What is a 'Point of Purchase - POP'

A point of purchase (POP) is a place where sales are made. On a macro-level, a point of purchase may be a mall, market or city. On a micro-level, retailers consider a point of purchase to be the area surrounding the counter where customers pay. It is also known as "point of sale."

BREAKING DOWN 'Point of Purchase - POP'

In recent years, the point of purchase for products and services has become an important focus for marketers, because consumers tend to make purchasing decisions on very high-margin products or services at these strategic locations. Points of purchase may be real, as in the case of a "brick and mortar" store, or virtual, as in the case of an electronic retailer that sells goods and services over the Internet.

At the point of purchase, the merchant typically creates an invoice or sales order. After receiving payment, the seller creates a receipt that is given to the buyer. Such receipts are usually printed, but increasingly, these are being delivered electronically.

POS Systems

POP systems, more commonly called point-of-sale or POS systems, frequently use hardware or software systems tailored to the particular industry or business. Although some small retailers still use off-the-shelf cash registers to calculate payment amounts and issue receipts, most POS systems today are computer-based and incorporate other devices or peripherals, such as printers, bar code scanners, scales and touch screens. In some cases, customers perform the duties that were previously performed only by check-out clerks, such as scanning bar codes, weighing items that are sold by weight, operating POS terminals by tapping their fingers against touch screens, and making payments by swiping their credit cards or inserting cash into machines.

In addition, POS software is increasingly used for accounting, warehousing and management functions. It may be used to manage inventory, alerting the warehouse when shelves run low or even creating purchase orders that are automatically sent to suppliers. POS software may assist management in deterring theft and employee fraud. It may integrate with a business's accounting system to enter the day's sales directly into the company's books.

POS Innovation

Modern POS systems are commonly programmable or allow enhancement with third-party software programs, allowing users to tailor systems to specific needs. For example, many retailers use POS systems to manage membership programs that award points to frequent buyers, and then issue discounts on future purchases.

Cloud-based POS systems are increasingly in use today, especially by large online merchants. Large or small operations require reliable Internet connections for such systems, and typically provide for redundancy to prevent POS system inoperability if an Internet connection is lost. Cloud-based systems can greatly reduce the upfront costs of implementing a POS system for many businesses.

Another trend is toward allowing customers to interact directly with POS systems, especially in the hospitality industry. This is often referred to as location-based technology. At many restaurants, customers can view menus and place orders on terminals located at tables. In hotels, customers use similar terminals to place orders for room service or pay hotel bills.

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