These days you would be hard-pressed to find a retail operation that doesn’t use a cloud point of sale system. Retailers that haven’t yet adopted POS for transactions likely soon will: MarketWatch forecasts that sales of POS systems worldwide will increase from $6.4 billion in 2018 to $15.3 billion in 2024, representing a compound annual growth rate of 15.7 percent between 2019 and 2024.
Much of that revenue growth will be the result of mobile payments, a trend that may leave some retailers struggling to upgrade their existing POS operation. In particular, stores that rely on traditional client-server POS systems may find themselves spending much time and effort manually upgrading their setups to support mobile payments. They also may be missing out on the advanced data analytics, real-time inventory tracking, and other features of cloud point-of-sale systems.
Here’s a look at how cloud-based POS systems stack up against their traditional counterparts in terms of how each type meets the future needs of retail operations.
Characteristics of Traditional Client/Server POS Systems
The first retail POS systems were closed networks used primarily to process customer transactions. As BizFluent explains, they are comprised of POS software running on a server to which POS terminals are attached, usually via cables. Retailers create and configure several different databases when they initially install the software, such as price and product tables.
In some cases, the server must be mapped as a network drive on the POS terminals by entering the server’s IP or network address, a process that usually requires login credentials. In addition, the POS software often has to be installed on the workstations manually, unless the software is loaded from the server and the workstations serve as “dumb terminals.” The workstations often have several peripherals attached via cables, such as credit card readers, receipt printers, and barcode scanners.
After the database tables containing the company’s product and price lists have been loaded on the server, the next step is to enter the inventory into the POS database. Then several sample transactions need to be run to confirm that the POS server and workstations are properly configured and operating correctly. Retailers must also confirm that the server and workstations are secure to ensure they are protecting customers’ sensitive financial information.
How Cloud Point of Sale Systems Differ from Traditional POS
The primary difference between cloud-based POS systems and their client/server counterparts is openness: cloud POS systems use the software-as-a-service model, which stores the retailer’s data on remote servers to make the records accessible from any internet-connected device. The open web-based architecture allows retailers to combine many financial and other management services into a single integrated solution that supports a range of retail operations.
However, the primary driver of the skyrocketing popularity of cloud POS systems is their support for mobile payments. Statista estimates that U.S. mobile payments grew from $369 million in 2017 to $746 million in 2019, and they are forecast to exceed $2 billion by 2023. In addition to mobility, cloud point of sale systems allow retailers to integrate customer relationship management (CRM) functions with POS, so they can use historic customer data to offer loyalty programs, online ordering, email marketing, and other promotions.
There are several other reasons for the increasing popularity of cloud point of sale systems:
- Cost: Rather than paying for hardware upfront, licensing software, and paying fees for support and maintenance, cloud POS entails only a monthly rental fee for access to the software. The pay-as-you-go model lowers acquisition costs and may reduce or even eliminate per-terminal fees and fees for connecting to third-party services.
- Simplicity: The service model of cloud POS eliminates the need to maintain in-house servers and other network equipment because the systems are ready to go as soon as you download the app and entered your inventory and other data. All software maintenance and updates are pushed to the devices automatically.
- Flexibility: Cloud POS systems grow seamlessly along with your business, allowing retailers to start small and build in capacity and new features as they need them.
- Functionality: By using open application programming interfaces (APIs), cloud POS systems support “snap-in” integration with mobile services, deliveries, and online ordering and payment.
Features to Look for in a Cloud Point of Sale System
Even with benefits such as affordability, scalability, and ease of use, cloud POS systems must support all the key operations of retailers, including employee management and cost accounting. Pulse Headlines lists the capabilities that retailers require in an effective and affordable POS system:
- The ability to generate detailed sales reports that compare sales over time and include net profit, profit margin, and total gross margin.
- Customer relationship management features, including customer purchase histories, targeted marketing, loyalty programs, and other personalized options.
- Inventory management that shows current stock levels and helps determine optimal stock levels for individual items. This includes identifying top-selling items and alerting suppliers automatically for timely restocking.
- Employee management that goes beyond scheduling to offer options for tracking performance, training, and skills development.
Other capabilities of cloud POS systems that retailers can take advantage of include the ability to handle voids and refunds, exchanges and returns without receipts, automatic discounts, variable and fixed-price discounts, multi-level taxes, kiosk mode (guest mode), and customer-facing displays.
While many large retailers have made extensive investments in their client/server POS systems, a growing number of vendors are taking advantage of the mobility, affordability, and flexibility of cloud POS systems. When it comes to keeping pace with technologies such as contactless payments that their customers rely on in their daily lives, retailers are finding cloud point of sale systems are difficult to beat.
Learn more about how the talech POS system helps retailers optimize management of all their vital business processes. We work with you to determine the best ways to meet the needs of your customers and employees so your business can thrive. We take the time to learn your business so we can balance your specific needs with your budget and comfort level in a custom POS system implementation. The result is a valued investment that will pay for itself in short order. Reach out to us today to sign up for a free demo and learn more about how talech can be your valued partner in the POS world.