Components: Tablets as ECRs

Elizabeth Whalen

Tech companies and processors are transforming tablet computers, notably Apple’s iPad, into mobile electronic cash registers of the future that do a whole lot more than simply payments.

Four years ago—before the introduction of the iPad—Jason Richelson was trying to find a better point-of-sale system for his three-location grocery store business.

“I became very fed up with Windows-based point-of-sale systems, with all the virus problems, database backup issues and server issues that I was having. I decided I was going to switch to a cloud-based point-of-sale system, and when none were available at the time, I decided I’d start one myself,” Richelson says.

His original plan was to have his system, ShopKeep POS, run on a Web browser, but he found that wouldn’t be viable.

“We built apps that ran on PCs, with everything else happening in the cloud, but we found the PC is actually the problem. It wasn’t the software. It was the PC: the drivers, the viruses, Windows XP, the high cost of the PC, having to maintain a Windows PC, or multiples of them, in your store.”

When Apple Inc. introduced its iPad in 2010, New York City-based ShopKeep POS switched its software to run on the path-breaking tablet computer. Since then, tablet-based POS systems have proliferated. Both new companies, like ShopKeep POS, and established ones, like NCR Corp., now offer them.

While there are other tablets in the market, most tablet-based POS systems use the iPad, including fast-growing mobile-payments provider Square Inc. with its Square Register and Groupon Inc. with its Breadcrumb system.

The Benefits of Mobility

Some merchants use tablets as replacements for traditional point-of-sale systems while others use them as mobile additions to their existing systems.

Businesses typically draw the line between the two use cases based on size, says Christian Nahas, vice president and general manager, NCR Small Business. Smaller businesses that have relied on electronic cash registers in combination with nothing more than a receipt printer and little to no software can now, thanks to improved technology at a reduced price, afford a POS system.

The Duluth, Ga.-based company, better known for its ATMs and kiosks, offers small businesses NCR Silver, a POS system that works on the iPad and Apple’s iPod touch and iPhone. The register, excluding a mobile device but including a stand, credit card reader, cash drawer and receipt printer, is $499. The software, which includes customer relationship management and other functions, then costs $79 a month for one register at one location.

ShopKeep POS’ prices are similar. Most of its 5,000 clients pay between $49 and $98 a month for the software; that price includes support and analytics functions like sales reports and inventory management. One register, which does include an iPad as well as a stand, printer, cash drawer, card swipe and receipt printer, is about $1,200, a price Richelson says is about a third the cost of a comparable Windows PC-based terminal.

In addition to making POS software affordable for small businesses, tablets offer opportunities to improve customer service, Nahas says, especially when business owners realize the benefits of mobility. Mobile service providers like plumbers and air-conditioning repair people as well as food trucks all immediately see the benefits of mobile POS systems, including on-the-spot card payments, but other businesses can also benefit from them because they remove barriers between customers and sales people.

“Why do I have a counter between me and my customer, anyway? When my business is built around customers, why wouldn’t I want to take the point of purchase to the customer on the floor? You can’t do that with a fixed-position terminal,” he says.

For example, sales associates equipped with tablets could greet customers as they enter the store, Nahas says. If a customer is looking for a specific type of item, the associate could instantly provide information drawn from the inventory-management system. If the customer in question has previously shopped at the store, the associate could offer suggestions based on his or her earlier purchases.

“I believe that the power of the tablet for any business lies in the fact that you’re able to engage with your customer long before the purchase is actually made,” Nahas says. “We can deliver technology to the small-business owner that allows them to engage the customer in a way that’s more than just, ‘Hi, how can I help you?’”

Customers who pay with cards and opt to have their receipts e-mailed to them could complete their transactions without ever having to approach the counter, Nahas says.

Small businesses have been the first to see the benefits of tablets and other mobile devices, says Lisa Falzone, chief executive and co-founder of Revel Systems Inc. of San Francisco, which provides an iPad-based POS system. But medium-to-large businesses, which are Revel’s target clients, are catching on.

“The really big enterprises are just learning, and it’s still so new,” she says. “So we do have to do a bit of education that says this can handle up to 500,000 SKUs [stock-keeping units, or billable items]. This can handle more than the legacy systems can.”

The same benefits that appeal to small businesses—customer-service improvement and savings opportunities—also appeal to larger businesses, says Nahas.

“Some of them are saying, ‘I’ve got a device now that allows me to do line busting or allows me to do some additive point of sale, like sidewalk sales,” he says. “Some of them, very few, but Nordstrom being one of them, are taking the step of saying, ‘I want, over time, to replace my fixed-position terminals with these, from a customer-service perspective and from a cost perspective.’”

‘It Drove Me Crazy’

ShopKeep POS intends to expand its focus to include merchants running between 100 and 1,000 stores, Richelson says. He believes tablet-based POS systems can meet the needs of these businesses.

“We’re running 5,000 stores on our system now,” he says. “It could be 5,000 independent stores, or it could be 5,000 Starbucks. It’s still essentially the same features and functions.”

Tablet-based POS systems appeal to businesses of all sizes not only because of the devices themselves but also because of the cloud-based software on which they’re based, Falzone says. Merchants may have to shut down traditional POS systems to run sales reports, she says, and those reports often are based on day-old data. Cloud-based systems don’t have to be shut down in order to run reports, and they produce reports based on real-time data.

Merchants can use that real-time data to make customer offers, Falzone says. For example, a restaurant experiencing a slow evening could send out an offer to customers to encourage them to visit that night.

The fact that cloud-based systems don’t have to be shut down to run reports is a key reason merchants like these systems, Richelson says.

“Because then they actually use the reports,” he says. “I never ran the reports in my stores because it drove me crazy. I actually had to be there to do it, but once I got to three stores, I was never actually in the store where the server was.”

Most tablet-based systems don’t run exclusively in the cloud, though.

“It’s a hybrid system. It’s the speed of a local-based system and the benefits of a Web-based system,” says Falzone. “The previous cloud-based systems haven’t really taken off because they’re slow. Every time you’re building an order or clicking on an item, you are connecting to the server.”

Revel builds orders using the application local to the iPad and connects to the cloud to process the payment for the orders.

Tablets themselves have been part of POS systems for many years, says Michael L. Russo, chief technology officer of Micros Systems Inc., a Columbia, Md.-based provider of business-management systems for retailers and the hospitality industry. Tablets like the iPad or Samsung Galaxy can replace an electronic cash register, he says, but the benefits of any POS system lie not in the input devices but rather in the software those devices run.

“It’s not the magic of the iPad,” he says. “The iPads are really cool, and they’re great input devices, but it’s the software that makes it work.”

Surviving the Kid Test

Stores and restaurants need software that can go beyond transaction processing and convert, for example, a pound of ground beef into the correct number of hamburgers and re-order the right amount of ingredients, Russo says. 

“It isn’t just a single device with software running on it,” he says. “There’s a system of software that’s running in that restaurant or store ecosystem.”

Some merchants may find they need software that’s more sophisticated than what typically comes with an entry-level tablet-based POS system, Russo says. And that software needs to run on devices that, whatever form they take, are designed to withstand the stresses of a retail environment.

“You have to be careful if you’re in an environment where you’re going to get drinks spilled on it, and it’s going to get slammed all the time. The more traditional Micros workstations are designed to last many, many years and take years of abuse before they break, so maybe they cost more initially, but you’re replacing them less often than a consumer-grade tablet.”

But Richelson says that his experience and those of his customers show the iPad is extremely durable.

“We’re selling 300 iPads a month now to our customers,” he says. “And we never have problems with them. My four-year-old has been playing with my iPad since she was two, and she drops it and spills milk on it, and it keeps working.”

The POS system of the future for businesses of all sizes will likely revolve around tablets, Revel’s Falzone says. Both Nahas of NCR and Russo of Micros believe that consumers’ mobile devices also will play a role in everything from ordering at a restaurant to paying for a purchase.

Restaurants may not want to order a tablet to replace every menu, Russo says, but with large numbers of their customers carrying smart phones or other mobile devices, they don’t have to. Instead, they could make available software that customers can use on their own devices to explore the menu or place an order.

Although tablets offer merchants mobility, the point of sale will probably never be entirely mobile, Nahas says. Customers paying with cash or needing to return an item or simply wanting a printed receipt will need to do so at a more stationary checkout location.

“So even as mobile POS provides a lot of benefits, retailers need to think through the entire shopping experience for the shopper and how to provide all the experiences the shopper expects,” adds a spokesperson for NCR.

Ultimately, Nahas’ goal is for the technology to facilitate an improved customer experience rather than become the focus of the transaction.

“We don’t want people to say, ‘That was really cool technology.’ We want them to say, ‘That was a really cool experience.’ Right now, tablets are driving that by allowing people to get out from behind the counter and interact with their customers better. But I think five years from now, it will be something different. The technology will change even more to where it’s even less intrusive than walking around with an iPad.”