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What is POS software?
POS software is used primarily by eCommerce and brick-and-mortar stores to conduct sales transactions. Such tool have the functionalities of both a computer and a cash register. With POS software, sellers can input orders, compute the cost and receive customer payments.
What is POS software? POS stands for “Point-Of-Sale”, and POS software is what brick-and-mortar stores and eCommerce stores use to conduct sales. Think of it as your more advanced cash register combined with a computer (or even mobile computing device such as a tablet) where cashiers input the ordered products, tally the cost, and consummate the financial transaction. It can integrate other systems and software, such as accounting apps or eCommerce platforms, or connect with networks and databases to expand your business’ operational flexibility and capability.
The definition of POS software revolves around its main purpose – to process sales. However, point-of-sale software does so much more than that. Full-featured POS systems can handle inventory tracking, analytics, sales monitoring and reporting, customer data management, employee management, mobile connectivity, and robust integrations. POS software also comes in a range of options from simple processors to complex cloud systems to meet the requirements of various businesses regardless of type (physical or online) and size (small, medium or large enterprises).
There are three general classifications of point-of-sale software. These systems include:
- Mobile POS. Basically used to manage and process payment but can also have other functions like inventory tracking. It is ideal for sole entrepreneurs and small businesses because of its simple setup, operation and affordability.
- Terminal POS. It can be both software and hardware based system that can carry add-on devices such as barcode scanners and cash drawers. It is the most commonly used system by businesses because of advanced functionality and reasonable prices.
- Cloud-Hosted POS. It is an online or web-based system you can use with your existing hardware (such as computer, tablet, and printer). It is suitable for businesses of any size especially startups because of the systems affordability, scalability and convenience.
In this article, we’ll explore what is POS software, how it works, what it does, what benefits and advantages it provide, its pricing structure, and examples of popular POS solutions. Consider all these as guideposts so that when the time comes for you to choose POS software, you’ll be in the best position to make well-informed decision. In this write-up we will go through the definition of the following aspects:
- POS Facts and Figures
- What Does POS Software Do?
- How Does POS Work?
- What Are the Benefits of POS Software?
- What Are the Advantages of POS Software?
- What Are the Features of POS Software?
- What is the Cost of POS Software?
- What are Examples of POS Software?
- Is POS Software For You?
1. POS Industry Facts and Figures
Here’s a quick look at some facts and statistics of the POS terminals industry.
Global Mobile POS Terminals Market by Component, 2012-2022 (USD Billion)
Credits: Grand View Research
- The size of worldwide retail POS terminals market in 2015 exceeded $14B. The industry is projected to grow at an annual rate of 14% from 2016 to 2024. (Global Market Insights)
- The increasing number of mobile devices such as tablets and smartphones are seen to drive the growth of the retail POS terminals market.
- Software and hardware are the two major components of retail POS terminals, and the software-based retail POS industry will account for 30% of global market revenue by 2024. (Fractovia.org)
- Supermarkets or hypermarkets application captured 35% share of the overall retail POS terminals industry and will continue to grow attributed to factors such as reduction in human error, employee tracking, inventory tracking, and stock management.
- The self-checkout or SCO (categorized under Terminal POS systems) market is expected to have a compound annual growth rate of 7% until 2023. Because of this, you can expect it to gain prominence and have a wider adoption worldwide.
- The most desired features used by retailers in their POS system are: first, zero transaction charges; second, mobile management app; and third, employee scheduling capabilities.
- Significant adoption rates have been reported for mobile POS particularly among small and mid-sized retailers. In fact, 79% of mPOS systems are utilized by small to mid sized companies reporting less than $10M sales and only 21% is used by large enterprises.
Stores That Use Mobile POS Broken Down by Revenue Range
Credits: The Point of Sale Software Systems User Research Report
2. What Does POS Software Do?
Understanding what is POS software boils down to knowing what it does. From the key words “point-of-sale” – the time and place where a retail transaction takes place – a POS system is there to process that sale. It has been doing this since the first electronic cash register was built by IBM in 1973 which were store systems (essentially a mainframe computer) could control several point-of-sale registers. The system introduced the first commercial use of client-server technology, peer-to-peer communication, remote initialization, and LAN simultaneous backup. In 1974, McDonald’s restaurants were among the first to use microprocessor controlled cash register systems.
The first commercially available graphical POS software came out in 1986, which featured a colored touch screen widget-driven interface, and was installed in numerous restaurants in the USA and Canada. In the same year, IBM introduced its series of modular POS equipment with real-time multi-tasking and multi-user operating system. It was in 1992 that the first modern POS software came out that could run on Microsoft’s Windows platform.
POS systems have become one of the most complex software systems today because of the varied features required by different businesses or end-users. POS systems initially served the retail, wholesale, and hospitality industries hence POS software suites included functionalities aside from managing sales transactions such as inventory, stock counting, vendor ordering, customer loyalty, reporting modules, purchase ordering, stock transferring, quotation issuing, barcode creating, bookkeeping and accounting. And for practical purposes and to maximize the system’s usability, each of these modules is interlinked.
Today, POS systems are used in just about every business of service and selling. They are utilized in healthcare management, goods and property leasing, equipment repair shops, ticketing offices (ex. cinemas and sports facilities) and many other operations. POS software capabilities have also been expanded to process monetary transactions, book and allocate facilities, keep customer service records, track goods and processes (ex. repair or manufacture), invoicing, and monitoring of debts and outstanding payments.
As you can see, POS system is the jack of all trades of your business; which is why POS systems are built for reliability, high and consistent operating speed, remote supportability, and rich functionality to meet various demands and requirements of a diverse group of users.
Touchbistro is a popular POS system for restaurants
3. How Does POS Software Work?
There are two major components that comprise a POS system – the hardware and the software.
- Hardware – This is the physical set up of machines that could be a cash register connected to a server or PC, or even a tablet device linked to a cloud-based system. It could also have some necessary add-ons like cash drawer, receipt printer, barcode reader, and card machine to process payments made via debit or credit cards.
- Software – The hardware is used in tandem with POS software which stores information and manages it within a database. POS software features vary widely depending on the end user and the industry. Some software suites carry general functions that cater to numerous industries, while others are niche-specific.
The POS software brings with it an array of features and functions to manage many aspects of your business operation, foremost of which is to keep track of sales so you can view how many items were sold and how much money came in. You can generate daily, weekly, monthly, quarterly, or yearly reports without worrying of your figures since POS software are designed for high degree of accuracy.
As we’ve mentioned in the preceding section, a POS system is built for rich functionality and that is handled largely by the software component. It can automatically check and update your inventory every time a product is sold, so you’re always in the know if stocks are running low and if a reorder of supplies is needed. You don’t need to do manual inventory count which is inefficient and inaccurate.
You can integrate your POS software with accounting systems to create comprehensive financial reports. You also get the convenience of producing error-free tax reports. One particular beneficial area that POS software provides is managing your employees especially if you employ several of them. The system can monitor their log in and log out times and keep track of the hours they rendered work. There are many more benefits that you can read on in the next section.
How does POS software work? Depending on functionalities and capabilities that come with it, POS software works to provide you the functions you need for your daily operations in a simplified and streamlined manner.
4. What Are the Benefits of POS Software?
A POS system is literally the workhorse of your business. It can provide you plenty of benefits. Here are some them:
- Accurate operation. The business of selling involves numbers, multiple clients and products at the same time. Handling them all manually easily opens you to errors and mistakes. You do away with double-checking each customer’s order and other information since POS software can record transactions, manage inventory, and analyze sales patterns in an accurate manner.
- Analysis. Data is just a bunch of disparate figures and serves no purpose without a powerful analytics and reporting system that can extract relevant information to reveal trends, strengths, weaknesses and solutions. Analytic features of POS software can provide you with useful insights to guide business decisions.
- Networking with other terminals. You can manage sales from a single platform with the networking capabilities of POS software that allows the system to connect and communicate with other terminals and handheld devices for tracking operations from any location.
- Shrinkage security. This is a distinctive benefit of POS software compared to other sales software since it offers powerful SKU reporting and follow time periods, promotions and orders, and can focus on the performance of each employee.
- Affordability. Even with all the powerful features tucked into POS software, it is relatively cheaper than other sales apps and business productivity software. With many cloud-based platforms, POS software features can also be scaled to match the requirements of your business.
A brief look at Vend’s dashboard
5. What Are the Advantages of POS Software?
There are several advantages that can result from adopting POS software but they can be summed up in three parts: efficiency, accuracy, and consistency. These are all important in running your retail or selling business. We’ll explore each.
- Efficiency. Consider this – according to studies, personnel who manually input each transaction on traditional cash register makes a mistake with every 300 characters typed, while with a POS system that uses a barcode reader there is only one error recorded for every 15,000 to 36 trillion barcode characters scanned. Moreover, inputting an item’s data using conventional methods consumes around 6 seconds, compared with scanning an item with POS barcode reader that takes only 0.3 seconds. You get the point. Completing the entire transaction process is way much faster with a POS system which translates to quicker turnover and more customers serviced in much shorter time. This is just one area among many others that POS system can impact significantly, contributing to efficiency in operation and boosting company revenues.
- Accuracy. You can track employee activity with the use of unique ID codes (also known as clerk codes), manage stock and inventory levels, do bookkeeping and accounting tasks, build financial summaries and sales reports, identify sales trends and seasonal product demand patterns, and a whole lot more – all with high levels of accuracy. Similar to the efficiency boosting example above, the accuracy offered by POS systems stems largely from the elimination of error-prone manual inputting of data, and the automation of tasks and processes. In addition, POS software is a great deterrent against employee theft since everyone working in your establishment knows that every transaction is tracked and monitored, and that any such instance whether unintentional or deliberate can easily be traced to the concerned personnel.
- Consistency. A particular challenge for businesses that have outlets in several locations is having consistent pricing of products across all its stores. POS software can take care of that by allowing business owners or managers access to a digital product database where they can modify prices or special deals and apply the changes automatically across all store locations. Pricing affects customer service and having consistency in this area ensures that your customers get the same level of service no matter at what store location they are.
6. What Are the Features of POS Software?
POS software can have as many features depending on the requirement of the end user and the industry it will be used for. Some POS software comes as integrated modules in comprehensive ERP software packages, while others are sold as standalone solutions. However, there basic functionalities common to POS systems such as the following:
- Inventory tracking. This is useful if you have storage facilities or multiple branches since a POS system inform you if you have enough stocks in your store or other branches, and if more stocks are needed.
- Sales reporting and analytics. This feature allows you to capture and analyze vital data on product sales as well as revenue rates and ROI. You can determine which products need more marketing efforts, or craft better sales boosting strategies.
- Customer management. POS systems store and maintain customer’s full purchase history that you can access on your dashboard. You can access customer information anytime and gauge who among them are your most valuable customers.
- Employee management. This allows you to efficiently manage your employees’ time and optimize productivity by keeping track of when and what your employees are working on.
- Mobile access. Cloud platforms allow you to access your sales data anytime from any location using web-connected mobile devices, giving you and your business much flexibility.
- Integration capability. The POS system must be capable of smoothly integrate with other business systems and apps you use such as accounting software or e-commerce solutions so that you can manage other tasks and processes from within your system. It should also integrate with your existing hardware components.
7. What is the Cost of POS Software?
There can be a wide disparity when it comes to the cost of POS software. Some basic platforms can go for a couple hundred dollars, while others can set you back by four figures. The good thing is that POS software prices have gone done because of the following: the availability of affordable subscription-based, cloud-hosted platforms; the many competing products and choices of plans offered by vendors; and the ability of POS software to work with existing or third-party hardware. Just to give you an idea of the pricing range, below are examples of cloud POS platforms and their rates.
- PayPal Here (payment processing arm of PayPal with built-in POS system) – $0 monthly fee
- Talech (cloud based POS for iPad) – $69/month for Standard and $99/month for Premium
- Shopify – $9 to $299/month depending on the 4 service tiers that you avail
If you start from the ground up with a new POS system, be prepared to make a sizable investment especially if you need several POS terminals. In 2009, a complete POS system (hardware + software) cost something like $4,000 (for a single terminal). Fortunately, hardware parts today can be sourced off the shelf while the software component is the cheaper part of the POS system with many offerings you can choose from. Now you can expect POS systems to cost lower than figures eight year ago.
Shopify is a very popular POS solution
8. What are Examples of POS Software?
- Toast POS is a Cloud- and tablet-based restaurant management solution Toast is designed to do away with your old POS while providing both control and business visibility. Made for US-based companies, the platform offers restaurant owners a single solution that has myriad functionalities that include POS, reporting, credit card processing, CRM, gift and loyalty, online ordering and labor and inventory. You can easily sign up for Toast POS free demo here.
- TouchBistro is an iPad POS system designed by restaurant service staff to meet the specific needs of restaurants, eateries, cafes, food trucks, pubs, or any other food business. The platform can handle tableside orders, floor plans and tables, mobile payment processing, staff and scheduling, menu management, and inventory management right from your iPad. It offers cloud reporting and analytics, and 24/7 expert support from former restaurant servers, managers, and owners. It comes with food service specific features, superior ease-of-use, and advanced management capabilities, making it an ideal niche-specific solution for your restaurant.
- Vend is a POS platform built for iPad and is widely used by retail businesses for managing customers, sales, and inventory. It is a flexible solution that can be tailored to support add-ons such as mouse and keyboard or touchscreen. Likewise, you can customize the POS screen for access to popular items or processes. Vend is compatible with existing systems, hardware, and equipment such as receipt printers, barcode scanners and cash drawers. Operating the platform is as easy as activating your Vend account via a web browser on any desktop and mobile device and you’ll have a reliable POS system up and running.
- Shopify POS is an iPad and iPhone-based POS service from leading ecommerce platform Shopify. The software allows you to manage your entire online and physical store business using a single unified platform. Users who subscribe to Shopify POS will receive a full POS system that consisting of a receipt printer, cash drawers, barcode scanner, and Shopify’s proprietary card reader (powered by Swipe). Shopify offers all the hardware through their website, but you can also use your own hardware and as long as they’re compatible, integration will be no problem.
- Erply is one of the leading web-based retail systems designed to offer merchants everything they need to manage their businesses. Among its many features is a hybrid cloud POS system that you can run both online and offline. Data is auto-synced once the system is reconnected online and you will not lose data or miss capturing transactions that took place when the system was offline. Its iPad-oriented POS system can help you manage sale and inventory as well as handle multi-store operations. It also offers speedy product lookup where you can query products by code or name, scan barcodes, or choose a product from the inventory list and add it to the transactions.
- Lightspeed Retail is a cloud POS system that is compatible with any device or platform. It streamlines day-to-day operations and can address point of sale requirements of businesses with single store or with multiple branches. With the software, you get inventory management tools, reporting features, quoting, ordering and invoicing tools, as well as jobs and timesheet capabilities. Other features include time-billing, appointment scheduling, and product creation. You can also smoothly switch functionality from management to sales in no time. If your business needs additional hardware, Lightspeed can supply you items such as barcode scanners, receipt printers, and cash drawers.
- Rezku POS is an iPad-based point of sale system designed for restaurants, cafes, bars, and other similar businesses. Its applications go beyond that of what you expect of a cash register or credit card payment tablet-based solution. With Rezku POS system, restaurant owners and managers are at the top of their inventory, finances, accounting, staffing, and other business processes.
- Figment POS is a cloud-based platform built to streamline the check out and payment processes of various industries. It offers a a high degree of customization and flexibility to suit your various requirements. Selecting the right pricing option for Figment POS is easy as the platform offers industry-specific functionalities packages to better suit the nature of your business. It includes a pre-built packages for bakeries, bookshops, coffee shops, and more.
- LimeTray is an intuitively designed cloud-based POS system that is designed to streamline and enhance one’s restaurant services. It is equipped with a comprehensive set of features to provide restaurant managers with full control over their operations while ensuring that they are able to deliver exceptional services to customers. LimeTray notably features a clutter-free design that makes it easy for managers to focus on their tasks. It also comes equipped with offline capability, advanced analytics, inventory management, cash management, CRM integration and other functionalities.
- WooPOS is an intuitive point-of-sale software solution created for online stores who utilize WooCommerce as well as retail brick-and-mortar shops. Equipped with tools for inventory management, sales tracking, CRM, and employee management, this tool is ideal for businesses of all sizes who want to streamline their operations. It even offers a cloud-based interface that makes it easy to synchronize all your sales information in a unified database. To make things better, the platform also comes with built-in analytics solutions so you can generate reports on your sales performance without hassle.
9. Is POS Software For You?
If the core of your business is selling products, then POS software is a foremost requirement. As you have learned from the preceding sections, today’s POS system goes beyond just processing customer purchases and recording sales. It can help you manage a whole lot of tasks to make processes more efficient and save you time, money and resources which can drive the sales and growth of your business. So yes, POS is crucial and definitely for you, more so if you are a small business retailer who has to grapple with tracking and recording daily sales, managing customer information, monitoring stocks and inventory, looking over employee task and performance, and a whole lot of other things. Large scale businesses can also benefit from POS software since it is a networked system that can operate several terminals in different store locations. You can make your life easier and your retail operation more efficient with POS software. What is POS software? It is the backbone of your selling business that you can’t afford not to have.