Last week, Michael Woodruff, our Partner Manager met up with Wayne Schmidt from Add On Success to bring you this webinar on what 6 questions you need to ask your clients when they’re looking to either buy or transition to a new POS system for their retail business.
Below you will find part of the transcription for the webinar.
Okay. So, let’s start with, why use a point of sale system and inventory management system? Effectively, what I like to think is really getting some time back to allow your retail customer to work on their business. Now, that sounds really, really clichéd and it’s all sort of, well yeah, I understand that, it’s not rocket science. However, I’ve worked in a lot of different industries, retail is one of those ones where they just never seem to have enough time. They are dealing with staff issues, customer issues, they’ve got suppliers, they’re playing their rent, they’re doing signage, they’re doing marketing, they’re doing sales and promotions, and they’re worrying about cash flow. All of these things, and yeah, they come into a lot of businesses, but in retail it’s more of a time specific thing.
So, really, why use an inventory and POS system? Just to get back some time in your business so you can then work on growing, expanding, being more efficient or whatever it is that you want to do in your retail business. So, that’s a really, really key one there. Clearly you’d use a POS system and an inventory system if you want the other systems in your business to talk to each other. So, you’ve got Xero in your customer’s retail business, why don’t you get your point of sale and inventory system to talk directly to that accounting package? That saves one step of manual entry. So, again, you are buying back some time either for yourselves or for your customer. It’s quicker to run reports. All the systems talk to each other, you are not duplicating data entry and things like that. So, that’s a bit of a no brainer, but that’s a really, really key reason as to why you would run a cloud based point of sale system.
This is a funny one, and take this the right way when you’re talking to your retail customers, “You are really, really good at retailing, but perhaps you’re not that great at admin”. Now, a lot of retailers are very passionate and I appreciate that. They are fantastic at triathlons, so they want to open up a sports store. They love quilting and making quilts, so they want to open up a quilting store. That’s awesome. So, they are really, really good and passionate about what they do. They are probably really good at selling their passion in the retail side, talking to customers, but at the end of the day, a lot of retail is about a lot of admin. Filling in purchase orders, receiving stock, putting labels on things, doing stock takes. So, that admin side, again, getting the software to do the heavy lifting leaves you more time for your passion at the end of the day.
Controlled growth and success is another reason why you’d look at a system in the business you want controlled. Growth and success and control is the key there. It’s awesome to see retailers expanding at a rapid rate. Having retail stores is a little bit, in my mind, like having extra children. One is not too bad, two is more than twice the work and three is just a complete circus. So, anything above that, you really start to get into, I guess, a lot of challenges when you are looking at growing your business. So, let’s do it in a controlled way. Again, let the system do the heavy lifting, automate processes, systemise the business and that growth is going to lead to success rather than a potential nightmare of 24 hours a day trying to work on your business.
So, the final one there is focus on what you are passionate about. So, that’s as I was talking about before. Really if you are passionate about running a sports store or running a dress shop or whatever, get all that admin stuff out of the way, get it done by a system and then you can focus on your customers and your passion.
Actually, I like some of the points you raise there. I was going to grab you while you were just talking about that because one of the things is, people don’t value time and when you say, “Hey, how much time are you going to get back?” Please, when you’re having these conversations with people, you get out your texta, you get a white board and you go, “Okay, how much is it that… how much do you pay yourself a week, or your staff to do this? how many hours do you do it?” and you do the calculation, extrapolate it over a year and maybe even extrapolate it over two or three years so that they can then measure their return on investment, ROI.
Too many times I see people, “Oh well, there’s your time and you’re going to save time”, but they don’t do the calculation. It’s amazing. You say, “Well look, if this is going to take you two hours less of data entry, what in that two hours can you do and how much do you charge in that two hours, so how much are you going to make?”
The other thing that I liked what you said, automate any manual process. Anytime you’ve got a manual process where you’ve whacked a human in between a computer and a computer because we haven’t got proper integration, again there is a cost associated there and it’s a cost of visibility as well as time, accuracy, integrity of data. I do love the admin side of following your passion because people often get very passionate, but forget to follow that there is a huge admin side to it. So, yeah, some good positioning. Sorry, I just had to break in there because I thought those were really good comments.
Yeah, good stuff. That’s exactly right and if you’re the sort of shopper like I am, I’m terrible. I walk in and I say, “I’ve got some money to spend, someone just put some clothes on me so I can walk out”.
You’re a male, that’s what we do.
Yeah, that’s right. I never go shopping by myself. “Just take care of this for me”. If someone is in the background trying to enter some data or something, just come out to the shop and serve me, I’ll pay you for it, no problems at all. That’s what you want to get in terms of time. You want your staff serving customers, that’s the key. So, its retail 101.
Okay. How do I get there? There are probably no surprises in here and I’ve probably talked about a lot of this. So, I’ll skip through it reasonably quickly. Get into the Cloud! Okay. That’s a given with the people that we’ve got listening today, but you’d be surprised by the number of people who are still adopting that, but they will get there eventually. Don’t hold that against them. So, get into the cloud. That’s going to make life so much easier.
You can run a report on your sales from home. You can see how your store that’s 150 kilometres away is trading because you can see it on your phone or on your laptop as to how they’re trading. You know when they opened the store and what they’re selling and what their margin is, and how much is Billy discounting all the clothes that you’re selling etc. So, you can keep a handle on that. Get your software system to do the heavy lifting. That’s a bit of a turn of phrase I use often and I’ve said it before, the software systems are designed with a lot of power in them, make sure your software is doing the work. Automate your processes.
As Wayne said, remove the humans, okay, as much as you possibly can anyway, and again that automation is key, and use an all in one system where you can, plus take advantage of the Xero ecosystem, it is vast. We’ve been a Xero add on partner forever and I’ve seen it grow from 10, 15, 20, 50 add ons to hundreds now. So, there are lots of solutions out there. Take advantage of the ones that are going to help your retailer, which again, I am preaching to the converted, but you guys know what I’m talking about.
Actually, while you’re there, there are a couple of things too. Especially when you’re positioning, so if you’re having to move clients to the cloud, I always use this and security tends to come up. That’s one of the first things. People go, “Oh, I don’t want to put my data up on the cloud, it’s not secure”.
Now, for the audience, if you ever need to position Cloud, this is the easiest thing. So, it’s a Q&A question. So, what you’re going to do is, you go… you have to do it this way, this is the process. You ask the client, “Do you do banking?” “Yes”, “Do you do internet banking?” “Yes”, “Do you do internet banking at home?” “Yes”, “Oh good. Do you know where the servers are that your bank uses?” “No”, “Do you know if they did a backup last night?” “No”, “Welcome to Cloud computing.
You’ve been using it and delivering it for years, and it’s for your money, nothing to do about a piece of product. It’s your actual money”. So, the pure definition of cloud computing, using somebody else’s computers, don’t even know where they are, accessing it via the internet using any type of browser. It just works anywhere, anytime, total security compared to your desktop, which is unsecure.
Correct, and I agree with that, and if someone comes in and robs your store and takes your computer, well, that’s the end of your business. So, I mean, there is all your data gone, or if that computer that your software system is on blows up, you have nothing. Whereas in the cloud you open up a laptop, you log in and you’re trading again in minutes.
Yeah, actually too… Michael, I know… my local coffee shop, I go there and I see their bookkeeper come time to time, going in there and I feel for her because she sits right up in the attic in this hot little room on a milk crate doing the work, and I go, there has got to be a better way than sitting on a milk crate in the attic of a coffee shop.
Living the dream. That’s right. You want to be able to work in your pyjamas. Come on. That’s the way it works, isn’t it?
Tell us about your next six key elements.
Alright. Fantastic. So, six key elements to consider. These are the ones you want to write down of course and I’ll talk through these. Again, these are more questions. I feel like I’m not going to give you guys any answers, I’m going to give you lots of questions today, but in the end that will get answers from your clients. So, you know what I’m trying to do here.
So, how do I interact with my customers, is the first key one. So, what sort of retail customer do I have? How do they sell their product? How do they talk to their customers? Are they a traditional retailer with four walls? I am a dress shop, I have one location, and all of my stock is on display. My customer walks in, they look at something, they take it off the shelf, they pay for it there and then and then they walk out the door. That’s what I would term as a traditional retailer within those four walls, okay? Do they sell like that, yes or no? You might have a retailer with lots of combinations of these ones that you can see on the screen. It might just be a single channel that they sell through, but it’s important to consider all of the options that they do sell through.
Am I retailer with a large floor space? Why is that significant? Well, if you’ve ever bought a bed from someone who doesn’t use a mobile point of sale as their register, you would find that if you’re in the far corner away from the till, you are looking at a bed and you say, “Well, how much is this one?” and they go, “I’ll be back in a minute”. So, they walk 150 metres back to their POS, they get the price, they walk back and they go, “It’s $2900”. You say, “Great. Well, what about in the queen size?” “Oh, I’ll be back in a minute”, and they walk 150 metres back. By the time they’ve made the sale, they’ve covered about five kilometres in their store. If they had a laptop or rather a tablet in front of them, they could flick through, they could show you a picture, they could check their stock on hand in lots of locations, not just the one that you’re in. They can do you a deal, they can look up the cost price, they can negotiate and before you know it you’ve bought a bed and a package and a whole lot of other things that you may not have bought. They could interact with you on the floor. That’s how I interact with my customers.
Are they selling from a van with account customers? So, there’s two things in one. Are they doing mobile sales from a van? Maybe selling hoses or fixers or paints or parts and widgets, whatever. A lot of those account customers, they probably are in that environment because often people don’t just rock up to your house and sell things out of a van. So, that’s a different way of retailing. That’s a different way of interacting with your customers. It is really important to consider, well how is my POS and inventory system going to deal with that? Maybe I’ve got a warehouse with stock in it. Maybe there is stock in my van. How do I know if it’s in the van or the warehouse? Well, I don’t because it just says I’ve got one, but I don’t know where it is. So, these are the things you need to dig in, sort of like scenarios I guess, with your customer.
Do they do wholesale or retail from a warehouse? Maybe they never ever see their customer because their customers are all online, as I’ve got here, selling online. Okay? Do they order online? Can people pick it up from a warehouse? Do I simply get an order from an email, from an account customer and then I send it to them on their truck? So, these are all, in my terms, types of retailing that you need to consider. How do we interact with our customers, therefore, what does my system need to do to support that process or processes if there is a number of those different ones in your store? Of course, selling online, that’s a very, very unique beast. I’ll talk about that a little bit later on as well. That is very unique and there is a whole range of things to consider. How does my customer pay? What payment gateways am I using? How do I know that I need to send this stock to that customer on a certain day or a time? Who is the customer? Where are they? Lots of different things to consider.
Okay, I will jump onto number two.
While you’re moving onto that, I just had to say, what you talked about there when you’ve got a large retail store, and specifically furniture stores are a classic. I was just purchasing exactly what you were talking about, a bed, and the store was two levels. They had a manual system, loved it, thank you Gainesville, and it was an old, old desktop computer which was on the ground floor. The beds are on the top floor. So, I made this guy walk up and down and up and down getting prices, and do you know what? We ended up not buying. He actually lost the sale because Sally and I just got a bit frustrated by the whole process. I mean, oh my god, this is 2015, can’t you do it a little bit more efficiently than this? So, yeah, it will affect buying decisions and when you’re buying something from Gainesville you’re dropping some serious coin. It would have covered his point of sales system in one sale, I reckon.
There you go, return on investment conversation right there, Wayne.
Yeah, lost opportunity.
How much money are you going to throw away. Cool. Sorry, I keep interrupting. It’s a good topic. I’m loving it.
That’s fine, and often that isn’t considered. Often it’s not considered that… how much is this costing me? Not just in dollars, but in lost opportunity and there is a key example there.
So, the second one. How do I buy my stock? Okay. So, I’ve got my customers, I know how I’m talking to them, how do I buy my stock? So, do I have local suppliers? This is obviously on the inventory management side, but it’s obviously a part of your retail environment? How do I buy my stock local supplier only? It comes from round the corner or it comes from interstate or whatever, no problems at all. Okay, is it an international supplier? If it is, do I need to track container numbers? Do I know where it is? Is it on the wharf? Is it through fumigation? Is it in customs? How do I know where it is? Okay. That’s a key one as well. How long is it going to take to get here and how do my staff maybe know that, you know what, I can sell this one to Wayne as he walks in and he wants to buy this because I know that there is one being delivered next week, because I’ve got an understanding of my supply chain. That’s a key part of retail as well, not just saying, “Oh, probably six weeks, I reckon”, and then Wayne walks out the door and buys one from someone who can tell him it’s going to be two weeks. So, that’s the difference there.
Are they replenished or one off items? Now, by that I mean a replenished item is something like a white business shirt, it’s always the same style, it’s always the same sizes etc. In a fashion environment, you just replenish them. You run out and you buy more of the same thing. One off items are things like bespoke furniture pieces or second hand items or vintage items or whatever. A lot of fashion is one off item. So, you’ve got… it’s a range or a season or a style and you’re never going to have it again, its winter 2014, its never coming back because the next season you’re getting the next range. So, how does that affect things like managing my data? Can I do a mass upload of data? Do I have to do it one by one? How do I do reporting? All of these things as well. So, that’s a key as well.
Is it manufactured? A lot of systems, or a lot of retailers rather will try and sometimes get everything in once from a whole box of buttons and some thread and some fabric. I want to see that all the way through to when my customer buys it. So, does you customer need to see that, yes or no? Alright, well then you’re going to need to look at a system that has a manufacturing capability as well. So, that’s another key thing as well. How do you manage your costs around that? How do you view costs? Then other important things like forecasting, sell through rates, lead times. Is all that recorded and do I know what’s going on there? Some of the things like the costs in your business. Your rent of course is massive, your wages are massive, and your inventory is massive. They’re probably your three key costs in a retail business, and inventory being one of the biggest ones. So, if you’ve got something like forecasting tools that can help you work through that, that’s going to make a big difference because you don’t want to be sitting on dead stock. If you’re guessing with 3000 items… “Oh, I reckon I’ll buy ten of those because they seem to be moving”, okay, you need a system that’s going to be able to do that for you in terms of forecasting. That’s a really, really key one. It keeps your cash in the right place at the right time and then you guys are happy because they’re not having cash flow issues.
Okay, onto the next one. Alright, so how do I get the product to the customer after they’ve bought it? Now, that’s a key consideration. We know how we’re talking to our customer, we know how we’re buying our product. The customer comes in and does what they’re told to do, which is buy the product. Is it in a cash and carry environment? Now, cash and carry being they walk in, they pay for it and they walk out with it on the same day. That’s a cash and carry environment. A lot of retailers are like that. Most retailers have a combination of all of these things here. That would be one as well. Layby or part payment? Do they have to pay a deposit? How do I work out what that deposit is easily, without a calculator and get it right every time? How do I know that I actually owe someone something? There is a liability in my business where someone comes in and says, “Well, I’ll put that $300 on layby”, “Okay, that’s fine”, they give you some of their money, and you are holding that stock. Well, how do you actually track that? So, how do you track that liability in your business? You promised that item to that person and they’re going to be pretty disappointed if they come in and you’ve sold it to someone else. So, how do you actually do that in your business?
How do you take payment? Do you take payment on an account, for example? You might be a retailer who has wholesale customers, who you sell to other retailers. You might have big businesses that you’re dealing with where they are putting the services or products that you’re selling onto their account. Is that a payment method? Can they use vouchers, can they use loyalty points, and are there competitions? All of that stuff. How do you track all of those things in your business as payment types rather than just credit or cash? Are your orders ordered and paid online? So, the customer’s done their job, they’ve put all their details in and they’ve paid for their items. How do you get it to them now? That’s a key one. That’s an exciting problem to have. You’ve got a whole bunch of orders and now you have to send them out, that’s awesome, but you’ve got to make sure you can track that and really make sure that that process, it’s not, I guess, holding your business back because you’re having to deal with… and I hear that a lot, the words ‘deal with’, “I have to deal with these online orders”. It almost sounds like they’re a negative, when in fact they’re a real positive for your business. So, I mean, I’ve seen retailers that are turning over almost as much or as much as a physical retail store in their online store and they’ve got a team of people that are working on those orders. That’s a massive opportunity there. So, yeah, that’s something to consider, and obviously, as I said, shipping and delivery doesn’t have to just be for online orders, it could be for your account customers, okay? They order things via an email, you process the order and you send it out to them via your shipping and delivery. How do you manage that actual process?
Okay, the fourth question is do I want to sell online? Excellent time to introduce the online side of things. It’s very, very important to remember, and you can use these words, write them down and use them with your retailer who says, “Oh, I think I might want to sell online”. That’s awesome, because it’s a big opportunity. Somewhere between 16 and 18 billion with a B in turnover on Australian web stores expected in 2016. That’s a big number, to get a slice of that pie, but ask them the question. Just tell them, it’s not just a catalogue, it’s another shopfront, so you have to treat it that way, you have to merchandise it, you have to manage it and you have to promote it. You can’t open a retail store in the back blocks of an industrial estate somewhere and complain when no one turns up. If they can’t find it, they can’t buy from it. So, that’s something to consider.
Are they really committed to buying online? Because the key word there is commitment. Do I want to sell online? How do I pick orders? How do I charge shipping rates? How do I get the product to the customer? Again, these are all things to consider. Do they have the infrastructure there to do it? It’s key that they plan for that. It’s absolutely doable and none of this should seem scary at all. It’s actually exciting. They just need to put a bit of thought into it and can talk to people like you guys, talk to people like us, and we can talk them through the pros and cons of doing that.
Key one there, integration with their POS and inventory system. Again, automation is the key. Wayne was talking about that before. The really important part is that I don’t want to have to grab an order from my online store, physically have to type it into my POS and inventory system, that’s just a waste of time. The customer has already entered their order into your online store and they’ve already paid for it. You should be in a position where you just pick it, pack it and send it off and the job is done. So, online can be an amazing marketplace, a massive opportunity. A little bit of planning and it can go really, really well.
So, I’m going to buy some new software. I’m going to invest my time and money and energy in setting it up. How can my new software help me make more sales? Very good question. So, some of the keys there. You want to be able to collect customer details during a sale, whether that’s in store or online. So, once you’ve got those details, you’ve got their name, presumably their email address, maybe their mailing address or shipping address and their mobile phone number, there are a couple of questions there. Am I collecting the relevant data so that I can in fact market to these people later on after they’ve left my store? Classic example, you might have received a text message or an email or something that says, “Okay, its 2 o’clock in the afternoon on a Thursday, all sales made in my local store, XYZ Fashion Store or whatever, between 3PM and 5PM today, 50% off. It’s a flash sale”. “Oh my god, I just got a text. I’m there. I’ll be there in half an hour”, and off I go. So, that’s obviously a way that you can use data given to you by your customer to promote things to them that they are interested in buying in a relevant way. So, targeted marketing messages. That’s a really good thing to consider. You want to send marketing messages to people who you know are interested in the specific thing that you’re selling. Now, that sounds like marketing 101 and, to tell you the truth, it is, but so many times… I’m a mad keen bike rider and triathlete, with the emphasis on ‘try’ in triathlon. I get out there anyway. The key there is I don’t want to see things on mountain biking or touring or those things. I want to see things like, “Okay, there is 50% off triathlon gear for this weekend only”, because that’s my real passion.
So, those targeted messages are key. If you’re not collecting that data in the first place, it’s hard to market to people about those specific things. A loyalty programme is always going to help. Loyal members get 10% off or 5% off or a VIP sale or whatever. That’s a bit of a no brainer. Always good if your software system has a loyalty program involved.
Actually, while you’re going to the next thing, especially on how software can drive sales, a couple of things too, just as consultants to serve the accountants and bookkeepers here on the webinar. Chat to them about pricing and how to do these programs. A classic, look at Karen Millan. Karen Millan is a clothes store, it’s a global clothes store, it does very well and I’ve watched their process and I’ve always been quite intrigued about their sales process and how their point of sale interacts with their clients. So, what happens is Sally goes into Karen Millan, sees a nice skirt, buys the skirt, goes to the point of sales system, they pay. They immediately email her a voucher. Before she is out of the store, she’s got on her iPhone a voucher. It’s not 10% off because always chat to them about pricing, 10% off means what’s your bottom line. It’s a, “Here is a voucher for $50 off your next purchase”. What I love is they always put an asterisk and it’s not applicable for anything that’s on sale, but it still lures Sally back before you’re even out of the shop. So, it’s like almost we never leave the shop because they keep sending her vouchers. As consultants, we can advise on that too. So, it’s something you should be chatting to your client about.
Yeah, and that is a really key one and if you can’t squeeze another three or four percent in terms of sales revenue out of that type of system, you’re really not trying hard enough. So, I mean, you think about someone turning over $50, $60, $70K a month in their business, all that stuff adds up and it’s a real key. You don’t have to give away huge margins, maybe you can give away a value add. You get a free one of these when you buy six of these or something. I don’t know.
Yeah, its value add and then it’s the upselling. It’s the whole thing that… I think people get a little bit caught up and don’t think about the big picture stuff of point of sales system in the retail space. So, it’s really important about picking the right system and not just, “Oh, it’s a bit of software, it’s going to do this and it’s purely to keep track of all our sales, its more to run the till”. No, it’s not the do with the till. That’s the last step in the process.
That’s a given that it runs the till, yeah, no worries, it runs the till, that’s great and easy. Anyone can do that. It’s the systems that are built in around it and how you use the data. That’s exactly right.
Alright, so the final one. How will the new system interact with other systems in my business? This is a critical one and this is something that I know you guys are all aware of. So, I won’t harp on about it. How does it integrate with Xero? Again, that’s a no brainer. Does it need to or can it integrate with a web store? Some systems can and some systems can’t. Some web stores can and some web stores can’t. These are the discussions, like what platform do you have? Let’s do some analysis and some review of that before any decisions are made about which way to go. So, that’s also key as well, and how does it interact with these? Is it flexible? Is it easy? Is it robust? These are keys as well. Are there other systems that need to integrate with my point of sale and inventory software, or can they all be in the one system? I’ve said before, grab those add ons in the Xero ecosystem that matter to your particular client base and use them as levers, because they are really, really powerful levers, or try and remove as many links in the chain as you can and try and get it all in one system that takes care of that.
So, with the expansion of Xero and what it can do and its robustness etc. That takes care of a lot of the things that need to be done in retail. So, that’s obviously a great starting point.
So, that’s my top six things that you need to consider. There are lots of other things of course. I reckon if you can answer those questions with your client or ask those questions of your client, you can at least start a bit of a process on, well, how am I going to do the change over? What sort of timing is going to be involved? What sort of work is going to be involved?
More importantly, as Wayne said before, how is that going to benefit my business down the track? So, I’m spending some dollars to get in. I’m spending some time and I’m going to buy back six hours a week at $50 an hour. That’s $300, $15000 a year. Well, my system just paid for itself ten times over. That was pretty easy. So, those are the conversations you can have and I know you guys do that with your clients now.
Alright, moving on. So, some success stories. I always talk about Grant from Nutrition Warehouse. I shot this video with Grant at his Gold Coast store probably 18 months ago. He had previously joined Retail Express about two years earlier and he had one store and he had grand plans. Two years later, he had 13 stores, when I shot this video. He is now upwards of, just pushing about 30 stores, I believe. That’s the controlled growth that I was talking about before. He is an absolute master.
If you ever go into his store you will be followed around forever through his marketing, in a very positive and friendly way, of course. He really talks about spending time with the customer and consulting with them. He’s got products there, if he doesn’t have it in one store, he can get it shipped from another store because he’s got stock visibility.
Great loyalty systems, so he talks to you about what you’re trying to achieve and what you’re trying to do and then markets to you in that certain way, both in timing and in content. So, every three months you get an email that says, “Hey, it looks like you’re probably going to run out. Do you need to come in and buy this product? Yes, you do”. So, really, really good customer focused retail business. There are a whole bunch of these that I recorded a while ago, they are on the Retail Express website, RetailExpress.com.au. Jump on and have a look in your own time. Lots of different coverages. There is footwear, there is fashion, there is nutrition, and there is a whole range of stuff. So, jump on there and have a look, there are some pretty good recents.
Date of Post: 2015-07-27