The battle for the POS is the battle for digitization of physical retail

The POS market has recently seen interesting transactions and announcements:

First Data acquired Clover end of2013 and launched its Clover Point of Sales in 2014. First Data Quietly Buys Payments Startup Clover; Launches Point Of Sale Platform For Merchants

Amazon acquired GoPago’s asset and team. Amazon Bought GoPago’s Mobile Payment Tech And Product/Engineering Team, DoubleBeam Bought The POS Business


Trends in retail and their impact for the POS.

In a world of horizontal e-commerce behemoths such as Amazon or vertical specialized online stores such as Fab, the pressure on physical retail is high whether it is through showrooming or easier commerce. Reinventing retail around usage and experience is a possible solution. The percentage of non commercial square footage in Apple stores is telling.

Because the payment component will disappear from the customer’s experience (the absence of checkout registers for the last years in Apple stores is telling), the Point of Sale is becoming the customer interaction interface within stores. The focus on personal names (introduced notably by Square) is key in this evolution. Recognizing people by their first name is a great feature for IRL CRM.

Impact of the reorganization of hardware and softare for the POS

The Point of Sale market is following the reorganization of hardware and software that is seen across other industries. Software wins over hardware. The mobile phones and tablets are at the core of the hardware experience (run the applications, connected). The customer’s mobile phone will become the main interaction screen (I tend to be skeptical of additional tablet screens in store, customers already spend most of their time glued to their own screen).


iBeacon in an Apple store

Physical adds-on, such as Bluetooth beacons (Apple, Paypal, Estimotes) provides the ultra-localized experience to interact with the products themselves, but should disappear when products become connected themselves

Market dynamics

There has been a flurry of POS and wallet startups following Square’s success. However not a lot of them have shown as much success. More established players, such as Paypal, getting in the market have not helped.

User acquisition is particularly difficult in B2B markets, especially for small and medium businesses (though signing mainstream chains is another important challenge). This plays a role in the vertical acquisitions we have seen were acquirers/processors have moved to buy Point of Sales startups. Their customer acquisition weight is just too important and their margins are being compressed by rates reduction and competition.

On the other hands, the demands of data enriched services is pushing for more horizontal organizations where connectivity to payment, accounting, global CRM, ecommerce and devices are becoming key. This is where Amazon acquiring POS software could fit. Square’s success as a stand alone company also depends on it.

Where will it start?

We are still very early in this game but there early indications can be found:

In service businesses. They have been facing less competitions than merchants businesses from the online world and, after the Groupon experiment, are looking to build repeat business.

In the expension of Bluetooth LE. It couldbe the first local connectivity technology to reach the masses. Bluetooth LE success might not come from marketing but from recreating value with the customer in enhancing support.

In online businesses going offline. New stores opened by brands such as Bonobo, Warby Parker are interesting to follow. But more importantly Apple is leading the way here, the Apple Store App is probably the most undervalued example of the new Point of Sale paradigm.

As the POS is moving from accepting payments, to accepting wallets, to enhancing the customer relation, there is plenty of opportunities for startups to help reinvent retail in the digital world.

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