Point of High Returns
Posted: 05.01.05 - By Michelle Maisto


In the early days of May, schools in the Northeast are still a good six weeks from summer vacation, patriotic picnic wares are approximately two months and 20 degrees from relevance and the next major gift-giving holidays aren’t for two more calendar seasons. Which means that at most Wal-Mart stores, nearly half the checkout counters are likely not in operation.

“The store is able to operate just 10 or 15 [of its 20 to 30] counters for most of the year and free up that additional space for advertising, merchandising and product placement,” says Taylor Smith, an analyst with research group Venture Development Corporation. “If they can free up that space for most of the year and then just roll out mobile POS solutions on carts, or [have employees with handhelds] for just the peak rush time, that can translate into a lot of bottom-line money and dollar returns.”

Smith says he’s heard of retailers that have installed two or three mobile point-of-sale (POS) carts for the holiday rush and received an ROI in the first week. “They got their money back pretty much right away.”

Further, “Line-busting is the largest application for mobile POS,” explains Smith. “It can be handled in two ways. One way is to have a single employee who can scan all your items and either print out a barcode label or scan a customer loyalty card [so that it] contains information about all the products that you purchased. Once you get to the stationary checkout line, either that printed label or your loyalty card are scanned and all your products are automatically rung up, so you can just pay. Or there’s the complete mobile POS, where the employee has the scanner, the printer, the printer receipt and the magnetic-strip reader to process credit cards.”

Rolling out a mobile POS cart during peak hours, Smith says, “enables you to process customers faster, which increases the customer’s satisfaction and increases your employees’ efficiency, and there you can see some bottom line [improvement]. But a lot of the time [ROI] is around the intangible of customer satisfaction. The less time they stand in line, the more likely they had an enjoyable shopping experience and will come back to your store.”

And that’s just the beginning of what mobile POS can do for you.

Assembling the Pieces

“I heard you were writing about POS,” laughs Todd J. Carey, CEO of MP2 Solutions, “and I thought, man, what a black hole!” Which is to say, POS is a broad category, involving numerous aspects within each solution, numerous players to provide the aspects and a variety of overall uses.

In addition to rolling out portable checkout stands for the holiday crunch, mobile POS can be used in retail scenarios such as a department store equipping salespeople with a handheld solution that enables them to provide increased customer service and unwavering sales attention; or a lawn-and-garden center, where dragging shrubbery inside to be scanned and paid for is not ideal; or for accepting credit card payment at a temporary Christmas tree lot, where there is no inside.

Mobile POS can also be used in the hospitality area for curbside check-in or for line-busting at hotels, airports or even in fast-food drive-through lines. It also combines more elements than most mobile solutions. Beyond hardware, software and a carrier’s service playing nicely, an all-in-one mobile POS solution includes a magnetic credit card swipe, credit card authorization technology, a credit card clearing house partner and a small receipt printer.
Handset manufacturer Samsung markets a line of enterprise-focused wireless devices as MITs, or Mobile Intelligent Terminals, and encourages their use in POS solutions by working closely with carriers—customizing the look and feel and user interface—while building handsets for distributors to sell to end users. “Another key to our success with these devices has been working with third-party application providers, specifically enterprise, or B2B enterprise application providers. That’s the third arm of the [POS] triangle,” says Tim Rowden of Samsung’s Mobile Enterprise Solutions group.

Samsung has one such relationship with Infinite Peripherals, a 12-year-old provider of custom receipt printing solutions. Samsung works intimately with Infinite Peripherals to develop printing solutions that work with its MIT devices. “They have a device that works with the i700—they call it a slag, or a cradle. It holds the i700 and includes a thermal printer, a battery pack with wireless, a connection cord and a credit card scanner,” says Rowden. “In addition, it ties back with a third-party application, called Authorize.net, that does all the credit card transactions. So the scenario would be: Someone has a cradle that’s activated, they would start the application, be handed the credit card, run it through a clearinghouse—in this case Authorize.net—complete the transaction, which is authorized and funded, print out a receipt for the consumer, and the consumer would sign with signature capture on the screen of the i700. They can do a point-of-sale transaction anywhere that they have wireless service.”

If combining the pieces isn’t your style, there are vendors that will do it for you. Texas-based MP2 Solutions, for example, offers end-to-end mobile workforce solutions that its site describes as enabling users to “conduct business, check inventory, take payments, deliver goods, print receipts and report back to headquarters on progress.”

The difference between MP2 and its competitors, says Carey, is that “MP2 is a wireless solutions company offering POS, not a POS company trying to do wireless. This fundamental difference in perspective is key in being able to focus on factors like increasing sales, finding ways to decrease costs and integrate applications for the customer.” Additionally, “We offer a way for customers to see into that wireless transaction in the field by providing them item data and pricing, digital signatures and inventory management, as well as POS with our Mobile Storefront software,” he explains.

The MP2 SFA solution is hosted on a PDA with phone capabilities (its “flagship” device is also the Samsung i700), which snaps into a cradle, onto which a magnetic strip and a printer can also be attached.

Big Sky Commerce (BSC), a merchant service provider specializing in payment processing solutions, will also streamline the involved process of adding credit card authorization functionality to an SFA application. “Mobile clients are not usually focused on the functionality of how a secure credit card transaction is transmitted through our devices for an approval and settlement,” says Kevin R. Davis, president of BSC. “Nor are they inclined to swim through a myriad of providers (cell phone carriers, Internet gateway providers, merchant account providers, software technicians, hardware data support, etc.) to enable such a service on their own. Clients are concerned with the end-result, which in our case is a reliable solution providing rapid transaction approvals using the latest smartphones.”

BSC’s solution, like essentially all mobile POS solutions, uses a cradle as the foundation onto which a PDA, printer and credit card strip attach. Currently, BSC is compatible with Samsung, palmOne’s Treo and RIM’s BlackBerry devices, which customers can provide or purchase from BSC. Credit card information is transmitted and managed at industry-dictated security standards, and transactions are automatically settled daily, depositing funds into an enterprise’s checking account within two business days.

The benefits of deployment, while numerous, also vary based on the deployment scenario. A consistent benefit, however, is the immediate cost-savings of being able to process a credit card in real time. Samsung’s Rowden explains, “The advantage to the retailer or the small-business person is that if they call that in, and read the credit card over the phone to get authorized, one, it costs them more and, two, they’re not able to capture the signature or give the customer a receipt. There’s an ROI that’s essentially a lower transaction cost for the merchant.”

The Rosetta Stone

Not too long ago, our experiences at the cash register began to change. First came the scanner with its Bleep! and a screen where we could watch our items tally. Then came the coupons on the backs of receipts. Soon cashiers had handheld barcode scanners, good for reaching around conveyor belts to scan the monstrous dog food bags that people load onto the bottoms of grocery carts but are loathe to lift up to the counter. And suddenly, it’s hard to remember a time when grocery and drugstore “loyalty cards” didn’t impose on our key chains and lifestyles.

The experience has also been changing in ways that are less obvious to the consumer.

“Historically, consumer goods (CG) companies spent considerable time poring over syndicated POS data (sometimes called “scanner data” because it is based on products that are scanned at retail) to glean insights into what was happening in retail,” writes Analyst Dale Hagemeyer in the Gartner report “Get More Power From Direct Point-of-Sale Data.” “The winners were companies that could digest and react to the data from syndicated sources such as ACNielsen and Information Resources. Over time, the syndicated sources provided better and better tools to facilitate the analysis, so most CG companies were on equal footing in terms of their ability to analyze the data. A shortcoming, however, is that there is a lag of several weeks in the data as it is gathered, cleansed and provided,” states the report.
“Are you a sports fan?” asks Hagemeyer, over a phone call. “How would you like to play a game and not have a scoreboard, and we walk off the field and I say, ‘That was a pretty good game, how do you think it went?’ And four weeks later we get together to see whether we actually won or lost.” Vision into the marketplace, he emphasizes, is crucial.

A POS data system begins with three things: The first is a cross-reference table. If Jane Inc. makes 10 types of canned soup and sells them to various stores, she needs a way of keeping track of the fact that while she calls them Chicken Noodle, Tomato, Corn Chowder, etc., each of her grocery store customers has a different name for them, usually a long string of numbers. The second thing is a data study, which analyzes a portion of the data. And the third is a way of making your data available to your clients.

“You get a slice of the data, you create the crossformat reference tables, you format it, and then you either make it available to your clients so they can tap into it and say, ‘Hey, how much soup did we sell today at A&P?’ Or, if they want to get really clever, they say, ‘Hey, how much soup did I sell between the hours of 10 a.m. and noon?’ Maybe they want to have promotions in the morning and the afternoon, or they want to have little cups of samples and want to figure out the best time to do that. There’s a million things they can do, and that’s the value of having this data.”

Not just having it, but having it in real time. Hagemeyer quickly follows with a Gatorade example: It gets hot outside, and people want Gatorade, he says. Maybe it’s selling like crazy, except for grape, because you’re sold out, except you don’t know that because there’s a four-week delay in receiving the data. “By the time you do something about it, it’s autumn in Manhattan, the leaves are changing—and you’re just finding out you had a Gatorade problem. That’s why direct POS is really important—you can literally see what’s going on in the marketplace today and do something about it tomorrow. It helps you to optimize your supply chain and to optimize your pricing.”


The business benefits of direct POS data fall into “three highly related but organizationally separate areas,” states the Gartner report. The first is headquarters-level monitoring (for example, with POS data, a manager can pinpoint a product in a store or region that isn’t selling and replace its valuable shelf space with a different item). The second is retail execution (for example, reducing the instance of out-of-stock items). And lastly, supply chain linkage (for example, with increased visibility, a manufacturer can see whether demand is above or below estimates and adjust production).

Originally, CG stores were hesitant to sell their POS data; some provided only brief excerpts from time to time. Slowly, however, things began to change. “If you were pretty compelling and you were a market leader,” says Hagemeyer, “you could say, ‘Listen, give me your data and I’ll massage it, and I’ll find a way we can make more money together by merchandising these things, at these times or in these stores.’ Then along came these guys called Wal-Mart and they said, ‘Not only am I going to give you the data for free, but I am going to give you a portal that you can go through and play with the data to your heart’s content.’ (Not if you’re a competitor, obviously, but if you’re a manufacturer and you have a legitimate reason to receive Wal-Mart data.) I mean, Wal-Mart just blew the doors
off this thing.”

Picking a Portal

When choosing a POS data solution provider, Hagemeyer offers four points to consider. “First, you want to go with a vendor that already has experience with your key customers.” If you sell barbecue grills, he explains, you want to look for a vendor that has already created a cross-reference table for, say, Home Depot and Lowe’s; otherwise, they’re going to have to do some of that development on your time (and your dime). “Second, you want to understand what the delivery mechanism is—whether you want it e-mailed to you, which is a little more clunky, or do you have a portal available to you, that you can go into and sort of slice and dice to your heart’s content.” Third, in order to do that slicing and dicing, “you want to make sure [the vendor] can lay your tool across their data, and they have done so successfully already. Obviously you want to use a business intelligence tool that you’re familiar with—not to say that it’s not more powerful; often times the power lies in your knowledge of it, not in the tool itself. But you want to make sure that these guys have provided access to their database for your favorite BI tool, so that you have consistency.” And lastly, consider their pricing model. Some vendors offer a flat, per-month fee, while others charge per seat.

“If you’re looking for companies that can let you scan credit cards at your outdoor Christmas tree store, there’s a lot of companies that’ll do that for you; it’s just a matter of how much you want to pay in,” concludes Hagemeyer. “This is something where you’re really getting into the intelligence of understanding people.”•

 


Edgell Communications
http://www.mobileenterprisemag.com/