It’s Hard to Beat Amazon, And That’s Putting Pressure on the Providers That Serve Small Sellers

Big merchants like Amazon.com Inc. are celebrated for virtually friction-free transaction flows, and now that’s putting pressure on the point-of-sale vendors that serve small businesses. That’s because clients want the same kind of experience for their customers, but don’t know how to go about it, a panel of experts said Monday.

“We’re seeing a heightened awareness that [small and medium-size merchants] need to do new and bigger things to compete with the big guys,” said Marc Castrechini, vice president of product management at Cayan, a unit of Columbus, Ga.-based processor Total System Services Inc. But their wish list, he added, “falls into that nebulous bucket—they don’t know what they want.”

As a result, payments-software providers are responding with bespoke solutions, an approach referred to as “curation.” This approach takes the complexity out of payment systems by reducing choices to a set of preselected product bundles. This can include hardware bundling, said Kevin Kent, director of channel development at POS Portal, a unit of Greenville, S.C.-based ScanSource Inc. ScanSource acquired the POS hardware provider for $144.9 million in July 2017.

“We’re seeing [value-added resellers and independent software vendors] are going to have a new role in curating, in bringing different innovations,” Kent said. “They seem small but they have a big impact on employee and customer satisfaction.” Kent and Castrechini spoke this week on a panel at RetailNow, a VAR/ISV conference sponsored by the Charlotte, N.C-based Retail Solutions Providers Association and held in San Antonio, Texas.

But Castrechini warned of a downside to this approach, cautioning “we may go a little too far with bundling” without actually adding value.

The panel also stressed simple experiences smaller merchants can introduce without much trouble. These could include coffee nooks in bookstores “in reaction to this machine called Amazon,” said Alan Outlaw, panel moderator and president for North America at TruRating Ltd., a United Kingdom-based company that collects customer feedback at the point of sale.

Other experience-based moves are emerging, as well, such as sophisticated loyalty schemes and tracking routines that can pinpoint when regular customers come in and how much they buy. But underlying these programs is tech expertise that must come from VARs. The merchants “don’t have tech teams, so they depend a lot on tech providers,” said Castrechini.

Such moves are leading to what Castrechini called “a cult of experiences.” They foreshadow what could be a lucrative—but also jarring—time for VARs and ISVs, he warned. “It’s going to be a fun journey, but it’s bumpy,” he said.