network cannot determine the time of dissolution of the

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company. Some Internet companies usually only the presence of a relatively short time,
although under these conditions, the point between historical cost and the liquidation of short,
but this non-sustainable business model cannot be the historical cost of the cash flow
information is a true reflection. Third, the historical cost is a static measurement attribute, if
the company cannot be combined with market conditions, the timely adjustment of the
development strategy, the financial sector would be unable to provide the historical cost
information as a basis for decision-making.

Financial accounting accrual is enterprise revenue and expenses should be a relationship

based on rights and responsibilities, through its duration and impact of occurrence for
accounting. The current cost and income payments will not affect the case, only the cost and
revenue moneys belonging to the current period to the current period as the revenues and
expenses for processing. First, the impact of e-commerce accounting assumptions phases, so
that the basic form is consistent with the accounting period during the transaction of its
business, effectively reducing the deployment of a variety of problems occur, such as the
spread of cross-distribution, so as to be more reasonable, clearly of fees and costs allocated.
Secondly, the process of e-commerce, mainly in the electronic payment way payment, online
real-time payment to complete the balance of payments, to ensure that its trading results will
not pay for the phenomenon did not occur. A document written summary financial report
belong to business results and financial condition, comprising income statement of changes in
equity, balance sheet and financial situation, the current flow statement, financial statements
and other schedules and notes. Financial reporting mainly serve the users of corporate
information, financial information requested must have a very high accuracy, and requires the
ability to timely update, at any time to provide the latest financial information. The traditional
manual operation in this regard would often mistakes, omissions, etc., relying on e-commerce
and computer technology and network technology, automated financial reporting statements
generated by computer superb computing power, effectively ensure the accuracy of financial
information, help updated in real time financial information to provide timely basis for
decision-making enterprise management and decision-making.

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Chapter 04-
“Challenges of E-Commerce”

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4.1 Overall Challenges of E-Commerce

1) An absence of online identity verification: When a visitor goes to an e-commerce

website and signs up, the portal is unaware of the customer, bar the information they entered.
Whether the customer information is genuine or not remains questionable. Cash-On-Delivery
(COD) purchases using an invalid or fake phone numbers or addresses can lead to huge
revenue losses.

2) Delivering an omnichannel customer experience: In today's world, customers can reach

out through any number of touch-points. They may visit your website, contact your agent,
leave a message on your social media page, shop from your store or contact you through a
live chat or a messaging platform.

According to ecomdash, “Any business that isn’t moving toward an omnichannel retailing
strategy will likely be left behind by its online savvy competitors.”

3) Competitor Analysis: “You can’t look at the competition and say you’re going to do it
better. You have to look at the competition and say you’re going to do it differently.” – Steve
Jobs

In a competitive environment, others will offer the same products and services as you. Unless
you have a strategy to differentiate yourself, it is difficult to survive.

4) Stuck in at the old school way of approach to selling: The reason many e-commerce
companies find online selling so difficult is that they are, ironically, stuck in the past. Most of
them lack the necessary insight into customer behavior and buying patterns, data which can
help them thrive in the current e-commerce environment.

5) Shopping cart abandonment: Shopping cart abandonment is a huge issue. Even e-

commerce giants are not immune to this problem.

For instance, when brick and mortar heavyweight Nordstrom started an e-commerce portal,
they witnessed big losses from abandoned carts. The tedious and bug-filled checkout process
was causing customers to flee in their droves.

Nordstrom had to come up with a new checkout design, turning it into a two-step process.

6) Maintaining customer loyalty: Even with the best-designed website out there, without
customer trust and loyalty, the business is bound to struggle.

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Creating new customers and then maintaining them requires a massive effort. One of the
reasons e-commerce companies in particular face a challenge in building customer trust and
loyalty is the seller and buyer don’t know each other. Nor can they see each other. Thus, the
customer is robbed of the senses they would normally rely on in face to face transactions.
This can only be made up for through time and effort. Across multiple transactions,
eventually, the company can build this trust and loyalty.

7) The headache of product return and refund: A survey by comscore and UPS, showed
63% of American consumers check the return policy before making a purchase and 48%
would shop more with retailers offering hassle-free returns. E-consumers are clearly
conscious of return and refund policies.

When a product is returned, whether due to a dissatisfied customer or damaged product, the
business suffers a heavy loss in shipment and reputation. Logistic and shipping costs have
always been problematic to e-commerce sellers delivering their product for free.

8) The struggle of competing on price and shipping: Online merchants frequently compete
on price. Plenty of sellers list the same products on their sites, but the prices may be different.
They are vying to increase their market share by selling the product.

Price competition particularly affects small e-commerce businesses, as mid-sized and large
competitors can often offer products for less. Combine this with free shipping, and smaller
companies simply can’t afford to compete on price.

Online sellers like Amazon and Wal-mart generally have shipping amenities distributed
across the country. Their warehouses allow orders to be shipped from the closest facility.
Approximately 60% of orders come from the same area as the customer. As they are shipped
from nearby warehouses, the cost of distribution decreases and the order arrives in a day or
two.

Ultimately every online shopper expects free and fast shipping. And all are at a low price.

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9) Competing against retailers and manufacturers: Many online stores bulk buy products
wholesale from manufacturers or distributors, selling them with retail online. This is the basic
business model for online stores.

Unfortunately, due in part to e-commerce's low barrier to entry, product manufacturers and
retailers start selling directly to consumers.

The same company that sells your products may also be your competitor. For example, ABC
Garments sells to not just your online marketplace, but also directly to consumers on its
website. Even some of the manufacturers create distributors, making the scenario worse.

10) A problem of data security:

Security issues can lead to nightmare scenarios. Fraudsters post spam and attack the web host
server, infecting the websites with viruses. They can potentially gain access to confidential
data about your customer’s phone numbers, card details, etc.

4.2 Ecommerce security challenge – The biggest and the most important challenge

Ecommerce has its own set of challenges and issues. Despite the fact that internet has come a
long way from its ‘open’ days, the fear of online transactions, be it financial or data transfer,
is very high in the consumer’s mind. Hacking, identity theft, credit card stealing, bank
information stealing, etc. are some of the greatest security issues that hinder the consumer
from trusting online businesses. Eventually, this means loss of potential business for
organizations.
Ecommerce security challenges are however, not limited to consumers. Businesses and
corporate firms also face security challenges as their vital information, records and most
importantly their reputation is at stake.
A wide variety of commerce is conducted via e-Commerce, including electronic funds
transfer, supply chain management, Internet marketing, online transaction processing,
electronic data interchange (EDI), inventory management systems, and automated data
collection systems. US online retail sales reached $175 billion in 2007 and are projected to
grow to $335 billion by 2012.
This massive increase in the uptake of e-Commerce has led to a new generation of associated
security threats, but any e-Commerce system must meet four integral requirements:

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  privacy – information exchanged must be kept from unauthorized parties
 integrity – the exchanged information must not be altered or tampered with
 authentication – both sender and recipient must prove their identities to each other
and
 Non-repudiation – proof is required that the exchanged information was indeed
received (Holcombe, 2007).
These basic maxims of e-Commerce are fundamental to the conduct of secure business
online. Further to the fundamental maxims of e-Commerce above, e-Commerce providers
must also protect against a number of different external security threats, most notably Denial
of Service (DoS). These are where an attempt is made to make a computer resource
unavailable to its intended users though a variety of mechanisms discussed below. The
financial services sector still bears the brunt of e-crime, accounting for 72% of all attacks.
But the sector that experienced the greatest increase in the number of attacks was e-
Commerce. Attacks in this sector have risen by 15% from 2006 to 2007. (H, 2007).

i. Privacy: Privacy has become a major concern for consumers with the rise of identity theft
and impersonation, and any concern for consumers must be treated as a major concern for e-
Commerce providers. According to Consumer Reports Money Adviser (Perrotta, 2008), the
US Attorney General has announced multiple indictments relating to a massive international
security breach involving nine major retailers and more than 40 million credit- and debit-card
numbers. US attorneys think that this may be the largest hacking and identity-theft case ever
prosecuted by the justice department. Both EU and US legislation at both the federal and state
levels mandates certain organizations to inform customers about information uses and
disclosures. Such disclosures are typically accomplished through privacy policies, both online
and offline.
In a study by (Deng & Lauer, 2008), a model is presented linking privacy policy, through
trustworthiness, to online trust, and then to customers’ loyalty and their willingness to
provide truthful information. The model was tested using a sample of 269 responses. The
findings suggested that consumers’ trust in a company is closely linked with the perception of
the company’s respect for customer privacy. Trust in turn is linked to increased customer
loyalty that can be manifested through increased purchases, openness to trying new products,
and willingness to participate in programs that use additional personal information. Privacy
now forms an integral part of any e-commerce strategy and investment in privacy protection
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has been shown to increase consumer’s spend, trustworthiness and loyalty. The converse of
this can be shown to be true when things go wrong. In March 2008, the Irish online jobs
board, jobs.ie, was compromised by criminals and users’ personal data (in the form of CV’s)
were taken (Ryan, 2008). Looking at the real-time responses of users to this event on the
popular Irish forum, Boards.ie, we can see that privacy is of major concern to users and in the
event of their privacy being compromised users become very agitated and there is an overall
negative effect on trust in e-commerce. User comments in the forum included: “I’m well
passed off about them keeping my CV on the sly”; “I am just angry that this could have
happened and to so many people”; “Mine was taken too. How do I terminate my acc with
jobs.ie”; “Grr, so annoyed, feel I should report it to the Gardai now”.

ii. Integrity, Authentication and Non- repudiation: In any e-commence system the factors
of data integrity, customer & client authentication and non-repudiation are critical to the
success of any online business. Data integrity is the assurance that data transmitted is
consistent and correct, that is, it has not been tampered or altered in any way during
transmission. Authentication is a means by which both parties in an online transaction can be
confident that they are who they say they are and non-repudiation is the idea that no party can
dispute that an actual event online took place. Proof of data integrity is typically the easiest of
these factors to successfully accomplish. A data hash or checksum, such as MD5 or CRC, is
usually sufficient to establish that the likelihood of data being undetectably changed is
extremely low (Deng & Lauer, 2008). Notwithstanding these security measures, it is still
possible to compromise data in transit through techniques such as phishing or man-in- the-
middle attacks. These flaws have led to the need for the development of strong verification
and security measurements such as digital signatures and public key infrastructures (PKI).
One of the key developments in e-commerce security and one which has led to the
widespread growth of e-commerce is the introduction of digital signatures as a means of
verification of data integrity and authentication. In 1995, Utah became the first jurisdiction in
the world to enact an electronic signature law. An electronic signature may be defined as
“any letters, characters, or symbols manifested by electronic or similar means and executed
or adopted by a party with the intent to authenticate a writing” (Blythe, 2006). In order for a
digital signature to attain the same legal status as an ink-on-paper signature, asymmetric key
cryptology must have been employed in its production (Blythe, 2006). Such a system
employs double keys; one key is used to encrypt the message by the sender, and a different,
albeit mathematically related, key is used by the recipient to decrypt the message. This is a
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very good system for electronic transactions, since two stranger-parties, perhaps living far
apart, can confirm each other’s identity and thereby reduce the likelihood of fraud in the
transaction. Non-repudiation techniques prevent the sender of a message from subsequently
denying that they sent the message. Digital Signatures using public-key cryptography and
hash functions are the generally accepted means of providing non-repudiation of
communications.

4.3 Challenges of E-commerce different companies face

4.3.1 Amazon faces with the E-commerce

Challenge 1: Channel expansion, high growth pains, and a rapidly evolving Business
Model As Amazon continues to scale up operations and diversify with new products,
services, and expand its verticals such as the acquisition of Whole Foods, its rapid growth
would present a unique set of challenges that can quite easily position the company to be
more vulnerable to risk. `

“This expansion increases the complexity of our business and places significant strain on our
management, personnel, operations, systems, technical performance, financial resources, and
internal financial control and reporting functions. We may not be able to manage growth
effectively, which could damage our reputation, limit our growth, and negatively affect our
operating results.”

With channel expansion and high growth, business models will need to become ever evolving
to keep up with change, and, focus on how rapidly changing technology and industry trends
can impact your business.

Challenge 2: The Risks of International Expansion Another significant challenge for

Amazon, as detailed in their report, relates to their expansion into current and new
international markets around the world. Some markets they have no to little operating
experience and may not benefit from any first-to-market advantages or otherwise actually
succeed. Additionally, for a business it is costly to establish, develop, and maintain
international operations and websites, and promote and advertise internationally. Some
additional risks identified which retailers with a current or future international expansion

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need to consider: economic and political conditions, international regulations on ecommerce,
business licensing in countries and states, currency exchange restrictions, language and
cultural differences and net neutrality.

Challenge 3: Optimization of Data Fulfillment Along with rapid growth, Amazon

identified another set of challenges relating to the optimization of its data as well as its
fulfillment centers. This is a very relatable concern for any ecommerce retailer that’s growing
quickly. The report states: “If we do not adequately predict customer demand or otherwise
optimize and operate our fulfillment network and data centers successfully, it could result in
excess or insufficient fulfillment or data center capacity, or result in increased costs,
impairment charges, or both, or harm our business in other ways.”

Online retailers need to consider that they should ensure their inventory is optimized, as it
will help to lower shipping costs from fulfillment centers, and you have developed a strong
relationship with shipping companies and have negotiated and clearly outline your terms.

Challenge 4: Seasonality and Holiday Strain Like any online retailer, or even brick and
mortar store, Amazon identified seasonality and holiday strain as a challenge. They face a
massive influx of traffic and orders during mainly during the fourth quarter due to customer’s
year-end holiday shopping surge, however these also peak at other times of years around
specific holidays. Retailers will need to prepare for seasonality and holiday strain by
forecasting demand for inventory and ensure there are enough stocked, potential increases in
shipping costs, website outages and slow speed due to traffic, and potential additional staffing
requirements.

Challenge 5: Government regulation with new and changing of laws and trade agreements,
economic recessions, and political up rest, there’s a lot up in the air right now around
government regulation which impacts companies like Amazon, but also for ecommerce
retailers in general, too. Businesses will need to keep a close eye on legislative impacts
including data protection, taxation, online payment services and restrictions and laws around
energy consumption.

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4.3.2 Alibaba faces with the E-commerce

Alibaba may be a key player in the world of ecommerce, yet it has to face a number of
challenges. One of them is lack of brand recognition, which may translate into the lack of
trust in countries outside of China. According to one of the polls conducted in the USA,
nearly 90% of respondents had no clue what Alibaba was. Thus, the fact that it is a primarily
domestic operation may mean limited opportunities in the context of cross border trading.
Some critics also say that Alibaba is full of fake goods and illegal business. Violations
include trademark infringements, fake cigarettes & alcohol, mobile phones and counterfeit
certification. Apparently the company has put a number of procedures into place to combat
counterfeit practices and remove problematic listings, yet the problem seems to persist. (net)

It’s also worth mentioning that contrary to many ecommerce companies, Alibaba does not let
Google index its wares, which means that customers must go directly to its website to search
for products.

4.3.3 Payment Challenges for E-commerce Merchants (like Visa/MasterCard)

1. New Fraud Threats: Global card fraud is projected to surpass $30 billion in 2020, with
retailers expected to lose $130 billion to CNP fraud between 2018 and 2023. There is a
never-ending battle between fraudsters finding new ways to cheat the system and people
trying to protect the system: one type of fraud can be stopped just for a new approach to
emerge and take its place. Identity fraud and account takeover are particularly costly for
ecommerce merchants as the two most common sources of fraud.

2. Handling Rising Costs: It can be difficult to audit and validate the cost of card acceptance
on a regular basis, with card scheme fees constantly changing and rising globally.
Ecommerce merchants have been impacted more than most with fee increases for online-
specific charges, such as the upcoming Visa inter-regional ecommerce fee increase in Europe
on 1st April. In the past, merchants could charge customers a surcharge for more expensive
payment types like credit and commercial cards, allowing them to offset these costs and
maintain lower prices for all consumers.

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3. Open Banking & PSD2 Innovations: Payment Initiation Service Providers (PISPs) –
formalized by PSD2 – could soon provide merchants with robust competition to the card
schemes through low-cost, near-instant payments from customers’ bank accounts. PSD2
compliant payment systems are being developed and improved constantly, with a few
products in beta testing or even becoming available for commercial use.

4. Brexit Threats – For European Merchants, Too Following the UK exit from the European
Union, it is likely that card schemes will reclassify their EEA regions to exclude the UK, thus
reclassifying previously intra-regional transactions between the EU and Britain as inter-regional.
Not only do these transactions command significantly higher interchange fees as they are not
capped by Interchange Fee Regulation (IFR), they also cost much more in terms of scheme fees: as
much as ten times higher in some instances. Merchants across Europe and the UK could see an
extra €1 billion in costs per year overall, with €456 million going to the card schemes and €553
million to issuing banks.

5. One-Click Wonderland – Digital Wallets: The race to a truly frictionless payments

environment is on. An increasing number of options for merchants – such as Apple Pay, Google
Pay, PayPal, and Klarna – is welcome, but also brings added complexity to the checkout. Further,
Visa and MasterCard, along with other card schemes, will be releasing their own unified wallet
with a single-click ‘buy’ button, Secure Remote Commerce (SRC), and this could be live before the
end of the year. Although claims of increased acceptance rates and reduced fraud have been made,
SRC could reduce routing possibilities due to tokenization – meaning online merchants will lose the
cost benefits of accepting local card schemes.

6. Acceptance Rates: Issuing banks have a far lower risk tolerance than merchants and will not
hesitate to decline a transaction from a merchant it does not recognize. By disproportionately
impacting new customers, incorrect declines are having a far wider impact on merchants’ revenues
than just the initial loss of sales. Merchants face a number of issues and considerations in this area:

 Acquirers inflating reported acceptance rates

 Finding the supplier best suited to serve your business
 Analyzing whether increasing acceptance rates will be negated by increased fraud and
chargeback

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7. Secure Customer Authentication and the Exemptions: From September 2019, as part of
PSD2, merchants will have to prove someone’s identity with two of inherence, knowledge and/or
possession – except when they don’t. Certain exemptions to Secure Customer Authentication
(SCA) can allow merchants to maintain frictionless checkout experiences for many customers,
ensuring cart abandonment rates are kept at acceptable levels. Merchants could be white listed by
customers, use their own risk analysis for low value transactions, or use one of a number of other
strategies, however it remains to be seen whether issuing banks will be able to support exemptions
like these by the September deadline. How those exemptions are applied, and which merchants can
make use of them, could be a game changer.
8. International Platform, Local Payments: There is a fine balance between a payments platform
being both universal and consistent but also flexible enough to benefit from local variations in
customer, regulation or technology. Too far one way and costs can spiral; too far the other and a
merchant risks alienating customers. Online payment methods like iDeal (Netherlands) and
SOFORT (Germany) can drive lower cart abandonment with consumers from those countries as
well as be cost effective when local acquirers are used.

4.4 Challenges of E-commerce in Bangladesh

 Bangladesh is a developing country and most of its population lives in rural areas. We
could not yet introduce latest internet technology to all parts of our country. On the other
hand, since the platform is in virtual world majority of our consumers in our country does
not clear about the conception of e-commerce and who at least knows about it feel
insecure to put their credit/debit card information online for purchase. DUE to its
increasing and widespread use of Information Technology, most businesses around the
world have already turned online.

 This online business refers to E-Commerce which has also moved into developing
countries like Bangladesh. Several E-commerce sites have grown. They serve like other
business houses. Their payment systems are also similar. The main problem faced by e-
Commerce companies in Bangladesh is PayPal and the lack of customers who are ready
to use debit/credit cards for payment against purchases.

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 There are also regulatory barriers. The use of tax ID is also required for credit card
issuing, so the potential audience is limited to only 2 million people. All these problems
have led to only 5.0 per cent growth in credit card issuance in 2014. For example, in India
where the payment market is much more saturated the number of debit cards has grown
by 27 per cent and credit cards by 7.0 per cent. The ATM/POS activation ratio, at 95 per
cent, is also higher there. So Bangladesh market is still in a dormant state.

 It is true that the e-commerce sector of Bangladesh has become associated with a lot of
people, but despite this, some of the barriers are still hampering the run of this sector.
People are still worried about sharing their personal information like phone number, bank
account information or home address to others. In some cases, it is seen that the vendors
are not providing the actual products to the customers. Because of the lacking of some
effective monitoring system, the vendors are becoming autocratic regarding the prices.

 On the contrary, some customers refuse to receive their ordered products from the courier
for some unknown reasons. Due to the inefficient manpower, some of the e-commerce
sites are failing to provide the desired support to their customers.

4.5 E-Commerce challenges that consumer face

The tragedy of e-commerce can be measured in percentage: 75.8% (almost 8 out of 10) of
online shopping carts are abandoned without the purchase being completed. Deficient
checkout processes are often singled out as the main cause, but many other problems faced by
e-commerce consumers could be behind it. Slow load times, poor return policies, lack of
customer warranties or absurd requirements are among the problems that make online
shopping difficult.

i. Scarce information on the product sheets

It doesn’t matter if an online shoe store has the best moccasins on the market: if your product
files contain poorly written text, poor quality images or imprecise specifications, the
consumer could back down and visit the competition. Details make all the difference, so it’s
important to take care of your product files. Bad practices are just one of the many problems
faced by online consumers.

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ii. Nonsensical requirements for completing a purchase

Did you know that 3 out of 10 online consumers (34%) abandon their shopping cart in the
time they are forced to create an account? This is just one of many requirements that should
not be imposed on first-time customers. Amazon, for example, reports the advantages of
registering on its platform, but in no case impose registration on its customers.

iii. Poor logistics and long delivery times

Another major challenge faced by shoppers while shopping online is logistics. Compared to
the physical store collection of traditional retailers, e-commerce must invest in delivery to
reduce this disadvantage. However, 23% of shoppers abandon their shopping carts for
shipping reasons, proving that they are not doing too well.

Long delivery times are a serious problem for B2C trade, although in business-to-business it
can be offset by the price or volume of products. While certain e-commerce offers same day
delivery, most remain stuck in deliveries in 2-3 days. Consumers don’t like waiting.

The situation worsens when shipping costs exceed the final price of the shopping cart. There
are at least two ways to solve this problem that not all e-commerce practices:

 Free shipping at a certain price (from 75 dollars or from a certain number of items).

 Incorporate shipping costs to the price, in addition to taxes, so that customers do not
receive an increase in price at the end of their shopping cart.

iv. Slow loading times

Do you like endless queues at supermarkets? They’re as horrible as slow loading times in
ecommerce. Amazon estimated in 2012 that every second of loading caused them to lose 1.6
billion dollars, which helps to understand why this platform is so fast today.

Most consumers search for several minutes in a category before selecting one or more
products for purchase. If navigation is not smooth, users will end up getting tired and leaving
the site, leaving behind an abandoned shopping cart. It is not surprising, then, that this is one
of the problems faced by ecommerce consumers.

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v. Insecurity for the consumer

Investment in cyber security is growing year on year, due to the increasing number of threats
to governments, companies, and businesses internationally. Far from being oblivious to this
problem, ecommerce is forced to exercise extreme caution. The processing of purchases
requires the sending of sensitive consumer information, which must be protected.

Online customers are increasingly aware of the importance of security, and therefore demand
guarantees. Unfortunately, a part of the E-commerce fails in this sense. Sometimes they even
violate users’ rights.

In addition to using seals of quality and trust (eKomi, Confianza Online, etc.), it is important
that virtual stores use security protocols SSL (Secured Socket Layer and comply with the
standards of Payment Card Industry Data Security Standard (PCI DSS), among other
measures.

vi. Bad return policies or lack of buyer warranties

The quality of a product cannot be known until the consumer examines it with his hands,
which does not present difficulties in traditional retailers. But that is not the case with E-
commerce. Most consumers are used to this difficulty and therefore expect to find certain
guarantees. Let’s see:

 The product sheets must contain a link to the return policies. If they are better
than the competition, highlighting them can be a great idea (immediate return without
commitment, for example). In any case, return policies cannot be imprecise. The
customer needs to know what to do if a product does not have the quality he expected.

 If the worst-case scenario is finally met (the product has poor quality, does not
match the image, is defective, etc.), it is important to offer guarantees to the
customer: how will you recover your money, who will take care of the recovery of the
item, will ecommerce compensate you in any way?

If the ecommerce is not able to satisfactorily answer these questions, probably the purchase
decision will never occur. The result will be an abandoned cart at best and a rebound most of
the time.

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These and other problems faced by online consumers are conspicuous by their absence at
Amazon, Wal-mart and most of the big E-commerce in the market. Entrepreneurs should take
note of them, to avoid them from the beginning and thus gain a competitive advantage over
their rivals.

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Chapter 05
“Application of E-Commerce
in Organizations from the
Perspective of Bangladesh”

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5.1 Brief Introduction about E-Commerce Organizations in Bangladesh

Due to increasing the Information Technology around the world have a strong role in
business sector that have already turned into online business many year past. This online
business refers to the E-commerce which is recently moved in to developing countries like
Bangladesh.

In Bangladesh E-commerce is still in developing phase, though it has started in the late 1990s
(e-cab, 2016). During that time, small numbers of non-resident Bangladeshi used e-commerce
services to send gifts and books to their dear one in Dhaka capital city of Bangladesh. Later
in the year 2001-2008, it has experienced little growth due to lack of knowledge and
infrastructure. The situation has started changing in 2012-2013 when two e-commerce site
akhoni and ajkerdeal introduce themselves to the online consumers. It has received good
appreciation from the consumers mainly in Dhaka. The outcome of the E-com venture not
only enticed business entrepreneur to invest and hit the market from Bangladesh but also
from abroad as well. Some foreign investor like Olx, daraz, and kaymu joined the
competition along with local (Rashed, 2017). There has been decent growth in E-commerce
in the last couple of years; some E-commerce service provider launches their service. A site
like rokomari.com, who have adopted a similar business strategy like Amazon started
selling books. Currently holding the top position in the industry and began expanding
their business into other product categories. Bikroy.com is another example; they adopted
the unique business model. They provide both buying and selling options for the consumer
goods in their platform. FMCG and grocery sector also step into the E-commerce industry
othoba.com, pickaboo and chaldal.com represent respective areas. Renowned business
conglomerate and business group of the country shown interest to join in e-commerce trade.
Online food delivery services also got a very positive response from food lovers. Due to high
traffic congestion and inadequate driving condition consumers prefer to order food online
then visit the restaurant.

5.2 The lacking of Organizations in Bangladesh while using E-commerce with the focus
of Accounting

1) Sales Tax Liability Can Be Confusing

Keeping up with where business owe sales tax is a nightmare for e-commerce sellers
especially those who fulfill by E-commerce. In most cases, if companies transfer some of

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customers inventory into a particular area then business all of sudden has legal nexus
(presence necessitating tax-filing) meaning customers are obligated to collect and remit sales
tax for sales made to residents of that areas.

There are also several areas that will prosecute companies criminally if companies collect
sales tax from their residents without properly filing so this is a big deal and can create some
major accounting headaches.

Most traditional retailers only have to file for sales tax in the states where they have a
physical location while e-commerce sellers may be managing 20-30 monthly or quarterly
filings!

2) Inventory Management Is Complex

How much inventory do I have and what is it worth? When companies were selling lemonade
in their neighborhood as a kid this question was very easy to answer. But this isn’t so easy for
E-commerce companies merchants especially those who also sell through multiple channels.

It can be very challenging for sellers to determine how much product is in production in
Bangladesh, en route, in customs, in a shopping cart or in a returns pile! And because of the
matching principle espoused by GAAP that proper accounting requires the business owner to
match expenses with the associated revenues it is the seller’s job to track inventory value
from production through the sale.

Things get even more complicated as the number of SKUs, transactions, countries and
marketplaces increase. It isn’t uncommon at all for growing sellers to have TK500k sitting in
inventory without really knowing where the inventory is or whether it is still sellable. Suffice
it to say having a scalable, integrated and largely automated inventory management system is
a must so that your financials can give you accurate data for decision making.

If a seller can’t manage inventory closely then they are forced to carry extra inventory which
can create significant cash flow challenges.

3) App Fees Are a Big Part of Companies Profit & Loss

1. Sales Commission (6-20% depending on category with most being 15% and there are
minimum fees for most categories)

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 2. Fees (depends of the size of the item, how long the inventory sits at a distribution
center, category and other factors)

3. Advertising Cost of Sales (ACOS) (could be sponsored product, banner ads, etc…)

4) Transaction Volume Can Blow Up Accounting System

One challenge with retail is that success often means lots of small transactions with lots of
data points. In a traditional brick and mortar store a good point of sale system can
automatically categorize sku-level sales data and some of them will even capture CRM data
for you to help you build your email list.

There are lots of transactions with lots of data. Most good accounting systems including
Quickbooks Online and Xero really stink at handling 10,000 detailed transactions each
month. The system will slow down and can’t handle that level of specificity. This means that
you have to find an intelligent way to batch your transactions. They can batch daily, weekly,
every other week or monthly.

Most of the customers choose to batch all transactions at the same pace that E-commerce
organizations send settlement payments. For most new Seller Central accounts this means
batching your sales and cost of goods sold every 14 days. Your QBO or Xero system can
definitely handle 2 transactions per platform per month. This gives you the needed financial
visibility without having so much data that organizations blow up accounting system.

5) Returns Create Many Problems

Managing returns as an e-commerce seller is challenging especially if you sell where

customers can return your products without needing much justification.

Here are some E-commerce returns categories:

 Sellable – The product is deemed to be good to go and is placed back in inventory.

You as the seller need to be careful because sometimes organization misses the mark
on categorizing. Organizations don’t want to ship faulty products to customers who
can then leave them negative feedback. Many sellers choose to change the returns
settings to send all returns back to their office or warehouse where an employee can
inspect each item. This system works well if organizations have a small warehouse

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 and if their item is fairly small or cheap but this can create a mountain of work and
headache if they don’t have a clean returns management system.

 Damaged – There are several reasons why inventory could be classified as damaged.
Organization will eat the cost of the inventory if the damage is their fault or they can
submit a ticket for reimbursement if they are at fault.
 Customer Damaged – An item is deemed to be customer damaged if it is opened and
is therefore not considered to be in “new” condition. Some items really are damaged
and some aren’t but E-commerce employees don’t always understand your product
well enough to correctly classify it.
 Defective – If it just doesn’t work.
 Carrier Damaged – If it is damaged in transit.

E-commerce accounting for returns presents challenges like having to decide when to write
off the inventory and organizations have to ensure that the inventory doesn’t get expensed
twice. Returns can complicate accounting for their inventory and if they aren’t careful they
can make your books worthless.

5.3 More Accounting Challenges of E-commerce Organizations of Bangladesh face

5.3.1 Collecting Sales Tax This is by far the biggest issue facing e-commerce merchants and
their accountants and bookkeepers. For a traditional brick-and-mortar business, there are
clear jurisdictions for sales-tax liability that are defined by its physical location: city, county,
state, federal. As e-commerce expands a business' reach, though, it also expands potential
sales-tax exposure to an almost overwhelming degree.

As they confront the issue of e-commerce and sales-tax liability, state and federal courts have
struggled to define what it means for a company to have a nexus, or a "sufficient physical
presence," in a given state for sales tax to apply. Some states have redrawn the parameters to
describe an "economic nexus," which basically argues that any company achieving a certain
level of online sales in a given state should have to pay sales taxes, even if the company has
no physical presence in that state.

5.3.2 Accounting for Subscription Services E-commerce has also sparked a rise in the
number of businesses that offer services by subscription. But there are potential pitfalls for
companies that don't understand the regulations regarding subscription revenue.

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For example, suppose newly started a business assisting those who wanted to increase their
presence on social media and gain more followers. If it collects the subscription fee at the
beginning of the month, that money doesn't legally belong to the business until the service
has been rendered — in other words, at the end of the month. Their accounting needs to
reflect this. And if they sell one-year subscriptions, they have to wait 12 months to apply that
revenue.

5.4 How to overcome the lacking regarding Accounting for Bangladesh E-commerce
using organizations or companies

Bangladesh E-commerce organizations or companies face some issues and challenges

regarding Accounting practice. To make sure E-commerce organizations’ accounting goes
smoothly, they should keep records of all financial transactions. If they don’t do this as they
go along, they’ll end up wasting lots of time trying to find missing documents later, which
will cause unnecessary stress. They can keep all receipts, invoices and anything else that
shows their income and outgoings. Try to keep them filed in a logical, systematic order to
save them further down the line. Ideally, they should have digital copies of all their important
files and give them appropriate file names, including the document type and the date; again,
this will save them a significant amount of time in the long run. These solutions will work as
a guide for Bangladesh E-commerce companies to cope up with other top E-commerce
companies existing in the Business world.

5.4.1 They can choose an accounting solution

The best way to manage the accounting of ecommerce venture is to utilize an online
accounting solution. These useful pieces of software can generally be set up easily, enabling
to take control of accounting. They’re usually found in the cloud too, so they’ll be able to
access data wherever and whenever need to. Some platforms even allow integrating the
accounting program into ecommerce site, making things even easier for them. There’s a lot of
choice out there though, so here are top picks to help E-commerce organization narrow it
down:

a) Wave

One of the best things about Wave is that it’s completely free. That’s right: no short free trial
and no monthly subscriptions, just 100% free, all of the time. With Wave, they can take care
of accounting, payroll, invoicing and more. They can have data automatically imported from

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PayPal, Excel and many other sources, and easily generate reports and create pay slips and
invoices. This is the ideal choice when they’re starting out and don’t have a big budget.

b) QuickBooks

As the number one rated small business accounting software, they can expect great things
from QuickBooks. They offer accounting applications on-premises, as well as in the cloud.
QuickBooks can be integrated with most of the major ecommerce platforms, including
Shopify, eBay, and Amazon. This minimizes time-consuming data entry tasks and means you
can easily track inventory and expenses. With this software you pay a monthly subscription
(the first month is free), the cost of which depends on the package they choose. Each package
comes with different benefits and depends on their needs and the size of your business.

c) Kashoo

This software is built to allow small business owners to take care of all their accounting
themselves, like they take care of all other parts of their business. The interface is simple and
clear, and data entry is quick and easy. They can even integrate the system with many of
today’s popular financial apps.

Kashoo claim it takes just one day to learn how to use their program. But with free unlimited
support, they can rest assured they won’t be left trying to figure everything out by themselves
if it doesn’t take them one day to learn. As a Kashoo customer, they also gain access to a
large video tutorial library, to help them get the hang of the system and business accounting.

A market leader in cloud accounting in the UK, Australia and New Zealand, Xero is at the
forefront of Software as a Service’s growth. They aim to “help small businesses thrive
worldwide” with their huge product range and innovative services. With over half a million
subscribers, Xero has an excellent reputation for providing reliable, comprehensive and
useful online accounting solutions. For small businesses, cash flows, invoices, payments and
payroll can all be handled through their online accounting software. Xero’s apps also allow
seamless use across all major devices, with data stored in the cloud for easy access at all
times. They can also benefit from multi-layer security, free 24/7 support and hundreds of add-
on business apps.

Xero is a popular choice with accounting and bookkeeping firms worldwide, so they can trust
that it is built by financial professionals for financial professionals.

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d) Call in the experts

If they’re in any doubt or find the whole accounting process for their business confusing, it
might be worth getting their own accountant. An accountant (especially one that specializes
in ecommerce) can help to ensure they’re following all tax regulations and take a large
weight off your shoulders. If find an accountant online, make sure choose one that’s certified
in country and who has great reviews. Many online accountancy firms now offer packages
with unlimited support rather than billing by the hour, so shop around to find the service that
suits best. (Kurnia, J., R.M., & B., 2015)

5.5 The Future of Bangladesh Ecommerce

Ecommerce is largely about execution. If you get the math’s right, the rest should follow,
given enough traffic and time for your site to establish. But for anyone involved in the
ecommerce game, it is an environment that is constantly changing and upgrading as
technologies improve and companies battle against each other to win a greater share of the
pie.

The future of ecommerce is uncertain, but some things remain constant – delivery times will
improve, customer service will get increasingly better, and product selection will become
ever greater. But how might the future of buying online actually look from the customer
perspective and what should to be implementing in own business over time to stay ahead of
the curve. (G. Cheng, 2002)

i. Ecommerce Personalization & Experience

Nearly all retail growth in the US at present is driven by ecommerce, and this looks set to
continue in the years ahead as more people spend more money online. Greater
personalization and a better customer experience will be the Holy Grail for ecommerce
businesses in the future, as it becomes increasingly difficult to secure customers against a
backdrop of ever-increasing competition. Customers will eventually flock to those offering as
close to the in-store experience as possible, and major ecommerce retailers are already
striving to make things more personal and more tangible on web.

ii. E-Commerce Delivery Drones

Perhaps one of the most exciting developments in ecommerce is one we are already starting
to see in testing – drone delivery. Drones will in the future allow companies to deliver

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packages much more efficiently and quickly, with delivery times of just 60 or even 30
minutes from order entirely plausible. Drones will be sent out from distribution centre and
travel directly to the delivery addresses provided, at significantly lower cost and logistical
hassle than at present. Amazon, among others, are already seriously close to making this a
reality across the entirety of their business, and it seems that others will be clamoring to
follow suit as quickly as possible.

iii. E-Commerce curation & Pay Monthly Models

Product curation and pay monthly models are likely to continue to form an increasing part of
the future of ecommerce. People don’t want to buy generic products from you – Amazon is
cheaper and quicker. But they do want to buy curated products, lifestyle products, and
ecommerce packages where your product knowledge and expertise can create an altogether
more enjoyable, rounded experience. Think Graze.com or Flavourly.com.

iv. E-Commerce tracking into Retail Stores

The boundaries between ecommerce and physical commerce, i.e. the retail store, will become
less definite as time passes, and companies are already looking at ways of tying together
online tracking and customer information with their real-world experience. This also
complements the idea of greater customization of the shopping experience, allowing retailers
to use existing online data to personalize their entire relationship – both online and offline.

Customers are already shopping in new, alternative ways to before. “Show rooming” and
“web rooming”, where customers visit a local shop then buy online for a cheaper price,
or vice versa, present new challenges for retailers, in bridging the gap between the online
and offline. As an online-only ecommerce retailer, they miss out on the web rooming
aspect, because any sales made in a physical retail environment off the back of research
on their site will be lost on them and their business. (Google.com)

Pop up shops can provide the answer, and can serve as a low-cost way of reaching out to new
customers and winning new long-term fans. Pop up shops give customers a chance to connect
with their brand in a physical way, while helping them reach corners of their market that
might otherwise have been impossible for them through their online channels.

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The future of ecommerce is of course still unclear. But any prudent ecommerce business
owner should take stock of what analysts are saying about the future direction of their
industry, so they can be sure to capitalize on these new opportunities as they arise.

v. E-Commerce AI Systems

Ecommerce already enjoys a significant advantage over other types of business, in the sense
that there are thousands of high-quality apps, all readily integrated into each other so that
even small-budget players can rapidly automate the entirety of the process. At the same time,
technologies rapidly change and improve, thanks to the strong competitive drive across the
industry – after all, another retailer is only a click away.

The next step for ecommerce will be the application of AI systems, running evolutionary
algorithms designed to find the absolute optimum. It’s all maths anyway – whether it’s
optimizing their sales process, or choosing the statistically highest converting design for their
website. By developing systems using these algorithms, which are designed to effectively
test, optimize and repeat on loop, ecommerce will move into an even higher level of
sophistication as this technology improves.

The upshot for those running ecommerce businesses is to embrace these processes as soon as
viable. Where the major players go, smaller retailers follow, and it won’t be long before a
proliferation of AI-driven systems improves the capabilities of the ecommerce industry even
further.

vi. Measurement across All Devices

Not everyone sticks to a single device when buying from them. In fact, more people are
moving between devices, from the web to mobile to apps, before turning into paying
customers. Measuring analytics across devices is still in its infancy, but it is becoming a more
significant field of interest for those in ecommerce.

Once tracking of usage across multiple devices become more sophisticated, the processes of
testing, tweaking and optimizing the user experience still further can be set in motion. This
will unlock even more value for ecommerce retailers, through providing further detailed
insights into how the same people respond to their offering across platforms.

vii. E-Commerce Attribution Modeling

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Attribution modeling provides the basis for calculating ROI, and thereby tailoring their
marketing strategy to deliver optimal results. Assigning value to something in or related to
their funnel is important because it makes it possible to calculate their return. Attribution
modeling looks at the best possible actions to which they should attach value, so they can
focus their marketing spending and resources on those that offer the strongest return.

For example, say they have a simple two-step funnel, whereby they catch an email sign-up or
a sale. Both elements here have a value – there is value in the sale, but also in the lead, which
might one day buy from them (or might buy from them several times over, depending on
their data). By attributing value to each of these actions effectively, marketers will continue
to generate more sophisticated insights into how best to channel their efforts.
(Google.scholars)

5.6 Conclusion and Recommendations

It can be concluded that the study has been attempted to clearly define all the essential
information to achieve regarding the main objectives. The E-commerce is not a new concept
to Bangladesh. For the world business market it is very common and fast growing business
moving within country to country. The study has been focused on E-commerce sector of
Bangladesh. And it also has been focused on Accounting as need while doing E-commerce
smoothly. Though there are some challenges faced by Bangladesh E-commerce
organizations. There are also some solutions for E-commerce organizations of Bangladesh.
They can select any one or more from the above accounting software. The study recommends
that if the organizations of Bangladesh E-commerce would be able to practice solutions
mentioned above they would be more expert in doing their business. As they have some
lacking in practicing Accounting as best for their E-commerce Business. To cope up with
foreign E-commerce companies though, the other companies are doing well so far. If
Bangladesh E-commerce Organizations can also focus on their operational managements and
initiatives they have been taken.

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The study may recommend for Bangladesh E-commerce sector or E-commerce organizations
some ideas given below:

 It is assumed that if Bangladeshi E-commerce organizations or Companies start using

software based accounting system they may be able to control some of the issues
related accounting they face usually.
 And future of Bangladesh e-commerce organizations can be assumed like above. The
number of website and online stores and the number of online shoppers in Bangladesh
is growing steadily. According to above information, the consumers of Bangladesh
shown positive attitudes on e-shopping and at the same time expressed their concern
about safety and privacy. So, e-commerce traders should take the initiative to build a
long-term relationship with clients and earn their confidence, let them share their
thoughts, create communities, listen to their opinions and use their ideas, more
importantly, focus on the transparency of the operation.
 They should improve their marketing activities and develop a consumer-oriented
strategy to attract more customers. As E-commerce is one of the flourish sectors or
industries in Bangladesh. The organizations doing E-commerce are playing a
significant role in the economy. Throughout E-commerce sites most of the citizens
live in abroad can easily acquire their needs.
 Recent time, global consumer’s data privacy becomes a major concern. In the study, it
has been found that both consumers and merchants have lacks of knowledge about the
whole business system. So, the government has to play a prominent role here and
ensure consumers data safety and provide the necessary platform to learn about e-
commerce.

The study, being conceptual in nature, raises a number of opportunities for future research,
both in terms of theory development and concept validation. More empirical research will in
fact be necessary to refine and further elaborate findings in the area of E-commerce. The
study is an eye opener for the researchers who have ample interest in E-commerce. This
review paper will offer them the leads towards the better understanding of the key variables
of the recent E-commerce platform that is revolutionizing the business.

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