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Point of sale market disrupted — good news for dealerships

Adam Adashek, Social Strategist — Dominion Social Ventures
July 22, 2013
Filed under Service Providers

Andrew Adashek PSN Blog 11-12As the story goes, back in 1870 while on a steamship voyage in Europe, American businessman James Ritty’s imagination was captivated by the automated mechanics on the ship that were tracking the turns of the propeller in order to alert the crew about when maintenance would be required. Ritty took this inspiration and created what became the first cash register, forever changing the way merchants do business.

The “cash register” has come a long way since Ritty’s machine, evolving into the complex digital Point of Sale (POS) systems that are today found in nearly every business small and large. With features like full inventory management, integrated loyalty programs and even mobile optimized versions that can run on an iPhone, there are seemingly few things these systems can’t do. But as the industry is finding out, there are only so many features that businesses want, much less need, and it is getting harder for these companies to compete based on these bells and whistles.

It has only been during the last few years that the POS industry has seen new software-forward companies flood into the market, but the effects have been profound. These SaaS companies have been able to design cloud-based platforms that are simple to use and seamlessly integrate with third party cash drawers, receipt printers and iPads to create low-cost/high-quality offerings. But, with new features for these systems only a software update away, it has become much easier to copy each other’s innovations and as a result, many products are starting to include identical functionality. This has forced companies to compete on price and pricing structure rather than utility.

With less differentiation coming from features, POS companies have moved into a typical “race to the bottom,” competing on price and making pricing more transparent. In the past there may have been multiple layers of costs to the customer including hardware purchases, setup and support, costs for adding features like integrating with accounting software and numerous other “hidden” fees. Today it is not uncommon for POS companies, particularly new entrants, to offer a low flat monthly price that is all-inclusive, or make their money in other areas like credit card transaction fees.

While this combination of needing to offer more product features, but at a lower price point may spell trouble for many companies in the POS industry, dealerships should expect to both save money and be delivered a higher quality product.

Perhaps not since Ritty’s European voyage has the Point Of Sale market faced as massive of a disruption as they are seeing today.

Andrew Adashek is a social strategist with Dominion Social Ventures.

Website: www.psnsales.com

Comments

2 Responses to “Point of sale market disrupted — good news for dealerships”

  1. John Deery on July 23rd, 2013 12:50 pm

    As a former retailer and a (now) 24 year POS system reseller – I find your comments to be of interest, and also ‘spot on’. As your readers are aware, consumers drive not only technology but also price. Brick and mortar retailers everywhere bemoan the shopper who shops on price only. And worse, comes into their store for information and then buys on-line. Clearly that customer has no sense of loyalty nor values service.

    Many of those same retailers don’t see the irony when they do the same thing to those who provide services to them – for example, POS resellers and the folks who develop and maintain the software. Unwillingness to pay support fees or maintenance fees or reasonable prices means that the very folks you need to make sure your system will work (today and tomorrow) are less likely to be there when you need them.

    I caution your readers who think they can ‘get something for nothing’ from a ‘Johnny Come Lately’ POS company. That’s an unsustainable business model. It’s only a race to the bottom for those foolish enough to play that game. As any retailer knows, you can’t take a loss on your best sellers to drive traffic and ‘make it up in volume’… (Retail 101)

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  2. Jason Brethorst on July 24th, 2013 12:40 am

    I think this is an interesting article as well and agree with many of the points. John Derry comments are spot-on in the second paragraph about retailers not seeing the irony when they are not willing to pay a few hundred dollars a month for support fees. As long as SaaS companies continue to compete over price instead of quality products and customer service it’s going to end up hurting everyone in the long run. It’s no different than two dealerships who are across the street from each other and start competing over price eventually they both will go out of business because no one wins when you start devaluing your products and killing your margins.

    As a SaaS company the only way you’re able to stay on top and offer free or discounted products is to have a mixture of free and paid products or start cutting costs (like customer support and outsourcing your development to overseas contractors who don’t know the first thing about creating great software). At More Than Rewards (www.morethanrewards.com) all of our software development is done in house and never outsourced and even our 100% Free Sales CRM System (FreePowersportCRM.com) includes free phone support from a live customer service person who picks up the phone in 3 rings less, all based out of our Milwaukee Wisconsin office. The reason is because I personally believe that regardless of how great your software product may be and how affordable it is if you don’t have a team of Rock Star Customer Service People on the front lines who love talking and listening to dealers about their needs and helping them accomplish their goals you’re setting yourself up for failure in this industry.

    It’s important that we all educate retailers that value of those monthly support fees, it’s not about paying for the software it’s about paying for the support of it.

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