What Is A POS? Point of Sale System Software and Hardware Explained

Summary

This video from Learn with Shopify offers a comprehensive guide to choosing the right point of sale (POS) system for your business. It covers the essentials of both hardware and software components, emphasizing the importance of real-time inventory management and seamless integration with online stores. The presenter highlights features like customer relationship management, mobile payment acceptance, and the ability to track sales and employee performance. The video also discusses the benefits of using Shopify POS for businesses looking to sell both online and in person, providing insights on how to enhance the customer experience and grow your business efficiently.

Takeaways

• 🛒 A point of sale (POS) system is essential for businesses with a physical store or those that operate on-the-go, such as food trucks or residential gardeners.
• 📱 Basic POS hardware can be as simple as a smartphone and a card reader, but may expand to include tablets, cash drawers, barcode scanners, receipt printers, and more depending on business needs.
• 💻 POS software is crucial as it manages inventory, handles payments, communicates with CRM for loyalty programs, and integrates with online stores for a unified business operation.
• 🔗 The concept of a 'single point of truth' is important for businesses to have real-time, accurate inventory representation across both online and in-person sales.
• 📈 An integrated POS system can boost online sales by enabling staff to follow up with customers who visited a physical store but did not make a purchase immediately.
• 🤝 A fully integrated POS and online store allows for deeper customer relationships through effective management of customer information and purchase history.
• 📲 Mobile payment acceptance is a key feature, allowing businesses to operate flexibly both in-store and at external locations like festivals.
• 💰 Understanding the costs associated with a POS system, including monthly software fees and per-transaction charges, is vital for budgeting.
• 🔄 Real-time synchronization of inventory between in-store and online sales is essential for avoiding discrepancies and improving customer satisfaction.
• 📊 POS systems should offer robust reporting features to analyze sales performance, both online and in-store, to inform better business decisions.
• 🛍️ POS systems should support various payment methods, including digital wallets and gift cards, to accommodate diverse customer preferences.

Q & A

What is the main purpose of a point of sale (POS) system?

The main purpose of a POS system is to enable businesses to accept payments in person, streamline inventory management, and integrate with other business operations such as online sales and customer relationship management.

Why is a POS system essential for businesses with a physical store or traveling business?

A POS system is essential for these types of businesses as it helps manage transactions, inventory, and customer interactions efficiently, which is crucial for the smooth operation and growth of the business.

What are the basic hardware components of a POS system?

The basic hardware components of a POS system can include a smartphone or tablet, a card reader for processing debit, credit, and gift cards, and potentially additional components like a cash drawer, barcode scanner, receipt printer, and an integrated scale and label printer.

How does POS software integrate with other business systems?

POS software integrates with other business systems such as inventory management, banking and payment processing, CRM for loyalty programs, and more, allowing for real-time communication and data sharing to streamline operations.

What is the concept of a 'single point of truth' in the context of a POS system?

A 'single point of truth' refers to having a unified system where all business data is synchronized in real time, ensuring that inventory levels, sales figures, and customer information are accurate and consistent across all sales channels, both online and in person.

How can a POS system enhance online eCommerce sales?

A POS system can enhance online eCommerce sales by allowing staff to communicate with in-store customers and follow up with them via email. This integration can enable customers to continue shopping online after visiting the physical store, thus increasing the chances of sale completion.

What are some key features to consider when choosing a POS system for a business?

Key features to consider include the cost of the POS system, real-time inventory sync, support for digital wallets, compatibility with different operating systems, mobile payment capabilities, gift card functionality, scalability with user management, detailed sales reporting, CRM integration, and tax reporting ease.

How does a POS system help in building a deeper relationship with customers?

A POS system helps in building a deeper relationship with customers by effectively collecting, archiving, and interpreting customer information and purchase history. This data can be used to understand customer preferences, send targeted marketing campaigns, and implement loyalty programs.

What is the significance of being able to accept mobile payments with a POS system?

The ability to accept mobile payments is significant as it provides flexibility and mobility to businesses. It allows them to conduct sales even without a traditional cash register setup, making it easier to sell at festivals, pop-up shops, or on the go.

How does Shopify POS integrate with an online Shopify store?

Shopify POS integrates with an online Shopify store by providing a unified platform that allows for real-time communication between in-person sales and online orders. This integration simplifies financial reporting, streamlines payment processing with Shopify Payments, and aids in tax preparation.

What resources are available for businesses to choose the right POS system?

Businesses can refer to the Shopify blog for an in-depth article on how to choose the right POS system. Additionally, Shopify POS offers a webpage detailing its features and hardware options, which can be explored to determine if it's the right fit for the business.

Outlines

00:00

🛒 Introduction to Shopify POS System

This paragraph introduces the topic of the video, which is the Shopify point of sale (POS) system. It emphasizes the importance of a POS system for businesses, especially those with a physical store or that operate on-the-go like food trucks or residential gardeners. The speaker outlines the intention to cover everything from hardware to software and to guide viewers on choosing the right POS system for their business. The paragraph also invites viewers to subscribe for more business-related content.

05:02

📚 Components and Considerations of a POS System

The paragraph delves into the components of a POS system, distinguishing between hardware and software. It describes a basic setup that can start with just a smartphone and card reader, and expand to include a tablet, cash drawer, barcode scanner, receipt printer, and more, depending on the business needs. The importance of software is highlighted, as it manages inventory, communicates with the bank, processes payments, and integrates with customer relationship management (CRM) systems. The benefits of a POS system with online store integration are discussed, including the ability to manage the business from a single point of truth and the advantages for multi-location businesses and those selling across various channels.

10:04

💡 Choosing the Right POS System for Your Business

This section focuses on the critical factors to consider when selecting a POS system. It stresses the need for real-time communication between in-person sales and online orders to ensure inventory accuracy. The paragraph also talks about how an integrated POS system can enhance online sales by allowing staff to email potential customers with items they viewed. The benefits of customer relationship building through effective data collection and analysis are mentioned. The importance of mobile payment acceptance and the advantages of using Shopify POS for businesses intending to sell both online and in person are discussed. The paragraph concludes with a prompt to check out Shopify POS and provides links to further resources for choosing the right POS system.

📝 Key Features and Questions to Ask When Selecting a POS

The paragraph outlines a series of questions a business owner should ask when evaluating different POS options. It covers the costs associated with using a POS system, including monthly software fees and per-transaction fees. The need for real-time inventory synchronization, digital wallet compatibility, and support for both iOS and Android operating systems is emphasized. Additionally, it addresses the ability to accept mobile payments, use gift cards, add users and set permissions, track sales results, and generate reports for business analysis and tax preparation. The paragraph concludes by reminding viewers of the primary purpose of a POS system—to facilitate in-person payments—and encourages them to choose a system that simplifies rather than complicates their business operations.

🚀 Starting Your Business Journey with Shopify

The final paragraph encourages viewers to start a free trial with Shopify if they do not already have a store. It suggests that the POS system can integrate seamlessly with an online store, potentially transforming a hobby or passion into a full-fledged business. The speaker invites viewers to like the video, subscribe for updates, and engage with the content by leaving comments. The paragraph ends with a note that the Learn with Shopify team will continue to create content to support viewers in their entrepreneurial endeavors.

Keywords

💡Point of Sale (POS) System

A Point of Sale (POS) system is a combination of hardware and software that allows businesses to complete transactions at the point of sale, typically in a retail setting. In the video, the POS system is central to the theme as it is discussed extensively, from its basic components to its integration with online stores and its impact on business operations. The script mentions that a POS system is 'an absolute must' for physical stores and traveling businesses, highlighting its importance in managing sales and inventory.

💡Hardware Components

Hardware components refer to the physical devices used in a POS system, such as smartphones, card readers, tablets, cash drawers, barcode scanners, receipt printers, and integrated scales. The video script outlines various hardware options, emphasizing that businesses can start with a basic setup and expand according to their needs. For instance, a 'smartphone as well as a card reader' can be used for processing payments, or a 'dedicated tablet' can be employed to show product images to customers.

💡Software Components

Software components are the programs that run on the hardware, enabling the POS system to manage transactions, inventory, and customer data. The script describes the software as 'arguably the more important part' of a POS system because it handles tasks such as real-time communication with inventory management systems and banks, and supports features like loyalty programs. The video also stresses the importance of POS software for businesses with multiple locations and online stores.

💡Inventory Management

Inventory management is the process of tracking stock levels, sales, and orders. In the context of the video, it is crucial for businesses to have a POS system that can communicate in real time with their inventory management system to ensure accurate inventory representation for customers and staff. The script mentions the problem of legacy POS systems that did not allow for 'realtime comms between your in person sales and online orders', leading to manual inventory counting.

💡Loyalty Program

A loyalty program is a marketing strategy designed to reward and encourage repeat business. The video discusses how an integrated POS system can facilitate the creation of loyalty programs by collecting and interpreting customer information and purchase history. For example, the script talks about leveraging the power of loyalty programs to 'target different customer segments with different marketing campaigns', enhancing customer relationships and driving sales.

💡Mobile Payments

Mobile payments refer to the ability to conduct financial transactions using a mobile device. The video emphasizes the importance of this feature in a POS system, as it allows businesses to accept payments anywhere, not just at a fixed cash register. The script mentions the legacy POS systems that 'require you to be tethered to your store's cash register countertop', contrasting them with modern systems that offer the flexibility of mobile payments.

💡Digital Wallets

Digital wallets are electronic equivalents of physical wallets, allowing users to make transactions using digital currency stored on their smartphones or other devices. The video script points out the growing trend of consumers using digital wallets like Apple Pay or Google Pay and the need for a POS system to accept these forms of payment. It is mentioned as a vital question to ask when considering a POS system, 'Can the POS system I'm considering except digital wallets?'

💡CRM (Customer Relationship Management)

CRM refers to strategies, technologies, and practices used to manage a company's interactions with customers and potential customers. In the script, CRM is highlighted as an integral part of a POS system, enabling businesses to build deeper relationships with customers by effectively managing their information. The video mentions the ability to 'search for men who only bought orders of $100 or less in the past three months and send them a marketing email', showcasing how CRM can be used for targeted marketing.

💡Single Point of Truth

A single point of truth refers to a single, reliable source of data that is used throughout an organization. The video script discusses the importance of having a POS system that serves as a single point of truth for both in-person and online transactions, ensuring that inventory levels and sales data are accurate and consistent across all channels. The concept is introduced with the statement, 'POS software that connects with your online store helps you run your entire business, end to end in one single point of truth.'

💡Integration

Integration in the context of a POS system refers to the seamless connection and interaction between different components of the system, such as hardware, software, and various business channels. The video emphasizes the benefits of a fully integrated POS system, like Shopify POS, which can communicate between offline and online stores and directly to customers. An example from the script is how an integrated system can 'send emails to people who visited your stores... and enable them to go directly from that email to a cart added with that jacket that they tried on'.

💡Transactional Fees

Transactional fees are charges assessed by a payment processor for each transaction processed through a POS system. The video script advises businesses to consider the cost of using a POS system, including the monthly software fee and per-transaction fees. It prompts viewers to ask, 'How much is the monthly POS software fee, and what are all the per transaction fees and how are they calculated?', indicating that understanding these costs is crucial for making an informed decision about a POS system.

Highlights

The Shopify point of sale system is essential for businesses with physical stores or traveling businesses.

Learn with Shopify provides knowledge, skills, and tips for business success.

Basic POS hardware can include a smartphone and card reader, with options to expand based on business needs.

Additional hardware might include a tablet, cash drawer, barcode scanner, receipt printer, and integrated scale for online order processing.

POS software is crucial for real-time communication with inventory management, banking, CRM, and other systems.

A POS system that integrates with an online store helps manage the entire business from a single point of truth.

POS software features are especially critical for businesses with multiple locations and sales channels.

A single point of truth in POS ensures accurate inventory representation for customers and staff.

An integrated POS system can boost online sales by enabling follow-up emails to in-store visitors.

Integrated POS and online store allows for deeper customer relationships through effective data collection and analysis.

Mobile payment acceptance is a key feature for modern POS systems, allowing flexibility in sales locations.

Shopify POS integrates with Shopify Payments for a seamless single point of truth for financial operations.

Shopify POS is recommended for businesses intending to sell both online and in person, but other options are available.

Important questions to consider when choosing a POS system include costs, real-time inventory sync, digital wallet support, and compatibility with iOS and Android.

POS system should support growth with features like user management, sales tracking, and CRM capabilities.

Ease of generating reports for tax purposes is a crucial consideration for any POS system.

The ultimate goal of a POS system is to simplify in-person payment acceptance and support business growth.

Shopify offers a free trial for new users to explore the features and benefits of their online store and POS system.

Transcripts

You P O S.

No, not you.

This.

The Shopify point of sale system.

And in this video, I'll be sharing everything you need to

know from the hardware to the software, to who needs one.

And you're gonna wanna stick around until the very end where we'll tie

it all together for one of the most important elements: how to choose the

right POS for you and your business.

But first, I just wanna welcome you to Learn with Shopify, where we aim to

arm you with the knowledge, skills, and tips to succeed in all things business.

And when it comes to doing business, especially if you have a physical store

or are a traveling business, like a food truck or a residential gardener, a point

of sale system is an absolute must.

Consider subscribing and hitting that bell so that you will be notified the moment,

new videos just like this one drop.

But what exactly are the components of an entire point of sale system?

At the base level, there are the hardware components and the software components.

When it comes to hardware, we can go super bare bones with just a

smartphone, as well as a card reader, to process debit, credit and gift cards.

But depending on the type of business that you're doing, you

may want a dedicated tablet.

If for example, you have product images on your tablet that you can

use to show customers your goods.

From this more bare bone setup, your business may require additional

hardware, like an integrated cash drawer that unlocks and opens during

transactions if you accept cash payments.

A barcode scanner, if you have a lot of different products that you're

selling and just want to quickly scan, instead of finding each one

individually on your smartphone or tablet.

A receipt printer, if your customers require a physical copy and not just email

receipts, and to even further consolidate, you may want an integrated scale and

label printer, if your POS station is also the place where you process

online orders for shipment as well.

That's a quick one/two overview of the potential hardware components.

But software, now that is arguably the more important part since it's

what needs to do all the heavy lifting behind the scenes, you know,

communicating in real time with your inventory management system.

Communicating with your bank and the payment cards your customers use to pay.

Communicating with your CRM if you offer loyalty program and so much more.

The software and its features become even more mission critical, if you have

multiple physical locations and multiple additional channels, like an online store.

Selling across social platforms and sending up popup shops

at events or trade shows.

Essentially POS software that connects with your online store helps you

run your entire business, end to end in one single point of truth.

If you wanna sell in person, a point of sale system is a must and best of all,

when your online store and in-person retail operations talk to each other

seamlessly and in real time, it makes managing and growing your business

infinitely more straightforward.

Now that we know about the hardware side and the software side of the POS

system in general, and also know that anyone who intends on selling in person

needs one, let's really explore the most important considerations when

choosing which POS system to go with.

You heard me mention this term already, but let's kick things off with the

concept of a single point of truth.

You see most businesses that have been around for a while, had a legacy POS

system before they started to expand to selling online, which means that when

they launched their websites, there was no real reliable way to manage

inventory between the two operations.

Aside from APIs that serve as communications manifolds, that

didn't happen in true real time.

This meant that these poor business owners would have to count inventory by hand,

just to be sure, then jump back and forth between their online inventory manager and

their physical retail management system constantly, and still never be 100% sure.

And since selling things is one of, if not the most important priorities for your

business, one of the first considerations when choosing a POS is that there are

reliable, realtime comms between your in person sales and online orders, to ensure

inventory representation is accurate to your customers, you and your staff.

Speaking of the online, offline blend in your sales numbers, a good in person

POS system actually boosts your online eCommerce sales, believe it or not.

With a fully integrated point of sale system, like Shopify POS you and your

staff at your physical location can send emails to people who visited your

stores, but were a bit indecisive and didn't end up buying right then and there.

With this powerful integration that email, you send them a day or two later

can enable them to go directly from that email to a cart added with that

jacket that they tried on and be able to check out and have it shipped to them.

And to think that sale happened because of the integration between your offline

and online stores and the powerful POS that could communicate between each

other and directly to your customer.

And speaking of your customers, a truly integrated POS and online store

enables you to build a much deeper relationship with your customers because

of the effective collecting, archiving and interpreting of your customer's

information and purchase history.

You can see what they ordered, when they ordered it, how much they spent

and even leveraged the power of loyalty programs and just as effectively

target different customer segments with different marketing campaigns.

You and your staff can, for example, search for men who only bought orders

of $100 or less in the past three months and send them a marketing email

for that new sweater that costs $79.

Next accepting mobile payments is a key feature you want in your POS system.

I mean, legacy POS systems require you to be tethered to your

store's cash register countertop.

And although you may choose to have a full setup in store, if at any point you decide

to sell at the festival, stripping down to just the bare bones card reader and tablet

is all you need to keep making money.

And with Shopify POS, if you already have an online Shopify store, this complete

integration means that the powerful and industry leading Shopify payments

continues the theme of a single point of truth for your in-person transactions,

enabling so much more ease when it comes to your financial reporting, getting money

transferred into your bank account, and probably the biggest lifesaver of all,

when it comes time to do your taxes.

Now, this is learn with Shopify, so we are biased with our deep

belief in Shopify POS as one of, if not the best point of sale system,

especially for businesses that intend on selling both online and in person.

But regardless, I welcome you to check out Shopify POS for yourself and really

get to know its features and even the elegant hardware options available to you.

And I'm gonna link the Shopify POS webpage down in the description.

We also recognize that it's possible that Shopify POS may not be the right

choice for your business right now.

And that's why we have an incredibly in depth article on the Shopify

blog that runs through how to choose the right POS for your business.

And that article will also be linked down in the description below.

To help you get started on your decision making path though.

I thought it'd be a great idea to share some of the most important questions

I would ask if I were looking at a few different POS options right now.

Right off the bat, I'd want to know how much it'll cost me to use each POS system.

Transaction after transaction after transaction.

So the first thing I'd ask is how much is the monthly POS software fee

and what are all the per transaction fees and how are they calculated?

Another vital question for me would be does the POS automatically

sync in real time, my inventory as customers buy return and exchange

items, both in store and online?

What about digital wallets?

I mean with more and more people using things like apple pay or

Google pay and not even bring all of their cards with them in person.

Can the POS system I'm considering except digital wallets?

And speaking of compatibility, I'm team iPhone.

But my side hustle partner is team Android.

If we run a popup shop together, does your POS software work with both

iOS and Android operating systems?

Actually prerequisite questions.

Does your POS software support mobile payments, period?

Meaning, if I have to go real bare bones and just connect a card

reader to my phone, will payments be accepted without a hitch?

What about gift cards?

Can gift cards that were originally purchased and gifted online,

be used in store and in person?

What about the other way around?

What about growth and scale?

Can I add users set permissions and track activity if I start hiring employees?

Will your POS system track their sales results like average order value,

growth, sales, and units per transaction?

So I'll know who to mentor and spend my time conducting sales training

effectively for my growing team.

What about on and offline blended and segmented reporting?

Can I just log into one place and see how my online sales are doing and how

my in-store sales are performing and extract and interpret that data to

help me make better business decisions?

And what about a CRM?

A customer relationship management component.

Will I be able to create a loyalty program with points and discounts

for my most loyal customers?

Will I be able to segment customer groups easily with simple filtering

to be able to send the most targeted and effective marketing campaigns?

And saving the dreaded thought of tax season to the end,

can I generate reports easily that I can just export and send off to my

accountant and have everything easily interpreted between my total sales and

expenses, but also compartmentalize with my online and in-person retail operations?

As you can see, there are a lot of considerations to make, and depending on

the type of business that you are running, there may be even more questions that I

have even thought of that you may have.

And if there are, please do be sure to write them down in the comments below.

Look, at the end of the day, the purpose of the POS system is to enable

you to accept payments in person.

That's it.

But the last thing you want is for your POS system to end up creating more work

for you, if anything, it should make life easier and free up your time and your

mind to focus on the parts of growing your business that'll have the greatest impact.

And Hey, if you're watching this video and don't have a Shopify store

yet, I welcome you to start your 100% free, no strings attached trial,

so you can get to experiment with everything Shopify has to offer with no

pressures and no sales pitch looming.

You can claim your completely free trial by clicking the link right over here,

or down in the description below.

That free trial for your Shopify online store might just be the thing that'll

turn your hobby or true passion into the business that enables you to lead

the life you were always meant to lead.

And if having a physical retail operation is a part of that dream, Shopify POS will

integrate seamlessly with that online store, that all started by watching this

video and signing up for a free trial.

And Hey, if you enjoy this video, give us a thumbs up by hitting that like button.

And if you got value, consider subscribing and hitting that bell so

that you will be notified the moment new videos, just like this one.

But in the meantime, me and the rest of the learn with Shopify crew will be

busy, continuing to create videos, to share all things entrepreneurship with

you, catch you guys in the next one.