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According to a recent Retail Systems Research study, more than 93% of retail stores identified "shrinkage" -- inventory loss due to theft, accounting errors, or inventory mismanagement -- as a high priority in the coming years. More than 63% of respondents believe that "better business intelligence" will help them cut total operating expenses.
These retailers are right to think that better inventory control is possible with the right tools. One way for retail and service industry businesses to cut costs, manage inventory, and streamline sales is through the use of Point of Sale, or POS systems. Is it time for your business to look into POS?
What Does A POS System Do?
At their most basic, POS systems act as electronic cash registers: they ring up purchases, calculate sales tax amounts, and create records of customer payments. You can buy industry-specific POS software for many types of businesses: restaurant POS systems, hotel POS software, salon scheduling and inventory management programs, and other offerings are available at a range of prices and capabilities. Basic POS systems can handle every facet of customer transactions (returns, refunds, etc.), and POS systems can also be used for inventory management and customer database creation.
Types Of POS Systems
Business POS systems come in several flavors. Some systems are designed to be used at a single cash register terminal, while others link together multiple terminals. Some POS systems run from a central "hub" or central computer, while others are hosted online.
A stand-alone terminal, often referred to as an electronic cash register or ECR, is the most basic type of system configuration. Software for a single transaction station can be purchased or hosted online, and can be as advanced or simple as your business needs. A Network System is one where multiple terminals are linked together, with a single station (one equipped with more memory and processing power) acting as the "primary" terminal. Controller-based systems operate similarly -- a single machine acts as the "hub" for collecting data, generating reports, and storing inventory and other data.
Which configuration is right for your business depends on your specific needs: smaller businesses with just one location usually find a stand-alone terminal or a linked network system to be sufficient. Businesses with e multiple locations, a high transaction volume, or multiple-step transactions (restaurants and other service industry companies) often require more advanced solutions.
The type of system you choose won't have too much impact on the features you are able to use. ECRs, Network, and Controller-based systems can all be configured to work with industry-specific software or advanced software and hardware features.
Web-based POS vs. Purchased Software
POS software is the backbone of any POS system. The software determines available features and the hardware you'll need. Software is typically either hosted (Web-based) or purchased as a "package" from a POS dealer. Each option offers its own distinct advantages.
Web-based software is like leasing a program: you pay a monthly fee to the software provider (sometimes a set up fee is also required) and can quickly download the program to your controlling computer, primary terminal, or workstation. Some advanced programs may require more technical support -- most Web-based software providers offer help desk access, maintenance, and repair options as part of the monthly service cost. Web-based POS programs require an Internet connection in order to use the system (if your connection goes down, you may not be able to use the system). In addition, to ensure proper functionality, most vendors require a dedicated power supply and a minimum connection speed.
One advantage of using a Web-based system is third-party data backup. Studies have found that 31% of computer users have lost all of their files to events beyond their control, and 60% of businesses that lose their data will shut down within 6 months of the disaster. A Web-based system allows you to backup information (inventory, customer data) easily and automatically. Web-based systems also allow remote access and easier, cost-free software updates. Costs for Web-based POS software begin at several hundred dollars a month and run up to thousands of dollars per month.
Purchased software is a popular choice for businesses that want a high level of customization or want to minimize costs -- whether up front costs or monthly fees. POS software is purchased at the time the system is implemented, and is wholly owned by the business that buys it. No monthly fees, but you do have to pay for upgrades, updates, and maintenance. Purchased software ranges in cost from free (mostly open-source, downloadable options) to several thousands of dollars for advanced solutions.
Some POS software programs come in both Web-based and proprietary options. Industry specific options, those that work with existing hardware, or systems that are highly customizable are available for all types of POS system configurations.