For any company planning on selling products or services in a brick-and-mortar store, a point of sale (POS) system is a must-have investment. It ensures you can manage transactions, your inventory, and even your staff in a convenient, all-in-one system to that can empower business growth.
Currently, the POS market is growing at an exceptional rate (15.9% CAGR), and is expected to reach a value of around $70.75 billion by 2029. Part of the reason for this is a growing demand for companies to deliver exceptional customer experiences across different environments.
In a world where consumers are growing more demanding, POS solutions allow business leaders to deliver simple and streamlined experiences in every channel.
In fact, 91% of consumers say they’re more likely to shop with companies capable of offering personalized experiences POS systems can help you capture accurate data about your audience and drive more meaningful interactions with your customers.
Here’s everything you need to know about Point of Sale (POS) systems.
What is a Point of Sale (POS) System?
A POS system is a combination of hardware and software components which allows businesses to accept payments from customers, and track sales. Modern tools can work as standalone solutions for managing offline transactions, or they can connect with a digital online store, to sync information between your offline and online operations.
With a POS system, you can process credit and debit card payments, monitor inventory information, track employees, and even create customer profiles. The components of a POS system often fall into two segments:
Point of Sale (POS) Hardware:
Your POS hardware is the endpoints and devices you use to handle transactions in a store. This includes all of your credit card readers, cash registers, and connected devices, such as self-service kiosks for your customers. The largest segment of the POS market is currently the hardware landscape, expected to reach a value of $181.47 billion by 2030.
Common types of POS hardware include:
- Cash Registers: Tools for calculating and processing transactions.
- Connected Devices: Such as desktops, mobile phones, and tablets for tracking information.
- Credit Card Readers: Allowing customers to swipe cards and enter pin numbers in-store.
- Cash Drawers: A secure environment for storing physical money.
- Receipt Printers: Used to provide your customers with an overview of their purchase.
- Bar Code Scanners: For tracking inventory and product details.
Point of Sale (POS) Software:
Your POS software is essentially the command center for all your transactions. It allows you to find items in your inventory list, ring up sales, and create reports. POS software can also include inventory management tools, CRM systems, and employee management features.
Some of the most common components of POS software include:
- Payment Processing: Tools for routing cash from a customer into your bank account. Your software might support cash payments, chip cards, secure online payments and contactless.
- Inventory Management: This allows you to keep tabs on all of your products, and sync any changes in inventory to your online store.
- POS Reporting: Reports and analytics give you an insight into how much you’re selling, and which products are most popular.
- Employee Management: Team management software helps you keep track of employees, their shifts, and other valuable information.
- CRM: Customer Relationship Management software makes it easier to collect information about your audience for more personalized service.
- Receipts: Your software can store digital receipts to help make processing refunds easier.
Some software solutions also come with additional tools, like tipping support for service companies and restaurants.
Why Do Businesses Large And Small Use Point of Sale (POS) Systems?
A POS system is generally considered to be one of the most crucial tools in business. While it is possible to take card payments using a simple credit card reader, having a full POS solution is often much more effective. With POS system technology, you can gain more valuable insight into your business.
Whenever you take a payment, the information from the sale is tracked and recorded in the system, making it easier to manage inventory, and view your most popular products. You can even get POS solutions which send alerts when you’re running low on an item.
POS systems also offer valuable insights into other information, like which days and times you receive the most customers, so you can adjust your sales strategy accordingly. Plus, they help you to manage your employees and ensure you have the right staff members available at any time.
A POS solution can even strengthen relationships with customers, by helping you to collect information about your target audience.
The Types of Point of Sale (POS) Systems and Their Features
Point of sale systems have evolved significantly in recent years. For instance, around 60% of recent POS system purchases were for cloud platforms, representing a new shift towards flexible, software-based solutions. Today, companies have a range of options available to help them manage sales in an omnichannel environment, such as:
On-Premises POS Software
An on-premises POS solution is typically considered the most “traditional” point of sale. All of the data collected is stored in a local database, and you have full control over the information you keep in your servers. This can be valuable for some companies who have high security requirements.
The biggest downside of on-premises point of sale software is its lack of flexibility. You’re limited to using the technology in a specific location, and there’s often a high upfront fee for setting up multiple systems. However, you will have access to features like:
- Offline Mode: Allows you to still access the system if your internet goes out
- One-Time Payments: You won’t be paying for a cloud-based software system, so you don’t necessarily need to worry about extra fees.
- Diverse Features: You can customize and add all the features you need to your POS system as and when you choose.
Cloud-based POS Software
Cloud-based point of sale (POS) systems are a lot more flexible. Studies show cloud POS tools have now gone beyond 20% penetration in the US market, indicating high adoption among companies. The great thing about cloud-based tools is they’re versatile.
With a cloud-based system, you store your data remotely on the data centers of your POS providers. You can also access your software anywhere, without having to travel to a specific location. Other features of cloud-based POS software include:
- Flexible Features: You can often upgrade and expand the functionality of your cloud POS software at the click of a button, without the need for expert support.
- Automatic Updates: Your software will be automatically and rapidly updated from a remote location, keeping it secure and efficient.
- Affordability: Generally, you’ll be able to access cloud-based software with less investment up-front. This can save you a lot of money on installing servers.
Mobile POS Systems
Often considered a sub-section of the cloud-based POS environment, mPOS solutions operate in the cloud, but are designed specifically to run on mobile devices like touchscreen tablets and phones. These solutions are often particularly popular among smaller businesses and pop-up stores.
According to Statista, the mobile POS transaction values are rising at a rate of around 30% annually, and these tools are becoming increasingly advanced, with features like:
- Cloud-Based Software: With a mobile POS, you’ll still have access to all the features you’d expect from a cloud-based POS, such as transaction and employee monitoring.
- Affordability: Since the software and hardware for a mPOS solution is often quite inexpensive, you can get started with minimal investment.
- Mobility: You have the freedom to take payments virtually anywhere, making them great for street food and pop-up store vendors.
Industry-specific POS Systems
One particularly interesting and growing area of the POS market is in the rise of industry-specific solutions. These tools are designed specifically for certain kinds of companies, and may come with additional features supported. For instance, common examples include:
- Retail POS: Retail point of sale systems often come with features for processing transactions, as well as tools for customer relationship management. They can process gift cards, and coupons, loyalty cards, and more, and may feature employee management tools too.
- Hospitality POS: A point of sale system for a hospitality company can help users keep track of hotel rooms, reservations, spa visits, and more. These tools are great for storing guest preferences for housekeeping and amenities, and allow staff to offer more personalized experiences to their customers.
- Restaurant POS: Food companies usually have specific requirements from their POS systems, such as the ability to manage menus, and track filling tables within the premises. Restaurant POS systems can come with tipping features, and tools for sending orders directly from a customer table to the back-end kitchen.
- Grocery and Supermarket POS: In the grocery and supermarket landscape, a POS solution can be part of a self-checkout system with customer-facing kiosks. Some solutions allow customers to scan their own product barcodes, and most tools have excellent features for tracking inventory information.
- Service POS: The service POS environment usually revolves around salons and companies which take numerous customer bookings. They can generate performance reports and loyalty profiles, and help with identifying workflow inefficiencies.
Top 5 Benefits of Using The Right POS System For Your Business
When used correctly, the best point of sale (POS) systems have infinite value for any company. They’re excellent at maximizing sales, reducing expenses, and keeping track of your business. These tools can also be valuable in building meaningful relationships with customers.
The biggest benefits of a great POS system include:
Saved Time and Money
First and foremost, POS solutions help companies to save significant time and money when it comes to managing a store. With a POS system, you can capture information about sales and transactions automatically, track inventory changes, and store financial data instantly.
An effective POS system means you don’t have to spend as much time tracking receipts yourself, or dealing with updating your inventory lists. The time savings you encounter will automatically translate into business cost savings too. Less time spent on managing your business means more time you can dedicate to delivering excellent customer service.
A good POS system will even provide you with insights into inefficiencies in your business, so you can cut down on wasted resources. Plus, it ensures you can organize your staff in a way that increases sales on your busiest days.
Increased Speed and Quality of Service
While around half of customers still say they prefer to shop in person, 65% say long and complex checkout processes are their biggest concern. With a point of sale (POS) system, companies have everything they need in place to improve the quality of the service they provide.
You can streamline the checkout process, by making it easier to scan products and process transactions in seconds. Some companies even use POS solutions to offer valuable self-service checkout experiences, to take some of the stress off employees.
POS solutions can also allow you to offer multiple payment types to customers, such as credit and credit card transactions, or cash payments. This ensures your customers gets the experience they’re looking for, without compromise.
Point of Sale solutions are excellent for capturing valuable information. The right tools will make it easier to store information about your target audience, so you can deliver more personalized and meaningful experiences at the checkout.
A good Point of Sale system also ensures you can capture information about productivity and efficiency in your store. For instance, you might learn you need more employees in the building on certain days, due to patterns in changing demand.
Your POS solution will even give you insights into which of your products are most valuable, so you know which to promote, and what kind of inventory you need to stock. You can track everything from customer retention rates to cart abandonment rates and more.
Because you can track important information about your products and inventory, you’re also in a better position to scale your store with a POS solution. According to some reports, businesses in the US lose up to $224 billion per year just because they order the wrong inventory.
A POS system can track the changing inventory levels in your company on your behalf, suggest when you might need to order new stock, and help you to plan for changes in demand. It can also show you where you’re most likely to get a higher number of sales when you increase your investment in a certain product.
Some solutions, like cloud POS systems, also make it easier to add new features and functionality to your store whenever you choose. For instance, you could implement gift cards, reward programs, and other tools for building loyalty.
Better Business Management
A Point of Sale (POS) system routes information from various streams of data throughout your business into one convenient place. If you’re running an omnichannel store where you sell products both online and offline, this makes it much easier to manage your company.
Within your POS system, you can access built-in employee scheduling tools, so you can save on the time it would usually take to organize your team. Plus, you’ll have access to automation capabilities, like the ability to automatically update your online store inventory when someone makes a purchase in-person.
Ultimately, a POS solution can keep your business running smoothly, so you can focus on generating the best possible revenue.
Point of Sale Systems are Crucial to Modern Companies
Point of Sale (POS) Systems are one of the most valuable tools you can invest in if you’re planning on selling services or products offline. These valuable tools give you more insights into your business, and more control over how you manage your organization.
With the data you collect from your POS, you can ensure you’re ready to tackle virtually any challenge in a competitive business landscape.