How the Point of Sale (POS) Industry Works
If you are researching point of sale (POS) solutions for your business, or just want to understand more about the POS industry, here is a brief summary of how the point of sale industry works.
Point of sale solutions are about as diverse as the businesses they serve. This stands to reason, since businesses vary in size, scope, location, products, services, management styles, customer base, and many other factors. Point of sale symtems include a synthesis of both hardware and software, and coming up with the right blend for a particular business model is no simple matter. Those in the POS industry know this, and so there is naturally an attempt to create avenues for helping businesses make good decisions and find the support they need. It is helpful to know how this works.
Generally, the POS industry follows a supply chain model like this:
POS Hardware Manufacturers and Software Developers
Point of sale manufactures create hardware, such as all-in-one POS terminals, bar code scanners, keyboards, cash drawers, pole displays, and receipt printers. Frequently manufacturers will specialize on certain POS hardware items, such as APG Cash Drawer and MMF POS for cash drawers, or Epson for receipt printers.
POS software developers focus on creating software that provides POS functionality such as sales transactions, inventory control, reporting capabilities, managing customer data, and much more. It is common for developers to customize their POS software for various industries, such as retail, grocery, liquor stores, salons, and others, since these business types can have very different needs. Some software developers choose to work directly with businesses to create cost-effective and customized solutions, doing without the distributor/VAR chain. Some developers focus on providing online POS solutions based on cloud technology, so that the point of sale software can be used more independently of hardware restrictions, and accessed from a POS station, computer, laptop, or smartphone.
POS distributors act as liaisons between manufacturers and VARs. Large distributors such as BlueStar and ScanSource are poised to find and work with the best manufacturers of POS hardware from across the globe, many of whom offer innovative and cost-effective technology but are not set up to work directly with VARs or businesses efficiently. By working with manufacturers, the distributors help to reduce costs, and improve products with product testing and product support.
POS distributors also are able to integrate POS hardware with various POS software options, allowing VARs to offer reasonable options for businesses of all levels. Distributors will often include terminal setup so that VARs can offer plug and play installation for their clients, saving both the reseller and the business the headaches of installation.
The distributor’s relationships with POS software developers provide the benefit of customer leads for POS VARs. Other benefits that distributors offer to resellers include training for products, technology and business, sales support and advertising assistance, and trade shows for education, exposure, and networking. They can also provide technical support, such as testing software compatibility with POS terminals, as well access to an extensive inventory.
Distributors also provide a credit facility, when VARs require it, to allow sales involving large amounts of equipment to be easily transacted.
POS Value-Added Resellers (VARs)
POS VARs are specialists who work directly with business owners to find the right blend of hardware and software for their business, adding value to the products with their expertise and ongoing support. VARs may work independently or with a POS Distributor for added support and expertise. VARs will handle installations, coordinating or supervising cable and electrical installations. They will also provide on-site training for the staff. Many VARs bring decades of POS experience with equipment of all shapes and sizes to bear for the benefit of the store owner.
The end-users of POS systems are businesses large and small in retail, service and other industries. Businesses using point of sale solutions range from small single-store outfits to online companies, to national or international corporations. Point of sale solutions can hold tremendous benefits for apparel or hospitality applications, automotive shops, drug stores, restaurants, grocery stores, e-commerce sites, single store or multi-store operations, and more. A properly suited POS system can save time and money, greatly increase efficiency and improve customer service and satisfaction.
The effective installation of a point of sale system involves a ten billion dollar plus industry with numerous players adding value at every stage. End-users of a POS system, and certainly their customers, may not see or appreciate the tens of thousands of people involved, but they are there, in the background, helping to make it happen. The local reseller may be a two person, or fifty two person operation, but they are ultimately backed by companies from modestly sized software developers to multi-billion dollar distributors and layers of expert industry personnel, all working to insure a smooth and seamless POS installation.