PAYMENT INSIGHTS
By Computop

Higher revenue at the Point of Sale

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In the course of digitalisation, the payment world is undergoing rapid evolution. Therefore, classic e-commerce as well as the Point of Sale need to establish modern concepts..

The classic Point of Sale (POS) functions, according to an almost archaic principle, derived from a time when cash payers were practically the only payment persona and the shop had a virtually unchallenged existence as a ‘consumer temple’.

With regards to purchasing decisions, this store concept keeps the customer trapped on the shop floor: they must decide for or against an on-site purchase and are limited to the offers that are physically present. Ultimately, anyone who wants to buy a product has no choice but to head for the dedicated checkout area.


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Avoid frustration

This may well have a negative impact on the retailer’s sales. At the very least, this area potentially creates avoidable frustration. The result can be that quite a few shoppers shy away from going into the store altogether as they associate nothing but stress with queuing up to pay at the end of their shopping experience. As a result, they no longer show up at the store and prefer to conveniently click through online shops. No wonder, because the act of paying is spatially and functionally separate from the shopping experience. According to current practice, this usually means customers have further to walk to reach the dedicated check-out areas, followed by waiting in an inevitable queue – something that is frustrating for both employees and customers.

This relic of a process derives from an era when a minimum number of cash registers – along with the secure physical storage of the shop’s revenues – were located as close as possible to the retailer’s safes. With omnichannel and alternative payment methods, smart retailers are using retail space more efficiently, transforming the POS into a unique, value-added experience which is resulting in increased conversion rates and sales.

Some omnichannel ideas are so interesting that you would actually have to re-invent retail outlets if they didn’t already exist.



Learning from Apple: the POS as a showroom

The reinterpretation of the Point of Sale transforms it from a pure goods transfer point to a showroom. The retailer puts the experience at the center of attention, creates a scenery that transports brand messages and presents itself more strongly than before. The larger the company, the more it can make sense to push the immediate sales directly in the store into the background and use flagship stores primarily for brand building.

Apple, for example, sees the Point of sale primarily as a point of view and point of service. Instead of covering the sales floor with a number of variants of the same computer or smartphone as is common practice at many large electronics retailers, the company exhibits only a few demo devices on site, which encourage customers to touch and try them out for themselves.

In addition, the cumbersome division of labor between advisors and cashiers, which is inconvenient for the customer, has been eliminated. Just like it once was in bygone retail days or as it still is in smaller, specialist shops, there are once again real salespeople who handle the exchange of “goods for money” in unison – fully digitalized, of course. The cash register now only exists virtually as an app on the employee’s iOS mobile device; the point of sale is also the point of payment. Payment is not only cashless, but paperless, because the invoice is sent by e-mail. This benefits both convenience and service alike.

It is precisely in those product categories in which online competition has achieved the highest market shares – especially clothing and technology – that stationary retailers can offer added value and demonstrate service competence with such genuine ‘one-stop’ shopping. After all, the concept is characterized by the fact that only staff working in the store can answer questions about the products.

Puma: Customer loyalty and conversion thanks to cross-channel commerce 

As a sports goods and lifestyle company, Computop’s customer Puma is also increasingly adopting this approach. Puma stores offer a straightforward cross-channel payment system. If customers want a specific color or size which is not in stock locally, they order it directly in the store using an oversized touchscreen, either in person or through a salesperson. The payment process is similar to an e-commerce transaction and the customer can then have the product delivered to the store, directly to their home or to any other address of their choice. This service is especially convenient for tourists who rarely have the opportunity to return to the shop promptly if at all.

Otto’s fashion brand Bonprix is using the Computop solution in a similarly clever way in an innovative test project. Fashion Connect is the name of the store. The sales area presents each item of clothing only once in one size. The fashion is not intended for trying on or buying. Instead, shoppers scan their favourites via app and order them for a fitting. Those who pay via the app initiate an e-commerce transaction and can then simply take the goods with them or have them conveniently delivered to their home.



The advantages for the customers is obvious: On the one hand, they benefit from an optimized shopping experience and do not have to make any concessions. They are not dependent on the physical shop and can conveniently change channels. Because when payment is embedded in a real omnichannel environment, customers can return goods ordered online in the store or return products purchased at the POS by mail. It makes no difference to the underlying system. A win-win situation for both merchants and buyers.

For the retailer there are even more advantages, because it minimizes the inventory per article and at the same time increases the width and depth of the presented assortment. As long as there is a display item of each listed product, an “out of stock” no longer leads to lost sales.

You can try out any article, but you don’t necessarily have to take it with you; it just has to be in stock in the central warehouse. This would give consumers significantly more choice without tying up capital in minimum stocks.

More convenience thanks to contactless card payment

According to surveys by the German Federal Bank, an ELV payment with signature takes just under 40 seconds, a normal card payment with PIN can be 29 seconds and a cash payment takes a total of 22 seconds. According to another study, if you only have to hold your mobile phone (Apple Pay/Google Pay) or card up to the POS terminal without entering a PIN, you can clear the cash register in 11 seconds. Biometric authentication on the mobile phone therefore has its charm for retailers and consumers.

In order to give customers the motivation to use this do-it-yourself workflow, incentives in the form of loyalty card programs or similar customer loyalty instruments such as digital couponing are a good idea. Meanwhile, many customers are increasingly managing these bonuses conveniently and centrally on their smartphones. And what is right for the customer can only be reasonable for retailers. The new generation of terminals offers them the possibility to use both payment applications such as Paypal and Bluecode as well as applications such as loyalty apps and additional checkout apps in one device.



China as an innovator

What still sounds rather futuristic to us has long since become reality in China. A country which is increasingly losing its reputation as a copycat stronghold,  China is catching up with the Europeans and Americans, and in some cases has already surpassed them. This also applies to payment at the PoS. Alibaba boss Jack Ma has recently attracted attention with his vision of “New Retail” – especially with the Freshippo chain.

The shops with the hippo as their trademark are a mixture of a supermarket with lots of fresh goods and a fast food restaurant with delivery service. Customers have the choice of carrying their purchases home themselves the traditional way or outsourcing specific tasks to the staff: choosing the ingredients, preparing the meal, serving it at the table in the shop or delivering the purchases to customers’ homes in a radius of three kilometres within 30 minutes. While this sounds very analog, it is fully digitalized. Information on all products is available on the mobile phone, everything can be ordered via app, payment is made via Alipay and a robot comes as a waiter.

Although Freshippo does not replace a western full-range supermarket, it shows that offline and online can be merged in an innovative way. The level of attention at the National Retail Federation Conference 2019 in New York was so high that one thing is clear: now the Americans want to learn from the Chinese.

This blog entry is based on the chapter “POS-Payment” from the book “Karten, Konten & Kanäle” by Ralf Gladis, founder and managing director of Computop. The book was published via Hanser and is available as hardcover or e-book.

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