What Is A Point of Sale (POS) System? How to Choose the Right Software and Hardware

What is a POS system?

Point-of-sale software is constantly evolving to improve how merchants run their business and serve customers. Gone are the days of clunky, immobile cash registers. Instead, modern retailers are choosing systems that operate on mobile devices and let them serve customers and take payments anywhere their customers are. 

POS systems aren’t just for brick-and-mortar stores—online store owners who want to open pop-up shops or sell at craft fairs, trade shows, and farmers markets also use mobile POS software to sell in-person. 

But what is a point of sale system, exactly? With plenty of options available, it can be tough to cut through the noise and choose the POS system that’s right for your business. Keep reading for your no-nonsense guide to POS systems.

What is a POS?

POS stands for point of sale, which is the physical place where shoppers pay for their goods in a store. Think of the point of sale as your store’s checkout counter—the place where transactions are completed.

What is a point-of-sale system?

Your point-of-sale (POS) system is the hardware and software that enables your business to accept payments from customers and make sales in-person. 

While that sounds pretty straightforward, your POS setup can work in different ways depending whether you sell online, have physical store locations, or both. POS systems used to refer to your cash register. But today, most POS systems are software-based and can be used on any tablet or smartphone. This lets you serve customers and take payments wherever you are without needing a cash register.

What is point-of-sale software?

POS software is the operating system you use to manage physical stores and sell in-person. For example, Shopify POS is considered point of sale software. After downloading the app onto any tablet or smartphone, that device becomes your POS system.

POS software also helps you manage store inventory, keep track of sales, collect customers’ contact information and order history, and manage retail staff. If you have both an online and brick-and-mortar store, POS software also connects to your ecommerce platform, which enables you to run your entire business from one back-office rather than through two separate systems. 

How does a POS system work for small businesses?

At its most basic level, a POS system calculates the sum of the items a customer wants to buy, processes the payment, and modifies your inventory levels to reflect the sale. Here’s what the typical POS system workflow looks like: 

  1. A customer chooses to buy your product
  2. Your POS system calculates the total price
  3. Your customer pays
  4. The point-of-sale transaction is finalized

1. A customer chooses to buy your product

As shoppers browse a store’s products, store associates can look up prices and inventory availability in the POS system. Once the shopper is ready to buy, the store associate uses a barcode scanner to add products to their cart. Some point of sale systems, like Shopify POS, let you scan items using your smartphone or tablet’s camera instead of a barcode scanner. 

2. Your POS system calculates the total price

Once all items are added to the shopper’s cart, your POS system calculates the total cost, including any sales tax, and then updates your inventory count to reflect items sold. At this point, store associates can also apply discounts or promo codes.

3. Your customer pays

To complete their purchase, customers need to use their credit card, debit card, tap card, loyalty points, gift card, cash, or a digital wallet like Apple Pay or Google Pay. They can also do what’s known as a split payment—where they use any mix of the above payment methods to pay for their purchase. 

4. The point-of-sale transaction is finalized

Once payment goes through, you've officially made a sale. Next, a receipt of the transaction is either printed or emailed to the customer and you give customers the products they bought. 

💡 PRO TIP: What do you do if a customer wants to buy a product you don't have in stock? Use Shopify POS’ buy in-store, ship-to-customer feature to complete transactions and ship orders to shoppers from your warehouse.

What are the benefits of a POS system?

Modern POS systems offer far more functionality than simply administering transactions. They can complete other business functions, as well as inform important business decisions, including:

  1. Centralizing your inventory management 
  2. Collecting and visualizing sales data in real-time
  3. Building in-depth customer profiles 
  4. Accepting payments anywhere
  5. Improving in-store sales
  6. Opening new stores faster 
  7. Adapting to changing business needs 

1. Centralize your inventory management

Whether you store inventory is at your stores or in a warehouse, ensuring your stock quantities are accurate as items are received, sold, returned, and exchanged can be time-consuming. But managing inventory is critical. 

Inventory is your largest expense when it comes to running your business. Considering US retailers sit on about $1.50 in inventory for every dollar they make, mismanaging inventory can also result in a lot of tied-up expenses. Buy too much stock and you run the risk of dead stock. Ordering too little can result in untimely stockouts

Merchants with both an online and physical store shouldn’t need to manually count and adjust inventory quantities each day to ensure the stock they see online and in their POS system is accurate. Your POS system should connect with your ecommerce platform and ensure that stock quantities shoppers see on product pages—and the stock you see in your back-office—reflect what you actually have in stock. 

Unfortunately, this is challenging when you use two different systems to manage online and in-person sales. But Shopify POS connects seamlessly with your Shopify online store’s database. Inventory levels are automatically updated as products are received, sold, returned, or exchanged in-store or online. 

By unifying your sales channels and managing your entire business from one platform, you ensure stock levels are accurate in your POS system and on your online store without needing to spend time manually counting and adjusting inventory quantities. This means you spend less time managing your inventory and more time selling it and growing your business. 

“Since using Shopify POS, we’re freed up a lot of time that would have otherwise been spent on operations,” explains Sophie Rankine, co-founder of elph ceramics. “That’s time we can now use to implement some of the strategies we have while assuring the day-to-day operations run smoothly. 

The amount of times I count inventory is close to never. I still do them, but before I had to count stock at the end of each day to know how much we sold and update stock quantities customers saw on our website. With Shopify POS, our stock levels sync automatically.

Sophie Rankine, Co-Founder, elph ceramics

Centralizing your store and warehouse inventory also makes it easier to move stock from one place to another (e.g., from your warehouse to a store) when you run low on a product. It also makes ordering inventory less of a guessing-game, which helps you order enough stock to meet demand without tying up capital in inventory that won’t sell. 

💡 PRO TIP: Want to take the guesswork out of restocking? Set reorder points in Shopify Admin to get low stock notifications and ensure you have enough lead time to replenish inventory of a product before quantities reach zero.

2. Collect and visualize sales data in real-time

Each transaction that goes through your POS system should also feed into your reporting and analytics tools. 

Your POS system should make viewing analytics straightforward. Rather than viewing ecommerce and store sales data in different platforms, you should be able to get a complete view of your brand’s sales and have the ability to filter by sales channel. Having a unified view of your sales makes it easier for you to know which products are moving and which aren’t. 

When choosing a point-of-sale system, ensure that helps you visualize the following data:

  • Online and retail store sales and inventory data 
  • Sales data over a period of time (day, week, month, year, or custom)
  • Sales by employee (average order value, items per order, gross and net sales)
  • Sales by channel (online store and multiple store locations)
  • Sales by location (store locations and geographic areas where online sales come from) 
  • Sales by product (sales volume, profitability, stock quantity, and percent of inventory sold)
  • Number of orders (broken down by fulfillment stage: unpaid, paid, unfulfilled, fulfilled)

💡 PRO TIP: Analyze your POS data in tandem with your ecommerce data to be more cost effective with your inventory, measure your store’s impact on online sales and repeat purchases, and measure lifetime value of single channel vs. multi-channel shoppers.

3. Build in-depth customer profiles

A POS system should also help you easily collect, track, and manage customer information. Access to these details can help store associates understand the customers they serve better while fueling your retention marketing and loyalty programs to spark repeat purchases. 

When evaluating your options, make sure the point-of-sale system you choose lets you do the following: 

  • Create customer profiles. Build profiles that store customers’ contact information, purchase history, lifetime value, and notes. 
  • View order history. See everything a customer has bought from you both in-store and online, which can help store associates suggest more relevant products
  • Launcha loyalty program. Build a loyalty program that rewards shoppers every time they buy from you online or in-store. 

📌 GET STARTED: Choose from hundreds of loyalty apps in the Shopify App Store and start rewarding shoppers for purchases they make both online and in-store.

4. Accept payments anywhere 

Another core function of POS systems is payment processing. When customers buy products, your POS system is what processes that transaction. When paired with the right hardware, POS systems can take the following payment types: 

  • Cash, which is then deposited into your cash register. 
  • Magstripe credit cards, which occur when the customer swipes their card in your credit card reader. 
  • Chip cards, which are credit or debit cards with a near-field communication (NFC) chip to enable tap payments. 
  • Contactless payments, which can include chip cards, as well as mobile wallet payments using Apple Pay or Google Pay. 
  • Gift cards, which can be either physical or digital and redeemed for either on-store or online purchases. 
  • Card not present transactions, which are when a customer pays with their credit card without being physically present. Typically, these transactions happen when customers enter their payment details during online checkout or when placing an order over the phone. 

What separates traditional POS systems from modern ones is mobile payment processing, which lets you serve customers and take payments anywhere you have an internet connection—whether it’s inside your store, at a fair, pop up shop, or anywhere in-between.

📌 GET STARTED: Shopify Payments is the fastest way to start accepting payments in-person, online, and on-the-go. It’s included in all Shopify plans, so you can skip lengthy third-party activations and go from setup to selling faster.

5. Improve in-store sales

The right POS features can help you serve customers using multiple channels and make more sales. 

For example, store staff can use email carts send follow-up emails to indecisive in-store shoppers that feature products they were interested in directly from Shopify POS. Think of it like an abandoned cart email, but for in-person selling. 

While the customer eventually buys the products online, the sale is attributed to the store and the staff who assisted the sale. This helps merchants quantify the important role stores play in product discovery and recover potentially lost sales. 

Offering flexible shipping and fulfillment options is another way to increase store foot traffic and improve sales with your POS system. 

A POS that offers flexible shipping alternatives can minimize the need for returns and exchanges and keep sales strong. That’s why the following pickup, purchase, and delivery options are quickly becoming table stakes:

Buy online, pick up in-store

Buy online, pick up in-store (BOPIS) lets shoppers buy products online and collect their order from whichever store location is convenient. This option helps shoppers get orders fast and save on shipping costs. Orders fulfilled with store pickup also tend to be returned less often since shoppers can try products in-store before walking out. 

📌 GET STARTED: Set up local pickup in Shopify to start offering store pickup as a delivery option at checkout. Pay less on last-mile delivery, speed up fulfillment times on local orders, and drive more foot traffic to your stores.

Home delivery 

After customers buy products in-store—especially heavy or large products like furniture—they don’t necessarily want to lug it home with them. As an added convenience, offer home delivery. Or, if an item isn't available in-store, but is at another location, customers can buy in store and have the item shipped to their home.

📌 GET STARTED: Set up local delivery in Shopify to start offering home delivery for in-store purchases and add a layer of convenience to your customer service.

Hassle-free returns and exchanges 

Returns are also a great opportunity to make more sales and increase average order value. For example, customers who buy online and return in store can be incentivized to make additional purchases when they come in for the return. Rather than view the return as a lost sale, take it as an opportunity to potentially sell them additional products and, at the very least, build a more engaged customer relationship.

Some brands are viewing returns as an additional touchpoint, offering an extra discount if you use the store credit the same day.

Kyle Monk, Director of Insight, British Retail Consortium

6. Open new stores faster

One of the biggest benefits of a mobile POS system is that it helps you open more stores—whether it’s a permanent location, a pop up shop, or a kiosk at an event—in just a few clicks. 

With Shopify POS, there’s no need to go through a cumbersome setup process. Just add a new POS location, download the Shopify POS app on any smartphone or tablet, connect your card reader, and start selling. 

7. Adapt to changing business needs

As you add more products, reach more customers, hire more staff, expand into new markets, and open new stores, you want a POS system whose hardware and software supports your brand’s growth. 

When assessing your POS options, make sure it lets you use apps to extend its capabilities. Using apps, you can customize your POS system to fit your business’s unique needs. For example, Shopify merchants can choose from thousands of apps built by our trusted partners to help them with marketing, bookkeeping, scheduling, invoicing, and more. Since these apps work with both Shopify POS and your Shopify website, you can run your entire business from one back office rather than needing to jump between programs. 

💡 PRO TIP: Want help from Shopify experts? Hire a Shopify expert to help on your next projectfrom marketing campaigns to store merchandising. 

What are the different types of POS systems?

There are two main types of POS systems: on-premise and cloud-based. On-premise POS systems require you to be on location to use it. Terminals are the most common on-premise point-of-sale system. Cloud-based POS systems offer more flexibility because you can run your business, serve customers, and take payments using any mobile device with an internet connection. 

A cloud-based POS software is compatible with most POS hardware (cash drawers, printers, etc.) and can be installed on any tablet or smartphone. Cloud-based and mobile POS systems are also typically less expensive and more convenient than a tethered on-premise solution. This makes them a great option for merchants who want the flexibility to sell in a physical store and online, along with the occasional pop-up shop or in-person event. 

💡 PRO TIP: Cloud-based POS software like Shopify POS syncs with your Shopify admin and automatically adjusts inventory and sales data as you receive, sell, return, or exchange products in your stores or online.

Asides from on-premise and cloud-based POS systems, there are other types of point-of-sale systems that fall into one or both of the those categories:

Retail POS

A retail POS has features tailored to help merchants with a brick-and-mortar store manage inventory and orders, sell products, process payments, and manage customer relationships and staff.

Some point-of-sale systems, like Shopify POS, also come with reports and analytics that unify in-store and online sales and inventory, making it easier for merchants selling in-person and online to manage their business in one place rather than jumping from one system to another. 

Best for: Retailers who sell both in-person and online, brick-and-mortar retailers, pop-up shops; 

Mobile POS (mPOS)

A mobile point-of-sale is usually cloud-based and can be used anywhere. Store owners can take transactions from a central point of purchase, like a traditional checkout counter or cash register, or wherever they need it to be. 

To take transactions on the go, retailers often use hardware like a tablet or smartphone and a card reader to process transactions and take payments. 

Best for: retail businesses; pop-up shops

Cloud-based POS

A cloud POS is a web-hosted point-of-sale solution that can be accessed using any computer, smartphone, or tablet with an internet connection. Unlike their predecessors--on-premise POS systems—you don’t need an on-premise server to use a cloud POS system. Everything is stored on remote servers. 

On-premise POS

An on-premise POS (also known as a legacy POS) stores information on a local server. Oftentimes, that server is on your computer’s hard disk. On-premise POS systems work similar to a program you install on your computer.

While these POS systems used to be popular, since the advent of the cloud, many POS systems are transitioning towards mobile. On-premise servers are cumbersome, stationary, and typically require manual updates and upkeep. 

Multichannel POS

A multichannel POS can integrate with various commerce channels, an increasingly important capability. These channels include your own website, third-party online marketplaces, your store, pop-up shops, event sales, wholesale, social media, and more. 

Best for: ecommerce merchants who do or plan to sell in-person; multichannel online brands

Tablet POS

A tablet POS can be both mobile and docked to a station. These POS systems run on Android tablets or iPads, acting as either the main POS or supplementing your central POS station. This is also a mPOS. 

Best for: retail businesses that want a mobile, portable POS, pop-up shops and event sales.

Desktop POS

POS systems that run on a desktop computer are typically on-premise solutions docked to a checkout station. They’re bulky but often more powerful and reliable, depending on the hardware you choose. 

Best for: retail businesses that want to add to their mobile POS setup. 

POS apps

Depending on the POS, there are a few point of sale apps to choose from. POS apps work with your hardware and other compatible devices to enable you to access your data and manage business operations. 

Best for: retail businesses that want flexibility to customize their POS system and add different functionalities like scheduling, bookkeeping, marketing, and more. 

Open-source POS

Open-source software allows companies to use their source code to build custom solutions with their platform. You can build your open-source POS system internally or with external collaborators. 

Best for: Large enterprises with lots of technical resources and need a fully-customizable solution.

What hardware does a POS system need?

Every POS system uses POS hardware in some capacity. If you’re only running an online store, you don’t need POS hardware to accept payments, but if you have a physical store, you’ll likely need a card reader, barcode scanner, tablet, and smartphone. 

Here’s a breakdown of the different pieces of POS hardware you may need to run your retail business. 

Common types of POS hardware

  • POS terminal: A POS terminal is the device that your POS software runs on. Mobile POS software can typically be installed onto any tablet, smartphone, desktop, or laptop computer with an internet connection. 
  • Cash drawer: unless you only process cashless payments, you’ll need somewhere to put the cash customers use to pay for your products. Cash drawers are a safe, secure place to organize bills.
  • Tablet or smartphone: both of these mobile devices are popular hardware for retail POS software. With them, store associates can process transactions and accept payments without having customers wait in line to pay. They’re also handy for inventory management, since retail staff can count and adjust inventory on-the-go. 
  • Barcode scanner: a barcode scanner reads an item’s product details and is used to ring up sales. They’re also useful for double-checking a product’s price, the amount of inventory you have in stock, and other details. There are two types of barcodes: 1D barcode scanners that can scan traditional barcodes, and 2D barcode scanners that can read QR codes. Some POS systems, like Shopify POS, let you scan a product’s barcode using your tablet or smartphone’s camera instead of using a barcode scanner.
  • Credit and debit card reader: this piece of hardware can read debit and credit cards. There are several ways to read a card, including swipe, tap, and EMV chip. You need this for payment processing so you can receive the funds from the customer’s bank.
  • Receipt printer: while receipt printers aren’t always essential, they’re useful if you want to offer customers the option of taking a printed receipt rather than an email receipt.
  • Label printer: there are some instances where you’ll need a label printer—like when you ship a product to a customer’s shipping address from your store, for example. With a label printer as part of your POS setup, you can do that on the spot.
  • Shipping scale: if you ship items to customers, you’ll need a shipping scale to be able to determine the cost of shipping that item and how much you charge for shipping.

💡 PRO TIP: If you want to open a temporary retail location like a pop-up shop, you don’t need to buy your hardware. Sign up for Shopify’s Hardware Rental Program to start selling quickly risk-free.

What is a POS transaction?

When a customer pays for their purchase and the transaction is finalized, that’s a point-of-sale transaction. There are many payment options customers can choose when shopping in retail stores including cash, credit and debit cards, mobile and smartphone payments, gift cards, and split payments. For a POS transaction to be finalized, it must be authorized with a PIN number or signature.

How to choose the right POS system

Whether you’re thinking about opening your first retail store or are dissatisfied with your current POS and thinking of switching, it’s critical to choose a POS system that supports your current needs and will help your brand as it grows and its needs evolve. 

Setting up your first point-of-sale (POS) system, or switching to a new one, can seem daunting. With a nearly endless array of options, specifications, and reviews to compare, researching which POS to choose can feel as overwhelming. 

Finding the right POS software requires a lot of upfront research and consideration—but the return on your investment is worth it. Start by assessing your current needs, and then think about your future: do you want to sell both online and in-store? Do you want to open more stores?

To ensure your business is set up for success, your POS system should:

  • Process sales and take payments
  • Flexible returns, exchanges, and store credits (e.g., buy online, return in-store)
  • Flexible payment, purchase, and delivery options
  • Full visibility into your inventory across all locations, updated in real-time
  • Enable you to sell everywhere your customers are 
  • Robust analytics and reporting capabilities
  • Quick access to customer profiles, order histories, and loyalty programs
  • Robust app integrations to extend your POS system’s capabilities
  • Easily integrate with your business tech stack (e.g., marketing, accounting software, etc.)

What features should a retail POS system have?

Other than the core functionalities, there are other features you should make sure the POS system you choose includes:

  1. Integrated payment processing
  2. Mobile checkout
  3. Multichannel inventory management
  4. Staff management 
  5. Centralized reporting and analytics 
  6. Flexible order fulfillment options 
  7. Multi-store management
  8. Customer relationship management
  9. Apps and add-ons
  10. Reliable support 

1. Integrated payment processing

Third-party payment processing agreements are notoriously complicated to navigate. With nebulous fees depending on the credit card type, hidden fees, long payout periods, and contracts that lock you in for multiple years, they can make managing cash flow more challenging than it needs to be.

But Shopify POS comes with integrated PCI-compliant payment processing built for retailers. With Shopify Payments, merchants pay one low, pre-negotiated rate for all credit cards. 

Boost your store’s sales by offering all popular payment methods—from credit and debit cards to Apply Pay and Google Pay—and track both in-store and online transactions and payouts from Shopify’s easy-to-understand back office. 

2. Mobile checkout

Customers hate waiting in line to pay. But one solution to having long queues to pay is to bring your checkout to them. 

With a mobile POS, store associates can look up inventory, process sales, returns, and exchanges, and take payments without leaving the customer’s side. Rather than having to wait in line to pay at the POS terminal, the POS terminal comes to them.

This is the type of hassle-free customer service modern shoppers expect. It lowers friction in the buying process, which results in a smoother shopping experience and greater overall customer satisfaction. 

3. Multichannel inventory management

While most POS systems help manage store inventory, most don’t help merchants manage inventory across multiple channels, including multiple store locations, their online store, and warehouses. But effective inventory management is critical to running a successful operation—whether you operate one or many stores. 

Choose a POS system that centralizes your inventory into one system so you can manage it all from one place. This will help you order enough stock to fulfill demand while avoiding overstocking, inventory shortages, or tying up too much capital with too much stock.

4. Staff management

As your retail business grows, so will your need to hire staff. You’ll serve more customers, offer more services, and your store operations will get more complex. Invest in a POS system that helps you manage teams as they grow. At minimum, your POS should have scheduling and bookkeeping capabilities, and give you visibility on each store associate’s performance (their daily sales, average transaction value, and average units per transaction, for example). 

And be mindful of POS systems that limit how many staff accounts you can create. You want a POS system that supports your team’s growth rather than limit it. 

💡 PRO TIP: With Shopify POS, you can assign staff different roles and permissions to set boundaries on what store associates can do when logged into your POS without manager—like changing a product’s price or applying a custom discount to a sale.

5. Centralized reporting and analytics

Data and reports help you spot trends, capitalize on opportunities, and make decisions with confidence. Your POS system should have built-in data and reports that help you track your inventory, revenue, which products are selling or languishing, your customers’ purchase history, and your staff performance. 

While POS data typically includes the data collected at the point of sale (physical transactions) that can be problematic for a brand that sells both in-person and online. If you’re a multichannel seller, the last thing you want is data that’s siloed by sales channel. That will cause you to spend countless hours in spreadsheets to find the data points you want. 

Instead, choose a system like Shopify POS that unifies your in-store and online data to one place. This will help you understand the big picture—how each channel influences the other, how customers shop on both channels, and your store’s impact on online revenue in the surrounding area. 

6. Flexible order fulfillment options

Modern consumers want the flexibility to shop however they want. Whether it’s online, in-stores, or through social media platforms like Instagram—retailers need to build a buyer’s journey that puts customers in control if they want to meet customer expectations and build brand loyalty.

If you choose a POS system that doesn’t integrate well with your ecommerce platform, it can be difficult to offer flexible delivery options like click-and-collect or curbside pickup. Ensure that your POS system integrates with your ecommerce platform. This will enable you to let shoppers discover, buy, and receive orders however is most convenient to them.

7. Multi-store management

As your network of retail stores grows, you want your POS system to support that growth. Ensure your point-of-sale system lets manage inventory across multiple locations and keep each store’s reporting up-to-date as products are received, transferred, sold, returned, exchanged. 

Along with having complete visibility on each store’s revenue and profits, you’ll also want to be able to manage the customer data and staff accounts across each of your store locations. 

8. Customer relationship management

Whenever a customer buys something from your brand, there’s a paper trail. Your POS system records what they bought, where and when they bought it, the total value of that transaction, and more. But you also want your POS system to record who bought it. 

Ensure your POS system lets you create customer profiles that centralize both their contact information and their purchase history for what they buy both online and in-store. This will help fuel your email marketing, as well as loyalty programs—both of which help increase retention, repeat purchases, and customer lifetime value. 

9. Apps and add-ons

While your POS system will come with many features built-in, you also want the flexibility to extend its capabilities with apps and add-ons. These quite literally add on to your point-of-sale and let you do more from the same system.

With Shopify, you can choose from thousands of apps built by our trusted partners in the Shopify App Store. Find an app to help you do virtually anythingfrom marketing and merchandising to shipping, store design and more.

10. Reliable support

Even if you’re using a POS system that’s easy to understand, there will come a time when you need help from an expert. When that happens, the last thing you want is to not have any support options.

Make sure the point-of-sale you choose comes with around-the-clock free customer support via email, chat, or phone. 

With Shopify, you can count on our support team to be with you every step of your journey. From onboarding or migrating from another tool to Shopify POS to training your staff and more, our team is ready to help your business tackle any challenges. 

Signs it’s time to switch your POS system

You might have been using your current POS system for some time and, while it’s good enough, you may suspect there are alternatives that are better suited to your current needs and future aspirations.

Here are a few few telltale signs it’s time to shop around for another POS system:

  1. Managing inventory in stores and online is a challenge
  2. Customers can’t use online gift cards in store and vice versa
  3. Customizations require lots of technical resources
  4. You have issues managing your growing team
  5. Your POS hardware doesn’t accept contactless payments 
  6. Your POS software isn’t compatible with mobile devices

Unify your sales channels with Shopify

Only Shopify unifies your sales channels and gives you all the tools you need to manage your business, market to customers, and sell everywhere in one place.

1. Managing inventory in stores and online is a challenge 

Merchants that don’t invest into building a seamless shopping experience between their brick-and-mortar and digital channels (notable social media and their online store) are missing out on serious revenue opportunities. 

A Harvard Business Review study of 46,000 shoppers found that omnichannel customers (shoppers who use more than one channel during their shopping journey) spend more and are more valuable to merchants than single channel shoppers. 

Customers who use more than one channel to shop spend 4% more when they shop in stores and 10% more when shopping online than single channel shoppers.

Part of the reason they spend more is because they’re more deliberate and calculated in what they buy. Multichannel shoppers research the products a store carries before visiting—in fact, when shoppers conduct online research prior to visiting a retailer, they spend up to 13% more. 

But to capitalize on this opportunity, the inventory levels merchants show online needs to accurately reflect what they carry in-store. Shoppers don’t want excuses about out-of-stock items—they want a seamless buying experiences that let them:

  • Research online, buy in-store
  • Buy online, pickup in store
  • Browse in-store, buy online
  • Buy in store, ship to home

To make these shopping journeys possible, your store’s POS system needs to reflect your stock on-hand, and your online store needs to reflect the stock you carry both in stores and at your warehouse. More importantly, for your online store to show accurate inventory levels, stock must automatically sync in real-time as products are sold, returned, or exchanged both online or in stores. 

For merchants using more than one platform to manage their online stores, warehouses, and store, keeping accurate inventory levels this is a big challenge that oftentimes requires frequent (and time-consuming) stocktakes.

Manually reconciling inventory across all the places you sell and store your products is tedious and prone to human error. When your inventory syncs automatically across all sales channels, you know exactly how much stock you have and where it is at any given time. It’s also easy to understand how well each product is selling and create purchase orders based on performance.

With that information at your fingertips, you can prevent stockouts, easily move inventory from one location to another, and get a full picture of all your sales from one place. A POS that’s part of a unified commerce platform unlocks that kind of visibility.

That was the motivation behind fashion brand Assembly New York’s switch to Shopify POS.

“Why [manage] two things when you could have just one?” says Ale Tarver, Assembly’s store manager.

If you’re selling online and using a POS from two different systems, you have to double check your inventory. All those manual adjustments add up and take a lot of time.

Ale Tarver, Store Manager, Assembly New York

Assembly NYC's Ale Tarver speaks on the benefits of managing store and warehouse inventory from the same system.

2. Customers can’t use gift cards both online and in-store 

Gift cards are getting more and more popular. In fact, the value of the gift card market in the US was $160 million in 2019 and is estimated to reach $221 million by 2024. This growth is partly due to rising adoption of gift cards by Millennials, as well as the increasing demand for digital gift cards (eGift cards) that shoppers can redeem both online or in stores. 

But not all POS systems allow shoppers to use eGift cards in-store or to use physical cards online, which is frustrating for customers. Ensure your POS system gives customers the flexibility to pay for purchases with gift cards wherever they choose to shop.

3. Customizations require lots of technical resources

With Shopify POS, you can customize the POS’ functionalities and workflows by yourself—no coding or expensive consultants needed. There are hundreds of apps that plug in seamlessly to help you build the tech stack you need to run your business, and you can also build new services and add to your customer experience with ease.

Michelle Cordeiro Grant, CEO and Founder of LIVELY, explains that Shopify’s customizable platform allowed the company to create an online booking experience called a “fit sesh,” where women can fill out their personal details and schedule a time to visit the store for a bra fitting. 30% now come from people who booked fittings online.

Shopify POS lets you customize workflows and your home screen to work for you.

4. You have issues managing your growing team

Managing staff can be a retailer’s most time-consuming task. Your to-do list includes everything from creating schedules and monitoring performance to ensuring you have the right number of employees working each shift. Fortunately, a best-fit POS system can help retailers schedule and manage their staff more effectively. 

For example, your POS system’s reports should show you the number of transactions processed at your store for a particular period. This data helps you spot peak busy hours and recurring lulls, and build staff schedules accordingly. With Shopify POS, merchants can also use apps like Homebase or ClockedIn to pull up timesheets and help staff clock in and out of their shifts faster. 

Your POS system should also let you easily create unique staff logins for each employee. When logged in, the POS system tracks each employee’s activity in the POS system and ensures they only have access to the tools they need to do their job. This helps store managers see how many sales store associates process each day, monitor cash register activity, and more. 

With separate employee logins, you can also easily reward staff who are exceeding expectations. You can see who makes the most sales and who isn’t on track to meet their sales goals

5. Your POS hardware doesn’t accept contactless payments 

More customers than ever are using their smartphones to pay at checkout—whether through a service like Apple Pay and Google Pay or credit cards that support tap payments.

A McKinsey study found that only 28% of transactions in the US were using cash in 2020, and cash transactions will likely continue to decline in popularity moving forward.

Contactless payments are undeniably convenient for shoppers and retailers. For customers, the tap-and-go option allows them to leave their physical wallet at home and pay with their smartphone. For merchants, the speed of contactless payments helps them take payments faster and keep queues under control.

Shopifdy POS contactless payment terminal accept tap and chip payments.

If your point of sale system’s hardware doesn’t support digital wallet payments, you’re potentially leaving money on the table. While almost all POS systems can accept and process payments via cash and credit card, not all accept near-field communication (NFC), or “tap” payments (Apple Pay, Google Pay, tap debit/credit cards, etc.)

It’s also difficult for retailers to offer these convenient payment options for customers on their own. Dealing with banks or payment providers means you’ll need to sign lengthy contracts, pay exorbitant setup fees, and figure out confusing payment rates.

Rather than trying to detangle these complicated options, look for a POS that provides low transaction rates, predictable fees, and has hardware that supports contactless payments. 

6. Your POS software isn’t compatible with mobile devices 

In 2021, 17% of US consumers paid for items in a store using their smartphone--and that number would be higher if more merchants accepted mobile payments. 

McKinsey reports that, in the US, 28% of US consumers want to pay with their smartphones all the time. With mobile payment transaction value representing $182 billion in the US and set to climb even higher, merchants need POS software that’s compatible with mobile devices like smartphones and tablets to start accepting mobile payments. 

But not all POS software is compatible with mobile devices, which makes it difficult to accept mobile payments or process transactions anywhere other than the checkout counter.

Shopify POS is compatible with mobile devices and lets you sell everywhere your customers are.

The ability to move your point of purchase around can revolutionize the shopping experience for your customers. Here are a few of the things a mobile POS (when POS software is installed on a mobile device) can do:

Reduce checkout friction and ease pressure on employees

One of the biggest benefits of mobile POS hardware like the Shopify Retail Kit is that it helps point-of-purchase congestion. A mobilized POS lets you process transactions on the spot from anywhere in your store, which also enhances your customer service.

No one likes waiting in tedious checkout lines. According to a survey from Forrester, 32% of shoppers would abandon a long line to go elsewhere for a faster checkout experience.

A mPOS also supports your employees. Staff are better equipped to help customers, answer questions, and use their mobile device (powered by your POS system) to check inventory availability without running off to “look in the back.” It’s challenging to provide a high level of service when employees are tied to a checkout counter.

Easily transition from inquiry to sale

With a stationary POS, customers interact with one employee on the sales floor when they have a question and another when making a purchase. A single point of contact creates better rapport between sales associates and shoppers, enhancing the experience, increasing trust, and potentially leading to more sales.

Increase flexibility around when (and where) you sell

Retailers often need to get out into the community to sell beyond the confines of their storefront—customers like to interact with brands outside a brick-and-mortar store, from pop-up shops and pop-in stores to food trucks and public markets. To take advantage of these kinds of events and activations, you’ll need a flexible POS that allows you to sell seamlessly from anywhere.

Gather customer email addresses and go paperless

Brick-and-mortar retailers don’t have as many organic opportunities to collect customer information as ecommerce stores—but a mobile POS system can help with that. For example, customers can opt to receive an email receipt instead of a paper one. 

Your employees can input this info into a personalized customer profile via a mobile POS, giving you access to their email address and the ability to stay in touch after they leave your store. (It will also save you money—and a few trees.)

50% of foot traffic in the store is new customers experiencing our brand for the first time. Since we capture contact details at the point of sale, we can use email marketing and retargeting to continue serving customers online.

Michelle Cordeiro Grant, LIVELY

Questions to ask POS system providers

These are the essential questions you should ask before switching your POS system.

  • Does my POS automatically sync inventory as I sell, return, or exchange goods in stores or online?
  • Can I analyze the profitability and popularity of my inventory without manual calculations? 
  • Does my POS hardware accept digital wallet payments?
  • Is my provider transparent about payment processing fees?
  • Do I have low transaction rates?
  • Is my POS compatible with both iOs and Android smartphones and tablets?
  • Can my customers use online gift cards in stores and vice versa?
  • Can I view and compare my online and store sales data in the same place?
  • Can I monitor the sales of my store associates (average order value, units per transaction, and gross sales) ? 
  • Can I create roles and permissions to help me grow my retail teams? 

If you answered no to a lot of these questions, it might be time to switch from your current system to Shopify POS. 

What is the best POS software for retail?

Every retail business has its own needs, and every business owner has to choose the POS that best meets those needs. While we’re biased, we work hard to make Shopify POS the best solution for merchants who sell online and in-person by unifying all the tools and reports they need into one easy-to-understand back office. 

For retailers who want to sell everywhere their customers are, Shopify POS Pro is the best POS system. It lets you manage your online and physical store inventory in the same place, and comes with hundreds of reports that unify store and online data. Plus it comes with unlimited staff accounts and registers, the ability to create custom staff roles and permissions, and omnichannel selling features that no other POS system has out-of-the-box. 

Shopify POS also integrates seamlessly with your Shopify online store. If you have omnichannel aspirations, Shopify is the best way to realize your goals while avoiding complicated workarounds or unreliable customizations.

Shopify POS helps us use online transactions to influence the in-store experience. It helps us better understand how our customers shop and helps us improve our brand experience to reflect their preferences.

Gosia Piatek, Founder & Creative Director, Kowtow

How to buy your retail POS system

The most important part of finding the right POS is doing your due diligence. When you’re running a business full-time, it can be difficult to find the time to assess your needs, research your options, and plan your path forward.

But here are a few ways to research POS systems, test your options, and ensure that you’re making an educated decision that puts your business in the best position to succeed today and in the future.

Ask your network

A great place to start is by asking the people you know and trust. This could be both internally and externally. Maybe you have an experienced employee who can make a recommendation—they already know the ins and outs of your business and, more importantly, use your current POS and interact with customers on a daily basis. They know your current POS system’s strengths, its shortcomings, and can offer valuable feedback on what features you should look for in your next POS system.

Alternatively, you can ask someone outside your company who has extensive experience in the retail space and with POS systems. They could be a consultant, another merchant, or an agency that helps retailers regularly.

Check review sites

To understand how other businesses are using a particular POS, read through a few review sites. You can compare competing POS systems and get a better grasp of each one’s benefits and limitations from retailers who have firsthand experience.

Here are a few great websites to check for business technology and tools:

Read case studies

For more details on how a specific POS system can help you succeed, try checking out a few case studies published by the POS provider. These articles offer insights into individual business success stories, including accounts of how a POS drove better business results.

Here are a few success stories to read if you’re considering Shopify POS: 

Try a free trial 

If a POS system provider gives you the option to try their product before buying, do it! A free trial will give you a hands-on sense of whether the POS system will meet your business’s needs. You’ll get to play around with its features, see how easy it is to use, and test the quality of their customer service before paying for their services. 

If the POS provider doesn’t let you try their product before buying, consider that a red flag. It’s likely because the product is difficult to self-learn—which means more time speaking with support rather than running your business. 

Check contract minimums

Look out for contract minimums, as some POS software requires merchants to use their tool for a fixed amount of time. This is limiting for a number of reasons, and can lock you into using software that isn’t right for your business. 

Instead, prioritize POS software that comes contract-free and gives you flexibility like Shopify POS.

See it in the real world

As a final step in finding the right POS, go shopping. Visit the stores of retailers you admire, see what POS system they use, and experience how it feels to be their customer. Next, ask them what they like and don’t like about their POS system. This unbiased opinion may help you decide which POS system is right for you. 

POS systems: mission control for your retail business

Now that you have a better understanding of POS software, hardware, and systems, you’re ready to find the right one for your business. 

Whether you just want to test the waters of physical retail with a pop-up shop, are ready to open your first permanent location, or are an experienced retailer with multiple stores, Shopify POS comes with tools and features that put you in a position to succeed. 

With more customers shopping both online and in-store, it’s important that your POS system helps you do that rather than force you to use complicated workarounds. The future of commerce is omnichannel—sell wherever your customers are and thrive with Shopify. 

POS system FAQ

What is a point of sale system used for?

A point-of-sale (POS) system is what lets your business take payments from customers in exchange for products, and keep track of each sale you make. Depending on whether you sell from a physical store, online, or both, a POS can be set up differently. With Shopify, merchants can open their first retail store and order hardware from Shopify admin.

What does POS system mean?

A point of sale is where a customer exchanges money for goods or services. The point-of-sale system refers to the technology a merchant uses to process the transaction and accept payments. This exchange can happen with cash, credit or debit cards, gift cards, or mobile wallets like Apple Pay or Google Pay. Before POS systems could be installed on mobile devices like tablets and smartphones, the term used to refer to a store’s cash register.

What does a POS system include?

A retail point of sale system typically includes both software and hardware. The POS software is installed on a mobile device like a smartphone or a tablet--this device becomes your POS system. Most POS systems also include hardware like a cash register, receipt printer, barcode scanner, and card reader.

What is a POS system example?

Shopify POS is an example of a POS system. With it, merchants can process financial transactions and exchange goods or services in exchange for money in their retail store. Once the transaction is finalized, merchants give customers a receipt as proof that the transaction occurred.

What kind of software is POS?

Point of sale software is what brick-and-mortar retailers use to conduct sales in person. It's sometimes a cash register, computer, or even a tablet where cashiers input products, tally the cost, and conduct the financial transaction.

How much does a POS system cost?

The cost of a POS system depends on how many stores you operate and what features you want. If you want to open a pop-up store and want something to process transactions, you can use Shopify POS Lite for free. If your needs are more advanced and you have multiple store locations, you can choose Shopify POS Pro, which starts at $89 USD/month per location.