| The long line leading out of the Starbucks at the train station hinted at what had gone wrong, and a quick glance through the window confirmed my suspicions: the staff were writing every order down on sheets of paper. Once again, the Starbucks point-of-sale (POS) system had broken down, as it does a couple of times a year. Like many others, I chose not to wait and went elsewhere for coffee.
Of course, that’s not such a disaster for Starbucks, as it’s only coffee, so I’ll likely return to that store. Do the same thing to someone trying to buy a vital part for their vehicle and you might lose a customer for life.
If a complex multinational like Starbucks has problems with its custom POS, what hope do you as a (likely) smaller retailer have in finding a reliable solution that delivers the features you need?
There are no simple answers to the problem. Technology, it is often said, usually gets complex before it gets better. POS systems might not have entirely passed through the complex stage, but there are some signs of hope in their development.
Data backbone
Finding the right POS system is one of the most difficult and vital tasks the modern retailer faces. This is in large part because “POS” is really something of a misnomer. These systems don’t simply replace the traditional mechanical or electrical cash register. They are really a primary interface into the entire data system that runs a retail enterprise. Some common functions found include:
Point of Sale
Inventory Control
Automatic Purchase Order Creation
Automatic Price Updates
Bar Code Scanning
Accounts Receivable
Accounts Payable
General Ledger
Payroll
Customer Tracking and Follow-Up
eCommerce / Website Shopping Cart Integration
Shop Management
EDI (Electronic Ordering)
In short, when you’re buying a POS, you’re not just buying something that records the money received from customers, and provides them with a receipt. You’re really buying the entire data backbone to your business. Its capabilities, reliability and feature-set will be vital to your business success.
The database
At the centre of every POS is a database. Databases record information in “records”, and then inter-relate those records in complex ways. For example, when an item is purchased, the database will note the details of the purchase in a “transaction record”. The details might include date, amount and the name of the purchased item. The database can then delete that item from a database that keeps track of inventory.
Later, the store manager can search through the transaction records to see what the total sales for a day, week or month might be. Inventory can be checked via the inventory database to see when further merchandise needs to be ordered. In the longer term, this data can give vital clues to future ordering, enabling the store manager to closely match inventory to actual demand, reducing excess stock, and helping to ensure that enough stock is on hand during times of peak demand.
Standard database systems
In POS systems, there are three basic types of databases used. The simplest is the desktop database. Examples of this type of database would include Microsoft Access and Filemaker. These databases are designed to be used by one user at a time. As their name implies, they sit on individual desktop computers.
For the simpler, single store operations with one sales point, a POS built around this kind of database would work fine. The one important element to understand is that great care must be taken to back-up this type of data, both locally to a separate hard disk, but also “off-site”. Off-site backups often consist of DVDs with the database contents saved to them, which a store manager or owner will take home for safekeeping.
Next there is the server-based database. These databases run on a computer all their own. Typical server databases would include Microsoft SQL server, Oracle, Postgress, MySql and Firebird. These are a bit more “heavy-duty” than desktop databases, and are built to handle multiple users using them at one time.
These databases might be used in a POS that served multiple sale points, with each sale point linked into the central database through its own desktop computer. The transaction record would be assembled on the desktop computer and then sent via a network cable to the server, where it would be added to the database.
There are some things you need to consider in this kind of a system. To start with, your company now has to administer not only individual PCs, but also a fairly complex server environment. That means it’s unlikely that people with casual knowledge of computers will be enough anymore, and you will need at least the services of a qualified technical team to make sure everything keeps running, is properly backed-up and so forth.
With both these types of databases a problem arises when the POS must be used at multiple stores. Each store would have its own database (or even databases). How can all the data be assembled in one place so that, for example, a report on enterprise-wide sales could be assembled?
Usually this is done through a process known as “polling”. Polling is a technical term that just means one system calls up and asks another system a set of questions. So the databases would contact each other and check to see if they each had the same records, and if not the records would be synchronized between them. Sometimes this is done for all databases, and sometimes this is done so that the individual databases synchronize to one central database.
This is a clever system, but it is prone to some problems. Poorly constructed records, databases that have not been maintained properly, or problems with network connections during the polling process can result in data errors. These errors can sometimes corrupt a database, rendering it inoperable and requiring some attention to get it back up and running. By “some attention” we mean, basically, dollars paid to someone to fix things. Sometimes it involves lots of dollars, because you need the POS working right now, and you’re going to be prepared to pay for that.
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A different database plan
There must be a better way. And there is. It utilizes what has come to be known as “cloud” computing. Under that model, instead of having software running on your own PCs and servers, the software runs on a single, centralized server located in a high-security data centre somewhere. It will be protected with uninterruptable power supplies (usually lead-acid batteries backed up by an in-building diesel generator), the data backed up both locally and locally, with its hard disks “mirrored” to fully operational backup hard disks, so that any kind of a disk fault will not affect the system at all. Locally, you will run what is essentially a web-browser on your PC to access this software, just the way you do when using Facebook, Google Mail, or buying items from Amazon.
The operational advantages of a cloud-based POS are comprehensive. These include:
- Low equipment costs. Just about any PC made in the last three years will work fine.
- Low maintenance costs. You won’t need IT consultants to help you configure your systems.
- Reliability. If you’ve ever installed the latest update to some software, only to see everything crash, you know how much of a concern this can be. In cloud-based systems the supplier thoroughly tests changes on a test-bed system. If errors or bugs do crop up, the supplier can fix them on the servers instantly – and it is completely their responsibility.
- Ease of expansion. Need another POS terminal at another location? You’ll need to pay the supplier to enable that facility, but then it’s just a matter of enabling a second PC, anywhere, to access the POS system.
- E-commerce. Many cloud-based POS offer an easy way to enable sales via a website by providing a “gateway” into your POS set up.
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There are quite a few POS systems available, but we’re going to look at just two. One is an Australian system used by a number of well-known retailers, and the other is a US-based system that works in Australian conditions.
Potential problems
If there is a single concern with using cloud-POS, it’s that a store will lose internet access at a crucial time. For example, if there is an internet service interruption, or drastic slowdown on Saturday mornings, many auto parts retailers could potentially lose thousands of dollars of business.
Internet access has improved dramatically in Australia over the past five years, in terms of both speed and reliability. Also, there are now steps you can take to provide yourself with alternative access. For example Unwired (www.unwired.com.au) can supply alternative “Wi-Max” coverage, which does not require any data lines, similar to Wi-Fi connections. You can purchase a special modem and then purchase bandwidth as and when you need it. It’s a small investment to make to further guarantee your data connection. The one drawback is that coverage areas are limited, though they are quite extensive in and around both Sydney and Melbourne.
Another alternative are the modems that give PCs access to the mobile telephone data network. However, these tend to be quite unreliable at times. In the future we will likely see the development of more reliable, faster 4G networks that will make these a more viable option.
Retail Express
This is the Australian cloud-based POS software. The software was designed in 2003, and it began life as a custom system designed for use by one retailer. Since then it has grown considerably, with new capabilities being added each year. Its outstanding features include:
- Easy-to-learn for sales staff, with full training videos. Retail Express claims individual cashiers can be competent with just 15 minutes of training.
- Cashiers can check stock in other stores on a real-time basis.
- Multiple barcodes per product, if needed.
- Lay-by sales, customer loyalty and gift voucher facilities.
- Automatically suggested cross-sell and up-sale products during transaction.
- Suspend and resume sales.
- Credit card enabled.
- Comprehensive sales reports easily generated.
- Simple to upload initial batch of products and additions.
- Automatic re-ordering, based on custom stock levels.
- MYOB integration for accounting.
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To view a demonstration video, go to the company’s website at www.retailexpress.com.au. According to Aaron Blackman of Retail Express, a single store license with unlimited users is $3,450 + GST.
Imonggo
If you are looking for a less full-featured but still capable POS system based in the cloud, or you want to experiment with the concept before committing to it, Imonggo might be the way to go. Pricing starts at free, and the premium version costs just US$30 per month, so US$360 for a full year. Features include:
- Easy-to-use sales screen.
- Return and exchange handling.
- Barcode scanning, including multiple barcodes for one item.
- Credit card payment system.
- Simple stock/sales/performance reports.
You can access further details on this software at www.imonggo.com.
It’s important to realize that cloud-POS is not for everyone or every situation. There are many circumstances where custom, PC-based software will work better for individual businesses. However, if you are considering moving to a different POS, or are establishing a new network of stores, cloud-POS is something you really should check out, along with the other alternatives.
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