As the story goes, back in 1870 while on a steamship voyage in Europe, American businessman James Ritty’s imagination was captivated by the automated mechanics on the ship that were tracking the turns of the propeller in order to alert the crew about when maintenance would be required. Ritty took this inspiration and created what became the first cash register, forever changing the way merchants do business.
The “cash register” has come a long way since Ritty’s machine, evolving into the complex digital Point of Sale (POS) systems that are today found in nearly every business small and large. With features like full inventory management, integrated loyalty programs and even mobile optimized versions that can run on an iPhone, there are seemingly few things these systems can’t do. But as the industry is finding out, there are only so many features that businesses want, much less need, and it is getting harder for these companies to compete based on these bells and whistles.
It has only been during the last few years that the POS industry has seen new software-forward companies flood into the market, but the effects have been profound. These SaaS companies have been able to design cloud-based platforms that are simple to use and seamlessly integrate with third party cash drawers, receipt printers and iPads to create low-cost/high-quality offerings. But, with new features for these systems only a software update away, it has become much easier to copy each other’s innovations and as a result, many products are starting to include identical functionality. This has forced companies to compete on price and pricing structure rather than utility.
With less differentiation coming from features, POS companies have moved into a typical “race to the bottom,” competing on price and making pricing more transparent. In the past there may have been multiple layers of costs to the customer including hardware purchases, setup and support, costs for adding features like integrating with accounting software and numerous other “hidden” fees. Today it is not uncommon for POS companies, particularly new entrants, to offer a low flat monthly price that is all-inclusive, or make their money in other areas like credit card transaction fees.
While this combination of needing to offer more product features, but at a lower price point may spell trouble for many companies in the POS industry, dealerships should expect to both save money and be delivered a higher quality product.
Perhaps not since Ritty’s European voyage has the Point Of Sale market faced as massive of a disruption as they are seeing today.
Andrew Adashek is a social strategist with Dominion Social Ventures.