Traditional POS Systems vs. Mobile Start-ups

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 Can we all just get along?

It’s a brand new retail world. We know it, in part, because of all the buzzwords that usually accompany this kind of dramatic shift. “Omni-channel” is one thrown around quite a bit these days. Ideally, a consumer should be able to interact with a merchant via online, mobile or in-store and have a seamless, consistent experience. The truth is that even with the largest merchants, it’s a struggle to have two channels work well together much less three.

Legacy POS players still have a hard time reconciling their systems with online platforms; the result being that in-store and online channels tend to use different systems, architecture, business logic, databases etc. Now add in mobile and you have the current landscape.

Most of today’s “omni-channel” examples are simply merchants offering goods across different channels, while its merchants and consumers suffer for the lack of integration. On the merchant-side they have to manage multiple vendors, figure out how to make systems work together and how to combine, mine and maximize customer data. Consumers may not know the underlying reasons but they do know that more often than not, they need different credentials for different channels and that they have to present coupons, loyalty cards and payments separately each time.

The vision of a unified commerce platform is a bit off in the distance but in the interim there are ways for key players to work together. In this increasingly mobile environment, strong partnerships would greatly benefit both traditional POS players and mobile commerce start-ups.

Traditional POS Needs More Services

The POS is just a part of the whole consumer experience. From the mobile commerce perspective, payment is almost the least important piece of the equation. Smart merchants see engagement as a continuous cycle and the steps leading up to and after payment are what drives sales and loyalty.

If traditional POS companies don’t start offering additional services, newer mPOS players will take more market share. According to Orbis Research’s market anaylist, the global mPOS market is expected to grow at a compound annual growth rate (CAGR) of 50 percent between 2016 through 2020. The growth will be driven by the demand for mobile payments and Orbis anticipates large retailers will be among those integrating mPOS solutions.

The beauty of mobile is its ability to incorporate many of the services that drive consumer adoption. A recent commerce study by JPMorgan Chase found that the top incentives for consumers to use mobile payments were reward points, discounts at purchase and faster checkout. Merchants were motivated by faster checkouts, a better consumer experience and enhanced security.

The best consumer use case is having all relevant offers, loyalty and payment applied in one scan, tap or confirmation. Add the ability for the user to order ahead and skip lines and it is consumer nirvana. This cannot happen with traditional POS systems.

The New, New World. Howdy Partner?

So what has prevented traditional POS players from partnering with newer mobile service companies and vice versa?

Let’s be honest, most of us in the space know that POS integration is usually the most challenging part of any mobile commerce project. In our experience, this view is shared by mobile start-ups and merchants alike. That is frankly why many companies, like traditional CRM and loyalty companies, would benefit from POS integration just don’t do it.

Traditional POS companies will likely say they already have digital channels covered, but are merchants really going to their POS provider for online and mobile solutions? Being a mobile-first company is very different than having legacy systems that add mobile as a bolt-on product. For example, if you go to one of the largest POS companies and look at their online and mobile ordering solution page, the “learn more” link leads to a 404 error with the message that the page does not exist. It does not exist. The reader can draw his or her own conclusions.

However, integrating with POS systems can be very valuable. Mobile commerce tied to the POS leads to SKU-level consumer data that provides a treasure trove of information. With this type of data merchants can analyze and target by purchase behavior and individual preferences. This also results in the enhancement of the consumer experience with each interaction as the merchant becomes smarter about the individual.

So what does a strong partnership look like? Companies need to take a hard (and honest) look at what they actually bring to the table and do the work to integrate platforms. Product and engineering teams need to map out a joint architecture and detailed user flows, with the merchants end-goal in mind.  Ideally, in this new world model the joint offering has real-time inventory, pricing updates, customer profiles, order status, integrated offers and loyalty. Consumers can order from anywhere via phone, online, mobile, or in store and fulfillment can happen by mail, in-person (or drone) delivery, and in-store or drive-thru pickup.  If the consumer wins, the merchant wins – and the integrated solution benefits all providers.

It is absolutely possible to have a truly unified commerce platform. There is no one company that is doing it all today but strategic partnerships could address the current gap.


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About the Author

Editorial Team is a leading industry news site for the point of sale and payments industry. We are also the go-to resource for small business owners that want expert tips and inspiration on how to run a successful business. Collectively, our team of experts has decades of POS, payments, and small business experience.