There's More Money In ECRs Than You Think
There’s a lot of misunderstanding about ECRs (electronic cash registers) and their value to VARs. Do you have all the facts?
Every POS (point of sale) VAR knows enough about ECRs to sell them, right? In fact, aren’t ECRs simple enough for any type of VAR to sell? After all, you can go to Sam’s Club or Costco, buy an ECR, plug it in, and your customer is ready to accept cash. Indeed, there are some types of ECRs that fit this description. These types of ECRs, according to Bruce Mann, VP of marketing and product development at CRS, Inc., are called AMODs (adding machines on drawers). These units cost less than $300, have very limited functionality, and are designed for start-ups with a limited budget. Obviously, these aren’t the kinds of products that are valuable to a VAR in terms of margins. “POS dealers aren’t interested in selling at the price points of the ECRs offered by stores like Staples, Office Max, or Sam’s,” says Larry Sampey, general manager of the Systems Products Division at Casio, Inc. “Unfortunately, many VARs think these are the only kinds of ECRs that exist.” Mann agrees, as does Rick Sterne, president of Datasym, Inc., another ECR vendor. And all three stress that there are plenty of opportunities for VARs to make money selling ECRs, as long as you know which type to sell and to what kind of market.
Understand The Different ECR Categories
The key message these three men want to get across to the channel is that, although ECRs are an evolution of cash registers, they are as functional, modern, and valuable as today’s more popular PC-based POS systems. Mann identifies three categories of ECRs that VARs will find valuable to resell.
The first category has some limited capability to communicate with a PC and possibly other ECRs in a network on a batch basis. This kind of ECR also supports popular peripherals including scales, scanners, credit authorization appliances, remote printers, and basic kitchen video systems. This family is available in the $600 range and is suitable for simple liquor stores, delis, diners, coffee houses, and specialty retail.
The next class of ECR is primarily differentiated by its ability to communicate with other ECRs in a network in real time, thereby allowing guest checks to be shared. This group of ECRs is available in the $700 to $1,400 range. These units are suitable in bar and grill applications, quick service, and limited table-service environments.
The top class of ECRs includes those with touch screen capabilities and a price range from $2,000 to $3,500 per terminal. These machines rival PC-based systems in functionality but offer additional advantages such as embedded software and a life expectancy that’s three times that of PC-based systems. “These terminals are becoming the preferred choice for many VARs selling into quick service, table service, and retail applications,” concludes Mann.
Have Your ECR Pitch Ready
If you sell ECRs, eventually you will have to explain why you think your solution is better than a PC-based one. Datasym’s Sterne says there are a few key points you should stress when making your argument. “The whole IT world seems to be in love with PC-based solutions. However, these units are not always the best fit, depending upon the true requirements of the retailer. For instance, PC-based solutions often do not provide the fastest processing and completion of the sales transaction. Further, PC-based solutions are subject to viruses and hackers and have a much higher total cost of ownership.”
If your customers have the penchant for PC-based systems that Sterne is describing, then you should assume they also have preconceived notions about the abilities of an ECR. In other words, as Mann noted earlier, they think all ECRs are AMODs. “ECRs have a lot more functionality than they did just a few years ago,” Sampey says. “They can offer everything from inventory management tools to credit card authorization functionality in a package that is often simpler to use than a PC-based solution.”
One final note of comparison between ECRs and PC-based POS systems concerns software contracts. PC-based solutions usually require annual software maintenance contracts, which are rare with ECRs.
ECR Customers Need Your Service
If you’ve done your job and convinced your client that an ECR is the best solution, you still have one more obstacle — especially if your client is a small start-up. The obstacle is competition from Internet resellers and those aforementioned office supply stores. As you have probably experienced, sometimes you can give your client all of the information on a product, only to have the client make the purchase through another channel. To help avoid this happening, do what you always do as a VAR: stress service and your technical expertise.
“When it comes to programming and service for low-end ECRs purchased from retailers, buyers tend to look to VARs for support,” Sterne explains. “They soon find out, though, that the service required costs more than the terminal itself. Buyers in this circumstance have learned the hard way that the ECR VAR does provide an important service and that they would be better off buying from the VAR in the first place.”
Of course, if you’re selling low-end ECRs, then gaining the service revenue after the client purchases the hardware from a retailer may not be a bad proposition. But there are good profits to be made from the hardware sales of higher-end ECRs. “VARs that specialize in PC-based solutions do not see ECRs as a viable source of profit,” says Mann. “That is absolutely incorrect. Wise VARs understand that ECRs are an excellent training method for entry-level sales personnel. Furthermore, ECRs also provide a means of starting a relationship with a merchant that could lead to the sale of additional, more sophisticated systems later.”