What is a point of sale (POS)?
The point of sale (POS), an essential element of a point of sale, refers to the place where a customer makes payment for goods or services and where sales taxes may become due. It can be located in a physical store, where terminals and POS systems are used to process card payments or a virtual point of sale such as a computer or mobile electronic device.
Understanding the point of sale
Point of sale (POS) is an important priority for marketers, as consumers tend to make purchasing decisions for high-margin products or services at these strategic locations. Traditionally, businesses have set up outlets near store exits to increase the rate of impulse purchases when customers leave. However, different locations of outlets can give retailers more opportunities to market specific product categories in the micro-market and influence consumers earlier in the sales funnel.
For example, department stores often have outlets for individual product groups, such as appliances, electronics, and clothing. Designated staff can actively promote products and guide consumers in purchasing decisions rather than simply processing transactions. Likewise, the format of a store can affect profit or purchasing behavior, as it provides consumers with flexible options for making a purchase.
The concept of Amazon convenience store, Amazon Go, which deploys technologies that allow buyers to enter, seize items and exit without going through a register, could revolutionize point of sale systems. In addition to increasing convenience, this could allow points of sale, loyalty and payments to be integrated into a single customer-centric experience.
Advantages of POS systems
Electronic POS software systems streamline retail operations by automating the transaction process and tracking important sales data. The basic systems include an electronic cash register and software to coordinate the data collected during daily purchases. Retailers can enhance functionality by installing a network of data capture devices, including card readers and barcode readers.
Depending on the functionality of the software, retailers can track price accuracy, inventory changes, gross revenue and sales patterns. Using integrated technology to track data helps retailers detect price or cash flow gaps that could cause lost profits or interrupt sales. Point-of-sale systems that monitor inventory and purchasing trends can help retailers avoid customer service issues, such as out-of-stock sales, and tailor purchasing and marketing to consumer behavior.
Key points to remember
- A point of sale (POS) is a place where a customer makes payment for goods or services and where sales taxes may become due.
- A point-of-sale transaction can occur in person or online, with receipts generated either on paper or electronically. Cloud-based point-of-sale systems are becoming increasingly popular with merchants.
- Point of sale systems are becoming increasingly interactive, particularly in the hospitality industry, and allow customers to place orders and reservations and pay invoices electronically.
Special Considerations: POS Innovation
Modern POS systems are generally programmable or allow enhancements with third-party software. These systems can be adapted to meet specific needs. For example, many retailers use point-of-sale systems to manage membership programs that give points to frequent buyers and offer discounts on future purchases.
Cloud-based point-of-sale systems are increasingly used, especially for large online merchants, to track and process many purchases. Cloud-based systems can significantly reduce the initial costs of implementing a POS system for many businesses.
Customers can also interact directly with point of sale systems, particularly in the hospitality industry. Often called location-based technology, these systems can process customer transactions. For example, in many restaurants, customers can view menus and place orders on terminals at their tables. In hotels, customers use similar terminals to place room service orders or to pay hotel bills.
To stay competitive and help brand owners promote their products, POS manufacturers focus on improving aesthetics and creating innovative product designs. In addition, increased competition in the retail sector and the resulting use of point-of-sale screens to entice customers to purchase products has encouraged retailers to demand different custom screens capable of meet specific needs in different retail facilities. The personalization offered in terms of aesthetics, capacity and mobility can have a significant impact on the identification of a company’s brand.