What’s the Point of a Point of Sale (POS) System?
A point of sale system, or POS, is the place where your customer makes a payment for products or services at your store. Simply put, every time a customer makes a purchase at your store, they’re completing a point of sale transaction.
The POS serves as the central component for your business; it’s the hub where everything—like sales, inventory and customer management—merges.
As evident as the benefits of a POS system are, we found that 56 percent of single-store retailers are still not using one. Instead, we found, many are still using a combination of manual methods, cash registers, QuickBooks and Excel for bookkeeping.
So why have retailers not taken that step to POS yet? To begin with, implementing new technology—especially technology that’s central to your business process—can be scary and overwhelming. Retailers need to consider the negative consequences of failing to have a POS in place.
“[Retailers] run the risk of slowing down their operations and missing critical data that could help them grow their business faster. Having key insight about their customers, their inventory level and when they should order more supplies are examples of information a POS provides.”MARYLISE TAUZIA, PRODUCT MARKETING & EVANGELISM LEAD, SQUARE
Understanding what a POS system is—its software and hardware components, as well as capabilities—will enable you to make an educated buying decision.
Software Components of a POS System
Every POS system comprises of software and hardware components that make running the daily operations of your business easier and faster. It’s important to understand what POS software options there are and what each have to offer.
“Flexibility is key. Ensure your POS vendor works with the payment processor/gateway of your choice, so that you can control cost. If you’re already using applications important to your business, make sure the POS can integrate with them seamlessly, so that you can continue using them.”
Hardware Components of a POS System
These are the common physical components required to get your POS up and running.
Monitor/tablet: Displays the product database and enables other functions, such as employee clock-in and viewing sales reports. Tablets—especially iPads—are popular for replacing bulkier monitors.
Barcode scanner: Automates the checkout process. Scanning barcodes pulls product info and adds it to the checkout total. Barcode scanners can also integrate with inventory management systems to automatically adjust stock levels.
Credit card reader: Since the EMV payment standard went live in 2015, secure and EMV-compliant credit card readers are a must-have. Non-compliant retailers face potentially huge losses on account of fraud liability.
Receipt printer: Email and text receipts may be gaining popularity, but paper receipts remain essential for providing customers with a quick snapshot of their purchase or returns.
Cash drawer: It may fade away in years to come, but cash is still king. Until then, you’ll need a secure place to store cash for transactions. Another benefit of cash: there are no associated credit card fees.
Key Features of a POS System: What to Look for When Buying
Many tasks in a retail store can be overly tedious and resource exhaustive. With the right POS system, retailers have the ability to simplify crucial daily business operations with greater proficiency.
“Modern POS systems do more than just offer flexibility when processing daily transactions,” says Grullon. “They improve a merchant’s chances of success by providing them with tools to streamline business processes.”
Our analysis with POS software buyers identified key features that retailers and restaurants look for in selecting a POS system:
Your POS system should ideally be able to:
- Generate detailed sales reports (based on product, hour, employee, total cost of items sold, total retail amount, net profit, profit percentage, gross margin)
- Provide quick snapshots and charts on your store’s sales performance
Inventory Management: One of the most important functions of a POS system, inventory management, at its very essence, keeps track of all products so you know when it’s time to order/or not order specific products.
Your POS system should enable you to:
- Scan and count products digitally
- Manage your stock by creating product variations (size, color)
- Identify pieces of inventory with a unique serial number
- Track inventory levels across multiple locations
- Enable seamless ordering such as automatically setting custom reorders of best-sellers
- Consolidating purchases and orders in one order
Customer Management: Building strong relationships with your customers will lead to repeat business. A POS should have customer relationship management (CRM) to track all customer data.
Your POS system should give you the ability to:
- Attach a sale/transaction to a customer
- Keep track of your customers’ purchase history
- Capture customer information such as name, age, birthday, phone number and email address
- Use email marketing to keep in touch with them
- More advanced systems will have a built-in loyalty program
Employee Reporting and Management: The performance of your employees can make or break the success of your store. Having the ability to set sales targets as well as know who your top performers are and who requires extra coaching will help increase sales.
Your POS system should give you the ability to:
- Add employees to your system
- Create and modify schedules for employees based on forecasted activity
- Email schedules to employees
- Track employees’ hours weekly and over time
- Analyze who your top performers are
