What is a point of sale system? A complete guide

What is a Point of Sale (POS) System? A Complete Guide

A point of sale (POS) system allows your customers to pay for the products and services they purchase from your store. It’s generally comprised of both hardware and software components that work together to streamline your payment processes.

Think of a POS system as a hub where you merge everything in your business related to payment, including inventory, sales, and customer management. It performs the functions of a basic cash register, including conducting transactions, adding taxes, creating receipts, and tracking sales. But you can also count on a POS system to assist with more advanced tasks, such as inventory management, vendor communications, and managing the costs of employee labor. If you’re a customer-facing business with fast-moving inventory, a POS system is a necessity in today’s marketplace, especially if you’re a retailer or restaurant.

The advantages of a POS system

Your business can enjoy the following benefits by adopting a POS system:

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Types of POS systems

There are two primary types of POS systems: on-premise and cloud-based.

On-premise POS systems

With an on-premise system, the software is installed and held on a server in your facility. It may look similar to a touchscreen monitor or desktop computer. Once you invest in an on-premise POS system, the data it houses is available without ongoing data hosting fees.

On-premise POS systems have some downsides, however. If you want to maintain and upgrade the system, you’ll have to pay for technical support, software licenses, and training fees. An on-premise POS system also requires you to have the physical space necessary to store its architecture, database, and more. These costs can add up very quickly.

Cloud-based POS systems

A cloud-based POS system is installed remotely and connected to the internet. When your data is stored remotely, you’ll be able to keep tabs on your business from anywhere at any time. You can also set up your POS system so it updates automatically, saving valuable time otherwise dedicated to manual updates. A cloud-based POS system also helps avoid technical support costs, training fees, and software licensing expenses.

Before you move forward with a cloud-based POS system, figure out who will own the data. Make sure you are clear on how the system is backed up and recovered as well so you can avoid issues if you switch providers in the future. Also, if you experience internet connectivity issues, you won’t be able to access your data until it’s restored.

Other system types

In addition to on-premise and cloud-based systems, there are subcategories of POS systems which include the following:

As you explore POS platforms, you’ll notice not all systems are created equally. This is why you’ll need to do your research and consider a number of factors. Think about your industry and business goals — for example, if you’re a restaurant, you’ll likely need a different POS solution than a clothing boutique.

POS system components

POS systems will typically include the following hardware components:

How a POS system works

POS systems provide the following baseline capabilities.

Keep track of inventory

Regardless of whether products are at your store, a warehouse, or a third-party fulfillment center, managing inventory can be a daunting task. POS software helps minimize guesswork and manual errors. You can use a POS system to ensure you have enough products in the right place at right time.

Manage customer and sales data

A POS system lets you collect and track customer information such as customer names, addresses, and order histories. You can use this data to pinpoint your most loyal customers and gain a better understanding of the customer segments you plan to target in the future.

With a POS system, you can also track key sales metrics like in-store and online sales, sales per employee, and sales per channel. This information is essential if you’d like to make informed, data-driven business decisions.

Fulfillment options

To succeed in today’s increasingly competitive marketplace, you must find creative ways to boost sales. A POS system can make this easier by offering in-store pickup, home delivery, and in-store returns for online purchases. This type of flexibility is a great way to appeal to your customers while diversifying your revenue stream in the process.

Learn the key to higher sales, lower costs, and better experiences

Choosing a POS system

There are countless POS systems on the market. The following tips can help you select the best one for your business.

Make a POS system a part of your customers’ ecommerce experience

A POS system can revolutionize your ecommerce experience. By integrating with your ecommerce store, you can eliminate manual data entry, keep tabs on inventory in real time, offer cross-channel promotions and customer incentives, and support in-store returns and pickups.

Adobe Commerce is an ecommerce platform that integrates with a variety of high-quality POS systems. It also offers an array of features that makes it easy to manage customer relations, track sales data and conversion rates, manage inventory, and maintain an omnichannel experience for users across all devices and platforms.

Schedule your free demo of Adobe Commerce for a demonstration of its capabilities.