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 POS Walkthrough
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DEMO SOFTWARE
Arel Retail demo version is available upon request. Please email sales@arelretail.com

FREQUENTLY ASKED QUESTIONS

The following are FAQs in regards to the Retail POS System:

 What is the difference between a cash register and a POS system?
 How much should a POS System cost? Is it worth it?
 What features should I need in a POS system?
 How do POS systems communicate?
 What equipment should I use?

 What is the difference between a cash register and a POS system?

A point of sale system is very similar to a cash register in that it allows you to make sales and cash is exchanged. However a cash register does not allow you to easily manage your stock, perform returns and exchanges, record employee timesheets, allow the use of barcode scanners or provide you with a suite of reports you can use to understand your system

PC based pos software systems provide you with all of these functions. Most pos software systems allow you to connect multiple PCs together so that they can share data. Further to this, these systems typically have a separate program, called a backoffice or management program, that allows you to consolidate data from multiple stores into a single cohesive view of your business.

 How much should a POS System cost? Is it worth it?

The answer to this depends largely on your current situation. You need to take into consideration the number of stores you have, how much time you are spending just getting the numbers to add up, your expansion plans, your cashflow and the like.

However, a computer based point of sale software system will provide you with many benefits beyond simple data capture, such as the following:

  • Tracking of discounts. A POS software system should let you track and record the reasons for all discounts provided during sales. You can be guaranteed that all products will sell at full price unless deliberately discounted
  • Stock Control. Without a computerised pos software system you will have great difficulty in managing your stock levels. With a PC based retail system stock should be automatically adjusted based on sales and purchase order receipts. Shrinkage can be determined, as can other critical business indicators such as stock turns and best selling products.
  • Increased Profits. A pos software system gives you a much greater insight into the buying patterns associated with your business. You can see which products are performing well in which stores, and which products are producing the greatest profit margin. You can create customer mail outs, loyalty schemes and sales periods. You can determine which hours are your busiest and staff stores accordingly, and you can implement salesperson commission without the headaches and “fudging” of sales associated with manual methods.
  • Reduced Costs. A pos software system will save you time on the basic operational tasks involved in running a store. Companies with manual operations and cash registers spend up to 30% of their time tallying numbers and information accuracy is typically poor. A POS system saves you this time and as they say: Time is money.
  • Improved accuracy. As mentioned above a retail pos system removes the manual element of most operations and thereby ensures the information you have is accurate and correct.
There are usually three tiers of product offerings for point of sale software:
  • Tier 1 – Marquee. High end, sophisticated pos systems designed for large volume retail chains with hundreds of stores. These typically require complex infrastructure and have a very high cost.
  • Tier 2 – Mid Range. Typically designed for small to medium retail chains (between 1 and 100 stores) and offering a wide range of features. Most of these systems require either permanent connection to their back office systems or rely on polling. Costs are extremely variable.
  • Tier 3 – Entry Level. Bottom of the range systems, with minimal functionality and designed to run on a single PC with no data communication ability. Costs of these systems are low.
 What features should I need in a POS system? What features should I want?

The features you require in your pos software are really a function of the type of business you operate and where you see your business heading over the next 5 years. Have a check list of the things you want to see and prioritise them before talking to any suppliers. Doing so will help you to stay focussed on what you want to see and not what the supplier wants to show you.

You should focus on the following key issues when evaluating different competitors:

  • Basic functionality. You may be surprised at just how varied the basic stores operations can be. Look for ease of use and how long it takes to complete a transaction (sale, return, exchange, etc).
  • Reporting is critical. Without good reporting you cannot make informed decisions about your business. Regardless of how well the data may be captured, if you cannot read or understand the reports you will still be blind to your business. Look for how easy it is to select specific subsets of information to report on and have a clear idea of what you want to know before looking at the software.
  • Communications & Administration. This is an often overlooked feature during a demonstration. If you are going to have more than a single PC or a single store then you need to understand how the communications work. See the communications question below for a better understanding of the issues involved. You also need to think about the time required to perform day to day tasks such as purchasing, new product creation and accounting.
  • Integration. Some POS systems include accounting modules, time and attendance and the like. Others provide integration features to allow you to use third party software of your choice. You should find out how easy it is to transfer data into and out of the point of sale system and determine how technically savvy you need to be to do it.
  • Support. Try to determine how well supported you will be. Is there a free support period and what happens after that support period expires. Also training and installation services are usually not included in the price of the software and are critical in getting a system operational smoothly. They should be budgeted into any purchasing decision you make. Find out how often software updates are released, and wether you have the rights to new releases when they become available. If a subscription service is available consider the cost of the service against the benefits of remaining up to date.
  • Extra Charges. Retail software providers usually charge either a site licence fee, a percentage of the sales you make, or a software maintenance fee. Find out what extra charges will be levied and what the charges are for.
 How do POS systems communicate?

Data communications are critical to the function of any multi store retail solution. There are a number of methods employed by POS systems to communicate data from stores to other stores or the back office. In addition to this some systems require small networks in the stores themselves as part of the data communications structure.

Polling – Type 1 (modem based)
Historically (before the internet) most pos solutions relied on polling. This is a method where at the end of each day all the sales for the day were “batched” together and sent in a file to the back office. Once all the files had been received the back office then processed all of the files and created a result file for transfer back to the stores. At the start of each day the stores would then process these files and then be ready for the next days operation. Since the internet was not available this transfer was performed using modem dial up. The back office would ring each store in turn at a specified time and ask for the end of day file. After processing it would ring the store again and send it the new file for the day. You will find that this method is still widely used today by many of the DOS based systems.

Problems: There are very high costs involved in the long distance phone calls. In order to poll a moderate to large number of stores companies have to create a “modem bank” and contact multiple stores at once in order to transfer all of the data in a short space of time. If a store is not contactable, either because the PC is off or the modem is experiencing problems then the store is missed from the update and data synchronisation becomes an issue. Stores usually cannot perform any activity while the transactions are being batched, or while the start of day file is being processed. This means store staff must remain in the store longer.

Polling – Type 2 (internet based)
With the widespread availability of the internet many POS solution providers have removed the costs associated with modems and long distance STD phone calls and have moved their file transfer mechanisms to a method known as FTP. This still involves the batching of transactions and however instead of waiting for modems to dial the transaction file is sent to a holding location (an FTP server). At a specific time the back office processes the files from the FTP site and places start of day files back on the FTP site. At the start of the next day the store must retrieve the file from the FTP site and processes it before being ready for the next days operation.

Problems: Stores may be off and could fail to transfer the daily file. Alternatively they may transfer the file, but it may be late and could miss the daily update. This could easily cause data loss in the back office. The down time associated with batching transactions means stores still have a “non-operational” period.

Polling – Type 3 (email)
This version of polling works in much the same way as the FTP method, however all files are transferred via the email protocols instead of FTP. The limitations and drawbacks are the same with the addition of extra work required to get the transfer files out of the emails and make them available for the back office or store to process. Automatic email processing has potential problems in terms of security and email spam.

Notes on Polling: Some vendors reduce the non-operational period of the stores by batching transactions as the day progresses, however the start of day inactivity is still an issue. Other vendors require every store to have a separate machine in the back room that performs the batching and processing of data (a store server). This is an added cost and should be avoided where possible.

Online To avoid the problems with polling many vendors are now using the power of the internet to provide direct update to the back office through a permanent internet connection. Each time a transaction is made the details are sent to the back office and updated immediately. This gives the back office staff live up to the minute information on what is happening in store. It also provides stores with the ability to query stock levels in other stores and to have accurate information as a result.

This is a great method of communication as long as the network connections are on and all systems are functioning as they should.

Problems: The cost of these solutions is definitely higher both in terms of the software and also the hardware and networking involved. Depending on how the software is written there are a number of other potential problems.
Firstly, when a connection becomes unavailable, or the back office server goes down the stores may not be able to process anything at all. This is typically the case with some of the newer “browser based” solutions.
Secondly, if a connection is lost in the middle of a transaction the transaction may be lost. The sale could still be completed in the store but the back office may never be aware of it.

Note: The connection problems can be overcome by having a special server in store (separate to the PC’s used for the point of sale) that handles the communications however this increases the cost of the solution.

Store and Forward
This solution is a mix of the best parts of both the online model and the polling model. It still uses the flexibility and power of the internet for communications but instead of requiring a permanent connection and a special in store communications server the store and forward model allows stores to be either online or offline without any disruption to service at all.

Each transaction in the store is treated as a message and queued on the PC ready to be sent to the back office. If the store is offline the message remains in the queue until an internet connection becomes available. Once a connection is made all of the queued messages are transferred to the back office and processed immediately by the back office.

In a similar manner all messages from the back office to the stores are queued. When the store comes online the messages are transferred. This provides you with the greatest flexibility in terms of deployment of your system. You can choose which stores to make permanently connected and which to use in dialup mode. You do not lose time waiting for batch files to be processed and all data is as up to date as the last time the store connected.

The cost of a store and forward solution can be affected by the store and forward mechanism involved.

Problems: None.

Note: Arel Retail uses the bChat B2B framework for its store and forward mechanism. Due to the low cost of this product, Arel Retail is able to offer this functionality at no extra cost to the customer.

 What equipment should I use?

This is entirely up to your discretion. Most vendors will be able to package a hardware/software solution for you, but you should avoid vendors that are locked into a specific hardware setup.

For a typical store you will need at a minimum:

  • 1x PC (entry level)
  • 1x Electronic Cash Drawer
  • 1x Receipt Printer
Recommended:
  • 1x Standalone EFTPOS/Credit Card unit
  • 1x Customer Display
  • 1x Bar Code scanner (if your products are barcoded)
  • 1x Backup Device (CD Burner, DAT Drive, Zip Drive, etc)
  • 1x UPS (for power surge and black out protection)
This is not exhaustive and you should consult with your suppliers about any specific needs you may have.

MORE INFORMATION

I trust that this document is useful. Please email any errors or corrections to retail@arelretail.com.

For more information on the Arel Retail solution please email sales@arelretail.com or phone +61 2 9669 8000.

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