White Paper | December 13, 2013

Turning IP-Based POS Systems Into Recurring Revenue

Source: APG Cash Drawer, LLC

The need for PC-centric POS solutions is waning as a more flexible model emerges. Leveraging cloud and mobile technologies, this model supports thin client and IP-enabled components such as cash drawers and printers.

The new model is more affordable and manageable, and it significantly improves the shopping experience. It’s a mobile world, after all, and tying the cash drawer to fixed POS stations no longer makes sense when retailers are seeking solutions for completing transactions at the “point of decision” rather than at a traditional checkout counter.

POS ISVs and integrators stand to expand their market reach and increase profits by designing and customizing IP-enabled POS systems and offering customers service plans with recurring-revenue opportunities.

Tablet-Based POS Is A Game Changer

A recent Boston Retail Partners study found retailers view mobility as a priority, with 52 percent planning to implement a mobile POS solution within two years. Another 19 percent said they plan to deploy mobile solutions in two years or more.

Retailers realize they can and need to improve the shopping experience by leveraging cloud and mobile technologies. For example, a sales associate can initiate a transaction on a tablet in a dressing room, accept a credit card or cash, and complete the sale at a strategically placed cash drawer for a mobile checkout experience. Using the tablet, the associate can complete the transaction and print or email the receipt. Shoppers leave the store happier and are more likely to return for future purchases.

This level of convenience and flexibility is hard to achieve with a POS system constrained by fixed workstations. If components such as cash drawers, printers, and barcode readers are IP-enabled and communicating wirelessly, there’s nothing stopping a merchant from offering this kind of flexible service. Store clerks can run transactions from thin-client tablets or smartphones. Where required, security cameras and digital signage displays can be integrated into the POS system, creating a compelling and secure customer experience

Affordability and Familiarity

The new, thinner POS model is more cost-effective than a traditional POS solution. Though prices vary, a typical “fat client” POS workstation costs around $3,000. A five-unit rollout would cost $15,000, a hefty price tag for a small retailer.

In comparison, a five-unit deployment with $400 tablets costs under $2,000, and the units are easier to use and have a lower replacement cost. Of course, components such as cash drawers and printers carry their own price tags, but being IP-enabled, fewer are needed because they can be shared. Assuming two IP printers and cash drawers are deployed, the cost of the same five- “station” POS system would be closer to $3,000.

Besides lower costs, IP-enabled POS systems have another advantage — familiarity. Users of tablets and smartphones require less training for similar devices in the workplace. Furthermore, a mobile POS lets retailers stand out from the competition by improving the shopping experience, translating to higher customer loyalty.

ISVs and Integrator Benefits

It is up to ISVs and integrators to make all of the IP-enabled POS components work together. For instance, in addition to standard POS components, they could integrate security cameras and digital signage screens into unified POS systems. Another example would be customizing POS screens by giving prominence to the most-used buttons to guide store clerks quickly through transactions.

This new “thinbility” POS model is exemplified by rapid development, configuration, and deployment. Developers need only a few weeks to get these systems up and running — regardless of operating system and hardware choices — as opposed to months with PC-centric solutions.

Service Opportunities

PC-centric POS systems offer plenty of service opportunities, but those opportunities don’t go away with the thinbility approach. Stand-alone IP-based cash drawers have features that ISVs and integrators can leverage to deliver service plans. For instance, the controllers that make the drawers IP-ready can be programmed for other functions, giving owners and store managers greater control over their use.

Monitoring and remote control capabilities enable exception management and provide alerts that prevent misuse. Managers can be notified of unusual events such as if a clerk opens the drawer manually with a key. By reviewing the information, managers can determine if the exception was legitimate or ill-intended. Further monitoring is available with time-stamp processing. A cash drawer that remains open for a long time can indicate a security or training issue. A timely alert sent to management via email or text can solve this problem fast.

Controllers also keep track of when a cash drawer is unplugged or moved or if it is opened by someone who is assigned to a different drawer. To prevent these problems, drawers can be programmed to open only for authorized employees. Again, the exceptions can be instantly reported to management for corrective action.

All of this data collected from these IP-based POS systems can be used to spur operational improvements and help correct bad habits. From a service provider standpoint, this translates to delivering systems with monitoring and reporting capabilities that can be turned into revenue-generating service plans. Plans can be built around periodic system checkups, reviews of collected data, and recommendations for business improvements.

Mobile POS Is Here To Stay

POS systems with thin clients and IP components aren’t for everyone. Big-box retailers, category killers and supermarkets will continue to need fixed checkouts, but they can leverage mobility in specialty departments, such as shoes, electronics or specialty wine/cheese. In boutique and specialty shops, where a lot of interaction takes place between clerk and patron, this new model is sure to gain traction.

Whether the new solution is mobile or thin, the future is here. In retail — and wherever else cash transactions take place — mobility will have a starring role. IP-enabled cash drawers linked wirelessly to other IP components offer businesses an ideal solution to leverage mobility. The ISVs and integrators who serve those businesses have a tremendous opportunity to improve profitability and add value by developing affordable, lightweight systems.