Let’s talk about a point of sale (POS) system…
Before starting an online business everything seems straightforward. You sell something and people buy it.
What you don’t realize is how many pieces to the online business puzzle need to fit together for the whole thing to run smooth.
A point of sale system is one of those things.
In this article we’re going to define what is a point of sale, why it’s necessary for a business to have, it’s benefits and give you some real world examples.
Our goal is to make this idea as simple as possible because none of this should hold you back from taking action and getting started. This is all just the cost to play business.
So let’s start by defining a POS…
What Is a Point of Sale (POS)?
Point of sale (POS), is a step in a business transaction where the customer makes a payment for a product or a service. It’s also where the customer pays the sales tax for the product.
The customer can make a payment at a physical store or on a website. But a point of sale is the webpage (checkout cart) or location where the payment happens.
Image Source: Square
If you’ve ever bought a coffee or taco from a truck and the employee handed you a tablet to swipe your card, that’s a “point of sale terminal”. It’s the hardware and software that allows the business to accept a payment.
Image Source: SlockumThemes
The point of sale terminal on a webpage would be the checkout form.
Understanding the Point of Sale (POS)
Customers make purchasing decisions near point of sale locations.
The goal should be to make the purchase as easy as possible for the customer. Have you noticed that in Target or Walmart, the electronics section has their own check out area?
That’s because stores know that if you have too much time thinking about your purchase you might not make it. Electronics are high profit margin products for the stores and they don’t want customers walking around the store. Once the customer is decided, they can quickly go and make the purchase.
Some stores even have a point of sale near sporting goods. Sporting goods is another high margin area that brings a lot of revenue for the store. The easier it is for the customer to pick a product and leave the store, the more profit a store can make.
Amazon Go POS Example
Image Source: Forbes
In June 2019, Amazon launched one of it’s “cashier-less” stores called Amazon Go. This let’s customers walk in, grab the products they want and walk out.
The only point of friction in a point of sale system is the checkout process and Amazon wants to eliminate it completely. The idea sounds crazy but here we have a store that reduces costs and trains customers to just consume. The whole experience becomes the point of sale.
Benefit of a POS
Simply put, you want to be able to track sales data and make informed decisions about the products you sell. A point of sale system does that for you. A retailer can understand the daily flow of their products and minimize the amount of time spent taking payments.
If you’re able to save time taking payments then you can focus on doing things to help grow the business or doing more creative work. The most basic POS can be a cash register and the software to track purchase data.
POS systems can now help you keep track of your inventory and look for trends in your sales. It can also help prevent losing sales because you’re out of stock with predictive forecasting.
Popular Point of Sale Systems
In this article we’re not reviewing or going deep into popular point of sale systems but we want to mention ones that we’ve used and recommend:
- Shopify POS
- Square POS
- Vend
- Shopkeep
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Wrapping This Up…
When you start an online business everything can seem overwhelming and it feels like there’s a software or tool for everything. And mostly, that’s true, but you don’t need all of them. They exist to help businesses owners in every step of their journey, not just in the beginning.
It could be that you’ll use some of them in the future or never at all. The goal is for you to learn, take the nuggets you need and move forward. If you need more help understanding all of this stuff, send us an email and we would be more than happy to help.
A point of sale system is a small part of a larger pie. So don’t get stuck in the weeds and keep moving forward.
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