What is POS Software? The All-In-One Business Management Tool
Foodservice and retail businesses handle large volumes of sales, inventory, and market data day to day, making it challenging to manually collect and interpret information. This is especially true for omnichannel companies that offer their products and services on several platforms.
However, with point-of-sale (POS) software, businesses can collect data from each transaction across all sales channels to promote data-based decision-making. This access to real-time sales information can improve marketing, pricing, inventory control, and employee management practices.
Advanced POS software can also integrate with existing management systems so that organizations can access several reports via one universal interface. With this all-in-one tool, businesses can generate actionable insights to determine how they can drive sales and their overall performance.
What is Point-of-Sale Software?
Originally, the POS was only comprised of a traditional cash register used to complete transactions and collect cash. This required businesses to handle inventory, customer data, and other operations manually.
Through many technological advances, businesses now have access to POS software, which uses sophisticated programming to calculate totals, track inventory, and record sales automatically.
Companies are also no longer limited to simple cash registers that require manual calculations. Modern POS systems typically come with attached hardware so organizations can accept multiple forms of payment, including cash, credit cards, and digital wallets.
Many small and medium-sized businesses, from restaurants to retail stores, have left the traditional methods behind for POS software as it provides an all-in-one solution to manage their inventory, transactions, and reporting needs. Aside from streamlining daily operations, POS solutions support expansion and are able to grow with a company. Organizations can purchase add-ons whenever a new need arises instead of implementing an entirely new system.
With one centralized interface, businesses can efficiently manage multiple locations simultaneously and pinpoint inefficiencies. Software systems can also detect anomalies from consistent trends to improve risk management and deter variances.
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8 Types of Point-of-Sale Software
The primary types of POS software include on-premise and cloud-based systems. On-premise solutions require users to be on-site, using the same server. On the other hand, cloud-based software allows employees to access the dashboard from any location with an internet connection.
Many businesses have switched to cloud-based software because it provides a flexible work environment, allowing management to monitor their sales in real-time from anywhere. It is also ideal for companies that sell products online or have a multichannel sales approach. Cloud-based software automatically updates all locations, whether physical or online, with every transaction to optimize inventory control.
Aside from the general on-premise and cloud-based solutions, there are several sub-categories of POS software, including-
1. Mobile POS
Mobile POS (mPOS) systems enable businesses and employees to complete transactions on-the-go with portable devices, such as tablets and smartphones. By eliminating the traditional central check-out counter, companies can travel to shopping fairs and employees can move freely around the sales floor.
mPOS solutions are ideal for-
- Mobile Vendors
- Pop-Up Shops
- Food Trucks
- Department Stores
- Flea Markets
A tablet POS allows businesses to have a mobile and stationary checkout system. Tablet solutions typically use Android tablets or iPads to run a version of mPOS software. With a docking component, stores can also provide a self-service kiosk.
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POS software that runs on a desktop computer generally uses on-premise systems installed in a set checkout station. Desktop solutions often include cash drawers, card readers, and scanners, which can take up more counter space. However, these solutions are robust, reliable, and consistent.
4. POS Applications
Most modern POS systems enable companies to purchase additional applications to better manage their business operations. POS applications provide additional services, such as-
- Data Reporting
- Employee Management
- Customer Relationship Management (CRM)
5. Open-Source POS
Open-source software enables businesses to create personalized solutions by using their own source code. Depending on the company's budget and IT department, help from external programmers may be necessary.
6. Multichannel POS
A multichannel POS solution can aggregate data from several sales channels, enabling businesses to expand their customer reach. Advanced multichannel POS software can integrate-
- E-commerce Sites
- Traditional Brick-and-Mortar Stores
- Online Marketplaces
- Social Media Shops
7. Retail POS
Traditional retail POS systems cater to brick-and-mortar stores and restaurants that sell their products and services strictly in-person. These solutions typically include inventory management, forecasting, and multichannel selling features.
8. Restaurant POS
Restaurant POS solutions are tailored to restaurants with menu planners, ingredient tracking, meal customization, and dining room layout features. With customizable functionality, various restaurants, from fast-food chains to diners, can utilize restaurant POS systems.
Components of a Point-of-Sale System
Depending on the type of POS software and the business's needs, companies can incorporate different types of hardware, including-
- Barcode Scanner - Besides scanning items during checkout, barcode scanners enable businesses to accept in-store and manufacturer coupons. It also improves inventory management by streamlining restocks. By automating transactions and inventory counts, companies can promote their accuracy and efficiency.
- Cash Drawer - Companies that accept cash payments need to have a secure place to organize and store bills. Depending on the type of cash drawer, employees can access the cash via a key, code, or biometric authorization.
- Card Reader - Card readers can process credit and debit card payments via magstripe, chip, or contactless technology. Some card readers incorporate all three technologies, expanding the business' processing capabilities.
- Receipt Printer - While online stores email customers their receipts, many traditional businesses still utilize receipt printers. Physical receipts allow stores to market products, send out customer surveys, and offer coupons.
- Label Printer - By integrating a label printer with the POS software, businesses can ship items between store locations, organize inventory, and streamline price changes.
- Scale - For companies that price products by weight, integrating scales enables the POS software to calculate customers' totals automatically.
5 Functions of Point-of-Sale Software
Modern POS software has several management features, significantly improving business functionality and performance. With POS solutions, companies can-
1. Manage Inventory
Regardless if a business holds their inventory in a warehouse, in-store, or at a distribution center, they can aggregate stock information to keep accurate counts.
For retailers, inventory is among the largest expenditures, making it crucial to manage properly. Otherwise, companies can waste significant funds on stock discrepancies, poor ordering strategies, and inaccurate cycle counts.
With an advanced POS system, companies can track their inventory throughout the supply chain and their various locations, from warehouses to store shelves. Through automated tracking, organizations can streamline order fulfillment, improve reorders, and quickly transfer items between sites.
This enables businesses to minimize inventory expenses, such as order and storage fees, by utilizing the stock on-hand before placing additional purchase orders.
With access to accurate item quantities, stores can maintain healthy inventory levels to prevent stockouts. However, in the case of a stockout, POS software will automatically mark items as out of stock across all sales channels to avoid backorders.
Businesses can even integrate their POS solution with ordering software to automate reorders. Once inventory dips below a healthy level, the POS software triggers a reorder to all necessary locations.
By integrating forecasting software, POS solutions can generate demand and sales forecasts based on existing patterns. Businesses can then prepare their purchase orders, employee scheduling, and pricing strategies to boost sales and revenue.
2. Track Sales and Generate Reports
Although many businesses believe POS systems are used solely for processing transactions, modern solutions also collect and analyze data. By recording each purchase, POS software can generate detailed reports on sales trends. This enables companies to use insightful data to improve decision-making.
Multichannel POS solutions monitor transactions from every sales front so businesses can determine each platform's strengths and weaknesses. Breaking down each sales channel gives companies the ability to pinpoint inefficiencies and find ways to improve performance.
With POS software, organizations can track and analyze-
- In-Store and Digital Sales Data
- Sales from Specific Timeframes
- Sales per Worker
- Sales per Channel
- Sales per Location
- Employee Activities
- Product Reports
- Average Number of Orders
Businesses can purchase POS add-ons and other analytical processes to increase their analysis capabilities and better understand their financial health.
3. Collect Customer Data
Advanced POS solutions also double as a customer relationship management (CRM) tool by tracking shoppers' information through each transaction. When making a purchase, customers offer personal information, such as their-
- Full Name
- Billing Information
- Preferred Method of Payment
While this data may not seem important, it enables businesses to better understand their key demographics and loyal shoppers. By evaluating customer data, companies can develop-
- Customer Profiles - Also known as buyer personas, customer profiles list pain points, areas of interest, buying behaviors, and shopping characteristics of different types of consumers. This enables the marketing team to develop targeted campaigns.
- Customer Purchase Histories - By collecting each customer's purchase history, retailers can practice upselling, cross-selling, and product suggestions to encourage impulse buys. Improving these sales strategies can promote sales and the average order value (AOV).
- Loyalty Programs - Modern POS systems recognize loyalty programs, allowing companies to collect even more customer data from all sales channels.
4. Improve In-Store Sales
While many consumers now prefer online shopping, even the traditional shopping experience has changed significantly, requiring retailers to meet fluctuating customer demand. With a POS solution, establishments can quickly adapt to their evolving industry.
POS features can help companies capitalize on emerging customer trends to empower shoppers and drive sales. By leveraging loyalty members' data, businesses can employ email marketing strategies to boost brand exposure and offer exclusive deals to promote sales.
For example, retailers can use purchase histories to print personalized coupons on shoppers' receipts to encourage repeat purchases. Businesses can also use this method to increase inventory turnover rates and generate returning customers.
Modern consumers want a variety of procurement options even with traditional shopping. Therefore, retailers need to provide several retrieval options, such as-
- In-Store Pick-Up
After placing an order, customers will receive an alert that their order was fulfilled and is available. Then, shoppers just need to go to the customer service center inside the store and present their email confirmation to pick up their items.
- Curbside Pick-Up
5. Customize Business Operations
POS solutions should enhance existing operations instead of forcing businesses to completely revamp their internal systems. The software and hardware should seamlessly integrate with the brand's aesthetic and existing solutions.
Before choosing a POS system, companies must ensure the software is robust enough to handle their daily tasks. Owners should also ask the provider about its integration capabilities, personalization features, and levels of functionality. By checking a system's connectivity, businesses can link new software with other management tools to improve data exchange, communication, and reporting.
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- What is POS Software? The All-In-One Business Management Tool