What is point of sale? Point of sale can easily be defined as the place where a sale takes place. So a cash register, a checkout line, or the shopping cart on your favourite e-commerce site, are all examples of POS. Why is POS important? Quite frankly because it is the one point where a retailer can introduce a customer to an add-on or induce an impulse purchase. What’s more pertinent however, is that in the age of e-commerce, omni-channel and online shopping, POS is a key tool to mine and collect information that can then be used in customer engagement. With tonnes of data generated on a daily basis, each little bite of information, enables marketers to predict trends and tailor make offers and sustainable marketing initiatives to individual customers.
POS in the 20th century
Retail in the 21st century is an interesting mix of traditional and internet based shopping. In the early part of the 20th century, the most lasting innovation in retail space was undoubtedly the large format retail store. With many such stores competing for attention, POS differentiation became the order of the day. For instance remember strategically placed gifting items at an Akbarallys or Shoppers Stop? This was one of the first instances of retailers using POS to make induce a sale. As the number of large format, multi-brand stores increased a need for some sort of differentiation was felt. Most large format retail stores were competing for a fixed number of customers. Repeat business became key to the enduring success of a store.
The emergence of Big Data
In such an environment, in the early 90s, the first significant POS innovation saw the light of day. Aptly known as loyalty programmes, almost every large format store worth its salt had one. Shoppers Stop, the pioneers of this concept in India, to date runs its ‘First Citizen’ programme to great effect. Think of the loyalty programme as the precursor to today’s big-data fuelled customer rewards programmes run by most major websites. For the first time, customer information like email, telephone numbers and birthdays were recorded and played an important role in retail stores reaching out to consumers. While in many cases, a greeting card with a discount coupon is all that customers came to expect on their birthdays or anniversaries, this in true essence was the beginning of big-data, which while indispensable today, was virtually unheard of in the late 90s. Xavier D’Penha, an employee with a bank says, “I remember the first birthday present of sorts I received from the unlikeliest of sources. My then girlfriend and I had gone shopping to Shoppers Stop. They gave us a little form where we filled out our details, and sure enough, on my birthday, I received a lovely little greeting card and a 15% discount coupon on my birthday. And every year since then the story is the same” There are virtually hundreds of stories that customers from the 90s still recount with surprise and fond memories. In the 1990s another major new trend was the introduction of ATM and debit cards. These cards, along with the newly introduced concept of credit cards, completely revolutionised the concept of buying and shopping. The use of POS devices like credit card imprinters and debit card readers yielded huge amounts of varying data, like details of the transactions, amounts spent on the various products, and this was the genesis of tailor made offers, which are today, the backbone of a successful customer retention and enhancement programme.
The emergence of e-commerce
The late 90s and the first decade of the 21st century saw the emergence, proliferation and acceptance of online shopping. In many ways what is accepted reality today, was until a few years ago either hard to believe or science fiction. College student Wahida Ashfaq says, “I can’t imagine how people would actually go to shopping centres and pick up clothes and shoes. Who would stand in long lines to enter or wait all year for the annual sales? Why would I do that? If I like something, all I have to do is login and shop. It’s that simple. I have so much time for life and other stuff. Why would I do it any other way?”
India’s tryst with e-commerce began rather late. Books were the first easily bought and sold items, and much like Amazon in the States, Flipkart made an early entry into the market. Along with several other sites, this was the advent of e-commerce. The initial hesitance of the Indian consumer, was soon overcome and by 2015, e-commerce was easily one of the most, if not the most profitable sector of Indian retail. With the kind of monies being injected into the sector today, there are many more happy times to come, of this the Indian consumer can be sure of.
The emergence of m-commerce and the rising importance of POS
A complementary movement to e-commerce, shopping on smartphones, through applications, or even 3G access through mobile browsers, called m-commerce. This movement added greatly to the number of people transacting on the internet. This also mean that with a rising number of shoppers, the amount of data generated at POS also increased exponentially. Using data mining techniques, most e-commerce websites today can track, tailor make and send out pertinent and relevant marketing hooks to the right target audiences. The power of POS is that it is so much more than just an accounting or bookkeeping system. In an ever-evolving paradigm, POS is more like the lynchpin of the entire customer outreach and retention mechanism.
After all, where else can a marketer have a holistic view of a customer’s entire purchase history? Today marketers sit on piles of information that if used strategically and tailored well, can yield amazing results. Manish Kaul, an e-marketing consultant says, “Marketing and customer retentions have ever been more scientific than it is today. There is information about a customer’s tastes, what they really like, how often they buy, what is the tune to which they have bought in the recent past, their personal details and other magic tidbits. Trends can be derived and more importantly, customers can be targeted in a smarter, more unobtrusive manner, increasing exponentially the conversion of a lead. When has there been a better time to be a marketer? If you believe me, never before!”
The ever increasing importance of POS in CRM.
India has always been a rather democratic marketplace. Even in the digital age, the Indian consumer is absolutely spoiled for choice. There exist (and this is only a rough approximation at best) close to 350 odd shopping sites in India. While this is an excellent piece of news for shopping mad consumers, for shopping sites themselves it means that this is a tiny pond that they all have to survive in. Jigna Alreja, CEO of Hitplay.in, a prominent shopping site has this insight to add, “we exist in a quite a generic, undifferentiated space. If there are a plethora of sites out there, that will offer the same, exact product, at a slightly lower price point, what is to stop a client from moving his business elsewhere? That’s where good Customer Relationship Management comes into play. And all the POS data we have needs to be put into creating offers, inducements and upsells that will seem unique and one-of-a-kind enough to customer to come back for more. A process which is part science and part art, we have to try and figure a customer’s tastes and then decide what he/she may like, in order to induce another purchase.” Experts agree that creating a robust CRM programme is a fine balance between giving customers deals that they will not easily find elsewhere, and being perceived as a discount goods site. While POS generated information plays an important role in this very integral part of e-commerce, CRM goes beyond just offering inducements. CRM is about ensuring that every interaction that a customer has with the brand is a positive one.
Where will POS go from here?
E-commerce is easily one of the most profitable sectors of retail today. Considering the vast potential of the growing telecom market, and the fact that India is well on its way to become the world’s largest smartphone market; it is safe to say that this sector (e-commerce that is) will remain a growth sector. What POS could evolve into from here is anyone’s guess. Let’s just agree, that along with the growth in the market, the importance of POS will surely not diminish in any way.