If you are someone who either has a retail store set to open or you’re considering investing in your own retail store, you need to familiarize yourself with the term POS. Perhaps, you already have an up and running retail store but just don’t recognize the jargon. Either way, understanding the concept of the point of sale (POS) of a retail business is important and interesting because this is where the proverbial magic happens.
Here are some basics of the point of sale system, what it’s for, what comprises it, and what makes it so magical to begin with!
What is a POS System?
A point of sale (POS) System is a combination of smart software tied in with efficient hardware that allows a store or retail outlet to ditch it’s old and worn out cash register. In exchange, the retail store gets something that not only facilitates the transactional process, but also offers easier inventory management systems and ways to analyze customer behaviour patterns.
A POS system typically consists of hardware like cash drawers, receipt printers, and barcode readers all working together in harmony and unified by a common software.
What are the workings of a POS System?
A POS system, as the name suggests, has multiple functionalities. Three of the most important and common ones are listed above. They’re also the primary and basic job of the POS system.
As soon as an item is identified and a transaction is registered, the system automatically deducts it from the inventory and makes modifications accordingly.
Now, with various identification parameters, the system can easily assign a purchase to a customer. This helps in formulating loyalty programs and understand the shopping habits of consumers. This further helps management solve specific issues that customers come in with.
End of sale or season or month reports help the business identify how different departments performed, which marketing strategies worked, and what needs to be restocked in the inventory.
How do POS Systems help the merchant?
For starters, even the most basic POS system will help with two main tasks any merchant has to handle – making transactions (selling goods and services) and managing the inventory. Both these aspects also have to be completed with consistency and efficiency. A POS system simplifies and performs this task by eliminating redundant manual labour.
POS systems also come with other functionalities and advantages. The more advanced ones track the sales of certain items to certain customers – enabling targeted advertising and recommending other products for that customer based on their preferences. This also extends to loyalty programs and reward plans. POS systems streamline data streams to ensure that no data is lost or misinterpreted.
Finally, POS systems generate comprehensive reports and visually represent data, which enables the users to identify areas of improvement and specifically target those aspects of their business. The detailed information made available also helps in planning and implementing improvement programs. Above all, POS systems automate and eliminate unnecessary process steps, thereby taking human error out of the equation.
How necessary or important is a POS System?
Not a necessity to any business but an assured positive addition to every business – that sums up the impact of the POS system on business. Besides, not using any level of automated or smart POS systems puts a lot of unnecessary strain on the employees and the management. It can lead to mistakes that can be easily avoided, and some mistakes can cause monumental losses.
Even small to medium business can benefit from POS systems. It helps increase both the efficiency and speed of sales, something that everyone could make use of, especially impatient customers. It can do away with the strain that can comes from manual management of inventory.
For larger businesses, a good POS system becomes a necessity. They simply cannot rely on their employees alone to manage inventories, make and track sales, and also present accurate reports down to the cent. When you’re a big business, knowing what your customers buy is essential. Customer service will also have nothing to go on if there are no computerized records to refer to.
How much does a POS System cost?
If you’re a small or medium business owner, then a high-end POS system could put you back tens of thousands of dollars. So your best bet is to turn to POS System providers. You’re effectively looking for services that give you POS System software at a low cost, with no hidden charges.
The good thing is that there are multiple options for you to choose from depending on the scale of your business and your requirements. Shopify also offers POS systems that cater to the sensibilities of businesses ranging from small scale operators to medium and large scale players. Traditionally, you’d want your hardware and software to be sourced from the same distributor or service provider for smoother service and a more holistic end user experience.
Once you find a provider and a POS system you like, you can get started on streamlining your business and POS strategy.