Your ultimate guide to choosing the perfect retail POS system

 

Looking to invest in retail POS system? This guide provides all you need to know to choose the best POS for your business.

According to Grand View Research’s Point-of-sale Terminals Market Report, the market size for global point of sale terminals will reach $130.91 billion by 2028, with mPOS and contactless payment terminals in high demand due to COVID-19.

Your employees and customers interact with each other daily through your retail EPOS system. That’s why choosing the right POS solution keeps your business running smoothly and can increase your profits.

On the contrary, wrong POS can lead to severe long-term consequences because it may be difficult to learn and operate, too expensive, or doesn’t have the necessary features to grow with your business.

Therefore, you need to equip yourself with sufficient information before making the decision. Keep reading our guide to choosing the perfect POS system for your retail.

Table of Contents

01

What is the meaning of POS systems in retail?

02

Types of retail POS systems

03

How retail POS works

04

Benefits of retail POS systems

05

6 signals for you to switch POS systems

06

How to choose the right retail POS system

Retail POS system definition

Point of Sale (POS) is the place where customers make payments for their goods and services. A retail POS system is a centralized solution to manage all retail operations at stores. In general, it consists of hardware and software.

A retail POS system

POS software

POS software refers to the technical solution to handle sales activities and data, including:

  • Customers
  • Sales and orders
  • Inventory level
  • Marketing and promotion campaigns
  • Staff and shifts
  • Reporting and analytics

POS hardware

POS hardware is all physical devices integrated with the POS software, such as:

  • Touchscreen terminals
  • Customer-facing display
  • Scale for weighing items
  • Label printers
  • Barcode scanners
  • Credit card reader
  • Cash registers/drawers
  • Receipt printers

There are several ways to categorize POS systems. In this section, we’ll classify based on POS technology.

Cash payments icon

1. On-premise POS systems

Other names: On-site POS, legacy POS, counter POS, or traditional POS.

Highlights:

  • Store data on the server at your business place
  • Include software and hardware, in which the POS hardware looks like a touchscreen monitor or a desktop computer
  • Limit access within your physical location
  • Require a high upfront fee for multiple terminals
  • Provide limited software update and technical support
set up icon Magestore POS icon

2. SaaS POS systems

Other names: Cloud-based or web POS system.

Highlights:

  • Store data in the cloud center of hosting providers
  • Access from anywhere
  • Automatic and regular updates
  • Affordability (one-time payment or subscription)
  • Offline mode to run without internet connection
Online payment icon

3. Mobile POS systems

Other names: mPOS or smartphone POS.

Highlights:

mPOS is a subset of cloud-based POS system so it also stores data in the cloud and offers the same benefits as cloud-based POS systems along with the following benefits:

  • Dedicated usage for mobile devices (smartphones, iPad, and Android tablets)
  • Ultimate mobility for businesses that are on the go and don’t have a lot of inventory like farmers markets, craft shows, fairs, and street food
  • Much lower cost than on-premise or cloud-based POS systems
Icon Magestore Magento POS instant access

4. Self-service POS systems

Another name: Self-service kiosks or self-checkout systems.

Highlights:

Self-service POS is the perfect choice for cinemas, beverage stands, and shops in malls as it supports the self-checkout process:

  • Customers can perform the payment process themselves and enjoy a pleasant shopping experience.
  • Businesses can reduce waiting time at checkout and staff resources for payment processing.
Sell from one platform icon

5. Omnichannel POS systems

This kind of POS refers to an all-in-one solution that integrates all of your channels such as your website, 3d-party marketplaces, and social media to ensure efficient and seamless business operations. Some omnichannel POS features are:

  • Data centralization
  • Management tools (customers, sales, inventory, and employees)
  • eCommerce integration
  • Marketing activities (promotions, discounts, and gift cards)
  • Customer loyalty programs (reward points and store credits)
  • Store pickup
  • Order processing
  • Reports and analytics

In the most simple form, a POS system collects payment from customers for purchased products and services. But that’s not all. There are many other retail POS workflows and processes that you can carry out.

Retail POS workflow and processes

1. Data entry

  • Allow data entry in bulk when migrating from worksheets to the new EPOS system
  • Look up customer databases and product catalogs to automatically fill orders

2. Inventory management

  • Scan item barcodes to automatically add products and prices to invoices
  • Deduct the amount in your inventory after completing the transaction
  • Provide low stock alerts via notification or email

3. Payment

You need to configure payment methods in your POS software to process payments, including:

  • Set up a merchant account
  • Pairing with POS hardware and payment terminals
  • Show payment options on POS screen

Steps to accept cash payment:

  • Receive cash from customers
  • Create an invoice for an order
  • Put the money in the cash drawer

Steps to accept card payment:

  • Customers tap or swipe their cards
  • POS software transfers the transaction amount and details to the payment processors
  • POS creates an invoice after the payment is successful and records it into the system

4. Order history

  • Print the receipt once the order is complete
  • Deduct quantity and items from inventory
  • Display discounts on sales reports and customer management systems
  • Show sales in staff session or shift summary, analytics dashboards, transaction reports, X and Z reports
Analytics dashboards of retail POS solution

5. Customer marketing

  • Allow customers to participate and use various promotions during checkout
  • Create and send emails directly from your POS system
  • Save the customer’s personal information such as favorite color or date of birth

6. Report

Retail POS systems usually provide many pre-built reports for:

  • Sales
  • Inventory
  • Customer
  • Marketing

As business owners and store managers, you can:

  • Customize existing reports
  • Create new POS reports
  • Transfer reports automatically to other accounting software or the finance department

Overwork due to repeated work is the most common cause of burnout for business owners and their employees. A good choice of retail POS system can perform many retail processes and workflows on autopilot. From there, POS data analytics solve many business problems by saving valuable resources and time, such as:

  • Inventory management: Keep your inventory up to date by tracking sales and returns and forecast to calculate restocking to avoid deadstock and out-of-stock situations. Also, it can show what products are selling well and what aren’t for you to leverage the quantity.
  • Competitive analysis: Provides solid data and reports like business heatmaps, graphs, and charts so you can understand your company’s performance metrics relative to industry standards and compare them with competitors.
  • Customer experience enhancement: Optimize your customer’s omnichannel journey by integrating mobile, desktop, and in-person experiences. For example, when customers come to your store, the POS counter staff can quickly view their purchase history for suitable suggestions and cross-selling. Such small touches keep customers coming back because they love attention and recognition.
  • Loyalty program: Based on POS data, you can design personalized marketing strategies by tracking customer contact information and their purchases. POS systems can integrate with loyalty programs and customer databases to leverage customer engagement and help you gain more profit.
  • Staff performance: Create staff working schedules and track the sales of each staff to calculate wages and commissions.

In short, a modern retail POS system helps you focus on more profitable areas such as consulting, customer care, and achieve new levels of success.

Benefits of POS systems in retail

POS technologies develop at a rapid pace to bring more and more ease, convenience, and comfort for retailers. When a retail POS can’t satisfy the needs of your business, it’s time to switch to a new system.

Some of the most common onset signs of an outdated POS are:

  • It’s impossible or difficult to sync data and manage inventory in real-time
  • It doesn’t support customer loyalty programs
  • It costs too much
  • It can’t help with staff management
  • It’s unportable to move around and take payments
  • It has no option for mobile devices

How to choose the right retail POS for your business

So far we’ve covered the basis details of retail POS. Now let’s look at the 5 essential steps you’ll need to take to get the right POS system for your retail.

  1. List your business requirements for your POS system
  2. Define your budget and prioritize
  3. Compare retail POS solutions based on your requirements
  4. Get a trial or demo of the retail POS
  5. Optimize your POS system for maximum business growth

Timeframe

No business owner wants to go through the retail POS system transition multiple times over a while. Therefore, you should outline the requirements for the POS solution you want before you start looking.

First, you can start with a simple question: How long do I need this solution to work for my business?

You should not stop at asking for today, but think about your expectations in the future as well. 2–3 years might be a reasonable time frame for a technology investment.

Features

After deciding on a timeframe, you should consider the following questions:

  • How many stores will use the POS solution to operate?
  • Do I need to handle multiple growing stores at the same time?
  • Do I just need a simple POS system to handle in-store transactions?
  • What sales promotion do I want to run?
  • Do I want to integrate the POS with any other system such as Quickbook, MYOB, or Xero?
  • Which business operations are doing well and which are not
  • How important is it to synchronize data between the physical stores and online stores?
  • What types of data do I need to sync?
Your business requirements for the retail POS

Your customer experience may not be seamless because your eCommerce and in-store POS systems lack the connection. No matter how much manual effort you put in keeping everything in sync, you may still find an order for an item that’s actually out of stock.

So you can try mapping out your value chain, from supply chain to post-purchase customer care, and then look at each stage to find bottlenecks that could improve the customer experience metrics and profit margin. From there, you can check specifically how the future POS system can improve those stages.

  • Cost: Retailers can rely on accurate real-world data to identify and handle slow-moving or low-margin inventory flows.
  • Revenue: You can minimize the number of employees and optimize sales. You’ll also ensure accurate stocking of high-margin and best-selling products. In addition, you can implement promotions and loyalty programs to increase the average cart size.

Considering these 2 aspects will help you shape the most important features you need in a retail POS system. Think about the strategy and methods you want to adopt. Then, gather all the challenges in as much detail as possible into a checklist of requirements for potential POS vendors.

Consider cost and revenue to shape the most important features for your retail POS system

Although no solution fits all businesses, below are the most common and recommended features for your reference.

POS must-have features

Invoicing and billing

Sales management

Customer management

Loyalty programs and offers

Reporting and data analytics

eCommerce integration

Marketing integrations

Employee management

POS nice-to-have features

Employee scheduling

Click and collect for merchants to serve customers better during COVID-19

Refunds and returns

Remember that choosing the type of retail POS system depends on the nature of your business.

  • A mobile food truck that works differently from a traditional coffee shop
  • A construction contractor has different needs than a clothing store

In case you’d like to know the necessary features for POS system by business lines, you can refer here:

There are still some aspects to consider.

Option to accept the most common payment methods

  • Cash
  • Credit and debit cards
  • PayPal
  • Authorize.net
  • Stripe

Ease of use

Your retail POS needs to be user-friendly and easy for your employees to use without calling technical support or referencing the manual frequently.

Integration

Many POS systems have built-in POS and inventory system integration. However, you should also consider a POS developed in an open-source platform like Magento. They provide maximum integration capabilities via APIs to connect with other cooperating systems such as CRM and ERP.

PCI Compliance

You should choose a POS system that is compliant with PCI data security standards to safeguard customer payment data and minimize fraud payments.

In this step, you’ll need to determine how much investment you are willing to spend to achieve your goals and requirements within the defined timeframe, including:

  • Budget
  • Potential revenue
  • Costs you expect to save

You should break down each requirement of step 1 to determine investment costs and opportunity costs to prioritize the components.

The cost of a POS system includes 3 parts:

  • POS software: Your POS license will be one-time payment or subscription depending on different POS providers.
  • POS hardware: The average cost of a card processor is between $20–100. Other peripherals like a receipt printer, cash drawer, and tablet stand will cost you from $600 to $1,000.
  • Payment processing: Payment processing depends on the pricing scheme of your payment processor, accounting for 1.5–3.5% per transaction. You can visit our guide to know more about the average credit card processing fee.

You can read more at our article: Essential components of POS system cost when calculating POS pricing.

Define your budget to invest in the retail POS system

Even the best retail POS solution sometimes has problems, or you simply want to customize to meet changing business needs. Therefore, a POS system isn’t only about purchase and installation, but also needs the support of a long-term partner to accompany your business growth.

  • What are my expectations for POS deployment and launching?
  • Do I want a dedicated project manager or will I oversee most of the system implementation on my own?
  • How do I want to receive support? How long do I expect to wait for the POS providers to respond? And through which communication channel?

We recommend working with a leading POS system to perform your daily tasks efficiently and achieve your business goals.

Compare POS solutions based on your requirements

Check out our articles on POS system examples and the top POS software of 2021. They not only possess leading edge technology, but also have a team of Magento experts with a customer-centric mindset.

Top 4 retail POS system comparison chart

POS provider

Pros

Cons

Magestore POS

  • Easy to use

  • Seamless integration with all versions of Magento platforms

  • Premium support

  • Great capability to customize to fit specific business demands

  • High scalability when your business grows

  • 365-day money-back policy

  • Agile implementation

  • High starting price

  • Quite complicated settings and functions

Square POS

  • Versatile for new businesses

  • Affordable (no sign-up fee or monthly fees)

  • Easy to use

  • Integrated with scale

  • Quite expensive for high volumes of transactions

  • Not able to customize

Vend POS

  • User-friendly so require minimal training

  • Able to be integrated with accounting software (Xero) and popular eCommerce platforms (WooCommerce, BigCommerce, and Shopify)

  • Visualized reports

  • Lack of serial number

  • Limited customizations for invoice and receipt

  • High cost to scale up with more stores

Shopify POS

  • Easy to use

  • Smoothly integrated with Shopify eCommerce website

  • Expensive and required you to purchase one of Shopify plan to use POS

  • Lack of the in-store basic features if you choose the Lite plan

  • Not compatible with desktop

And keep reading our in-depth POS comparison of the best Magento POS providers for retailers:

Side-by-side comparison of POS for Magento

One-on-one comparison of retail POS

Want a full-feature comparison of the most popular retail POS systems for Magento?

Most POS providers let customers test the software with a free trial. This step ensures you find the right POS for your business. You can play and see how the overall system works, explore benefits, and check out features. If you encounter any problems or points for improvement, you can make a note and share it with the POS provider. It’s an opportunity for you and them to discuss and solve your problem together.

After choosing the POS system, the game isn’t over yet. As you test and use it, you can still figure out where to optimize to improve your business. You can start with enhancing the default features, then slowly explore all that the system has to offer or can integrate with.

Business insights

You should create detailed and complete sales reports with graphs and charts on your retail POS system. There should be a visualizer of valuable data such as sales, inventory, and cash in real-time to:

  • Discover meaningful trends: POS data analysis can unlock the secret portion of future success.
  • Gain a competitive edge: Know your sales performance, track against competitors, and analyze by industry.
  • Expand your footprint: Get in-depth information to make sound decisions about where and when to open a new branch, as well as the necessary equipment and manpower
Optimize your POS system for maximum business growth

POS apps

Applications of POS systems can make running your business easier. You can check what apps and add-ons your vendor has developed like Magento eCommerce integration.

Continuous improvement and updates

It’s important to ask for employee feedback as they use the system for things that could improve the overall experience for your customers or for your own employees.

Do not terminate your relationship with the supplier at the time of purchase. You should stay in touch to get useful information about new features, suggestions, and inspirational articles in working with retail POS systems.

How to get started

Starting from the simplest function of processing sales orders, the modern POS solution is now the central system of retail businesses and contributes to keeping customers coming back to the store. Thus, your choice of a POS system will be a make-or-break decision and one of the most important investments you can make.

We recommend that you consider all aspects of your retail before committing to any single retail POS solution. If you need expert advice, we are available to talk to clarify your business requirements and tailor a retail POS solution to meet your unique desire.