23 Sep 2013

Making POS Systems & eCommerce Profitable

eCommerce and POS SystemSmall to mid-sized Retailers realise they need to have a multi-channel business model to be successful today, along with the importance of being online.  However implementing a strategy profitably is easier than what is often reported.

The Australian Online Retail market is growing at over 25% year on year, and worth more than $12B.  This year, thousands of consumers will do their Christmas shopping online, and they’ll be starting early, from October, in order to ensure they get their deliveries without fuss before Christmas day.

However despite this massive shift in consumer behaviour, and the need for retailers to be online, the operational costs for a retailer to achieve success online can be very high.

If a retailer’s POS System is not deeply integrated with their ecommerce platform, to the point where inventory, sales orders and customer data is automated, then the operational costs of managing a web business may exceed the margins made on the sale of products.

The cost of building a great looking website is only the tip of the iceberg, in terms of the total web operating costs over say a 12 month period.  The largest proportion of your actual costs of running a web business are the ongoing operational costs (not the initial website development costs).

All the manual work and labour that needs to be applied to running a smooth online business must be minimalized, in order to be profitable.

Here are some of the key success factors for a retailer to be profitable online:

  •  Getting your technology platforms right is pivotal to multi-channel success. Your POS System must be deeply integrated with your ecommerce platform, and they should operate as a single system, not disparate systems
  •  Products in your core retail system should automatically synchronise with the products in your ecommerce platform, without manual intervention
  • The stock availability information must also be live connected with your ecommerce system, in order to manage customer expectations for availability.  One of the worst things you can do is take an online order and customer payment, then not be able to deliver.  Or worse still, having physical stock on hand, but not selling it online because your website doesn’t know it exists
  • You need to have a single view of your customer, both inst0re and online.  The requires having your customer records synchronised, for both in-store and online buying activity.  If a customer has an in-store discount level, or a gift voucher or coupon, then this information needs to be available to both your POS software system as well as your ecommerce system.
  • When you receive an online sales transaction, that sale data must also synchronise with your core retail software, so that you and your staff can see all of your customers historical transactions – both in-store and online.
  •  Your fulfilment systems also need to have access to all your customer information.
  • And finally, from a Loyalty perspective, it’s imperative all the in-store and online data is amalgamated.  In order to execute an effective loyalty program by identifying specific customer activity; then offer targeted promotions to those customers, you must have a complete solution that’s ‘aware’ of all the customers ‘channel’ activities.

This may all sound simply, however something to be particularity aware of, is retail POS software companies that only offer their retail clients and API to their software, citing how easy it is to connect with other 3rd party platforms.

If the retail software vendor only offers an API service, and doesn’t actually provide a complete turn-key multi-channel solution – then you may be in for a tougher ride than expected. Most POS system API’s are actually not up scratch when it comes to the integration requirements, and furthermore, you have to find your own web developers to do the technical integration.  This technical integration can be extremely risky, and very expensive.

Aaron Blackman is the CEO, Retail Express.

Retail Express delivers market leading cloud based Retail Operating Software, designed specifically to reduce costs, improve efficiency, and grow sales.