What is a POS system?

what is a pos system

Before the POS software technology was developed, businesses kept their records sales books and ledgers, other retailers used a cash registers to process sales and then data was transferred to accounts and stock list. When computer technology became advanced, a retail POS software was established which saves time on billing, promotions, and returns among others. The point of sale system can be integrated with your other systems and software such as ecommerce platforms, accounting apps, ERP and warehouse systems.

More so a Point of Sale permits offline and online operations at branches, permits data movement & restrictions. In built analytical reports help to keep track of sales, tax management, accounts management, profit and loss management, production management as well as rewarding customers.

To start a retail store, one has to ensure that there is enough inventory, this calls for making proper monthly records so as to ensure that there is smooth running of the business. To ensure a well administrative, management and marketing operations of a retail store,one needs a POS system to simplify and have an efficient process in the business.

Having an efficient point of sale (POS) system can go a long way in making sure that all your operations are running smoothly.

What’s  a Point of Sale (POS) System?

Point of sale (POS) refers to the place where a customer executes the payment for goods or services and where sales taxes may become payable. It can be in a physical store, where POS terminals and systems are used to process card payments or a virtual sales point such as a computer or mobile electronic device.

A POS transaction may occur in person or online through ecommerce, with receipts generated either in print or electronically. Cloud-based POS systems are becoming increasingly popular among merchants.

POS systems are increasingly interactive, particularly in the hospitality industry, and allow customers to place orders and reservations and pay bills electronically

The major component for any business is a POS service. It is the hub where sales, inventory and customer management among others merge.

As evident as the benefits of a POS system are, research found that 56 percent of single-store retailers are still not using one. Instead, they found, many are still using a combination of manual methods, cash registers, QuickBooks and Excel for bookkeeping.

So many retailers have not yet taken that step to adopt POS systems because 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 system in place.

Understanding what a POS system is, its software and hardware components, as well as capabilities will enable you to make an intellectual 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.

The POS software stores the information and maintains it within a database. EzyPOS software for example provides a huge range of capabilities such as billing and order processing,accounts management, sales monitoring and reporting, inventory tracking, returns, analytics, remote connectivity through the internet, customer data management, employee management, and customer loyalty programs.

Many POS software can be integrated into 3rd party software such as accounting software for bookkeeping, email marketing solutions, and ecommerce platforms for selling online.

 “Flexibility is key. Ensure your POS vendor works with the payment processor/gateway of your choice, so that you can control the 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

To run a POS system in your business, you need a set of POS hardware. These are the common physical components required to get your POS up and running.

Computer 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.

Barcode printer: A barcode printer will help you to print barcode stickers for items that don’t come with barcodes. The software should enable you to generate and print those labels without requiring another software for the same purpose.

Customer/pole display: A customer display is a device with an LED display that shows the price value of the items on the customers receipt at the checkout point. This is an optional item and the pos software can operate efficiently without it.

These POS hardware are best suited for retail stores that have cash dedicated cash wraps. Due to their advanced functionalities and reasonable prices, they are used in businesses such as restaurants, grocery stores, boutiques, book or magazine stores, salons, and electronic stores.

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:

1. Billing and order processing

A point of sale system must have the basic functionality of billing and order processing. It should be able to bill orders by scanning items and capturing different payment modes.

It should have the capability to generate order invoice, reprint and email to end customer along with adding the discount, customer details, additional remarks and salesman’s name to an order.

2. Sales monitoring and reporting

The point of sale system must be able to generate a robust report on sales result. It should be able to report hourly, daily, weekly, monthly and yearly takings and outgoings so that the merchants can easily understand the overall success of their business.

Sales trends such as seasonal demand in products, forecast on the basis of sales trends, insights on unnecessary product overspend, and information relating to stock management are some of the features of an advanced POS reporting module.

3. Inventory and stock management

A POS system’s inventory management module must provide complete visibility and accountability at store level at all times.

The system should provide a view of lot-wise inventory, SKU transaction history about ‘in’, ‘out’ and ‘within’ movements of any SKU, and inbound & outbound inventory.

It should be able to make stock adjustments i.e. increase/decrease stock while viewing inventory and capture the reason for stock adjustments.

4. Cross channel returns management

Accepting cross-channel returns and facilitating refunds and replacements from any store location are some of the functionalities of a POS returns management module.

The system should facilitate the creation of multiple returns for one sales order at different time intervals. It should capture details like the reason for return, salesperson’s name, and remarks.

5. Customer relationship and experience

A point of sale system can help you retain your customers by storing customer data and purchase history. This can be used to provide a personalized experience to your customer.

Customer data is highly useful for advertising as this data can provide insights on which customer would be interested in your sale. For example, sending a sale flyer for “15% off on over-sized shirts” to the customer who wears a medium sized shirt would be a waste of time.

6. Employee management

It is surprising for many when we say that a POS system can be used to manage employees. But, an employee management module of a POS system can help you manage your staffing levels, employee hours, and sales performance which helps you to track employee productivity.

You can track your employee activity by linking it with each transaction. This will help to bifurcate the good and weak performers so that you can take appropriate actions to improve their productivity.

7. Loyalty programs and gift cards/vouchers

Instead of using traditional punch cards, you can now track your customer loyalty incentives using the POS system.

As the sales of gift cards is increasing every year, your POS system must have the capability to manage those as well.

Today’s POS system go beyond processing sales. As you have learned in the previous sections, a feature-rich POS can help increase efficiency and provide insights to help you improve your productivity. These are the reasons for you to switch to a POS system today. See how EzyPOS can help you achieve that with a feature rich Point of Sale system.

Other features are:

Sales Reporting: On the surface, most POS systems enable you to look at your sales. The difference lies in how those numbers are presented, the ease at which data can be accessed and how much detail you get.

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.

Benefits of POS Systems

Points of sale (POSs) are an important focus for marketers because consumers tend to make purchasing decisions on high-margin products or services at these strategic locations. Traditionally, businesses set up POSs near store exits to increase the rate of impulse purchases as customers leave. However, varying POS locations can give retailers more opportunities to micro-market specific product categories and influence consumers at earlier points in the sales funnel.

Depending on the software features, retailers can track pricing accuracy, inventory changes, gross revenue, and sales patterns. Using integrated technology to track data helps retailers catch discrepancies in pricing or cash flow that could lead to profit loss or interrupt sales. POS systems that monitor inventory and buying trends can help retailers avoid customer service issues, such as out-of-stock sales, and tailor purchasing and marketing to consumer behavior.

Electronic POS software systems streamline retail operations by automating the transaction process and tracking important sales data. Basic systems include an electronic cash register and software to coordinate data collected from daily purchases. Retailers can increase functionality by installing a network of data-capture devices, including card readers and barcode scanners.

Depending on the software features, retailers can track pricing accuracy, inventory changes, gross revenue, and sales patterns. Using integrated technology to track data helps retailers catch discrepancies in pricing or cash flow that could lead to profit loss or interrupt sales. POS systems that monitor inventory and buying trends can help retailers avoid customer service issues, such as out-of-stock sales, and tailor purchasing and marketing to consumer behavior.

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 system 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 where necessarry
  • Track employees’ hours weekly and over time
  • Analyze who your top performers are

Questions to Ask when choosing the best POS System

There are many POS systems on the market, but as a busy entrepreneur, you probably don’t have time to sift through an endless array of options. Make things easier by remembering these 8 questions to ask when shopping for a POS.

1. What features am I looking for?

As in any situation, it’s easier to find what you need when you know what you’re looking for. Painting a full picture of your business and what’s missing at all levels will give you an idea of what your POS should do for you.

Think about the specifics related to your business:

  • Do you plan on opening other business locations (multi-branch operation)?
  • Do you have any particular workflows that are unique to your industry?
  • What would make your life easier?
  • Do you plan to sell online?
  • Are reports an important part of your planning process?
  • Do you need a POS system with integrated accounting?

2. How does the POS manage inventory?

A good POS keeps your shelves well-stocked; it helps you forecast, automate, and consolidate your inventory management.

Look for:

  • Insight into stock levels per location
  • Reports on best-selling products and brands
  • Automated reminders when you’re running low on stock
  • Easy workflow for making purchase orders

3. Can the POS go mobile?

The typical shopper anywhere in the world will leave a store if they have to wait too long in the check-out line. The right POS provides customers with speed and convenience, and should go where you go.

Look for:

  • Check-out capability for mobile devices like android devices,iPhones, iPads or tablets
  • Wireless support for temporary locations like pop-up shops, street fairs, trade shows, farmer’s markets,or special events
  • Easy access to information for sales staff

4. Does the POS sync the in-store and online shopping experience?

The world of online and physical retail are now one and the same with Omni channel.

Most retailers agree that customers who shop both online and in-store bring in more revenue than those who shop via one channel. The right POS will bridge the gap between brick-and-mortar and e-commerce.

Look for:

  • Inventory, sales, customers and order requests are synchronized between in-store and web
  • Professionally designed, easy-to-use templates that do not require any technical skills
  • Built-in mobile-responsive website if necessary (eCommerce)
  • The ability to sell on Facebook and other online marketplaces where possible

5. Does the POS offer deep analysis and actionable reports?

A good POS system will not only show you how well you’re doing, but help you communicate more effectively with your customers and identify opportunities for business growth.

Look for:

  • Reports for most profitable products, top-selling products, lowest-selling products, no sales products, busiest store hours, top brands, online vs. in-store sales, etc.
  • Reports that show customer purchase history and employee performance
  • Predictive inventory analytics

6. Is training and support part of what you’re buying?

An onboarding session with a product specialist is key to getting started on the right foot and continued access to technical support will see you through any issues

Look for:

  • Local partners who can provide on-site consultation, installation and troubleshooting services
  • Variety of training materials, including a help center, community forum and online resources
  • Published customer satisfaction ratings

7. Is the system cloud-based?

A cloud-based POS system allows you to access your reports data from wherever you are. It is also scalable, and offers significantly lower infrastructure costs.

Look for:

  • The ability to access your point of sale from any device, from anywhere
  • Automated cloud-based data backups
  • A system compatible with all types of computers and mobile devices

In Summary:

With the right technology, an independent retailer can make a big impact, but there are important factors to consider before making a decision.

Next time you’re in the market for a new point of sale system for your retail shop, supermarket, grocery store or any other retails based business, remember the above questions. They’ll help you find a system that will support your success.

Bottom line, the best POS system for you will make your life easier.

If your thinking about starting a large or mini supermarket,don’t forget to check out our article about 10 Steps On How To Start a Mini or Large Supermarket

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