What is a 'Point Of Sale - POS'

A point of sale (POS) is the place where sales are made. On a macro level, a POS may be a mall, a market or a city. On a micro level, retailers consider a POS to be the area where a customer completes a transaction, such as a checkout counter. It is also known as a point of purchase.

BREAKING DOWN 'Point Of Sale - POS'

POSs 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 phone or on the Internet. Retailers use a wide variety of tools to process point-of-sale transactions, including cash registers, electronic card readers and barcode scanners. The most basic method involves manually calculating a purchase and issuing a receipt, while computers, mobile devices and terminals can act as virtual POSs.

Points of Sale and Buying Behavior

The POS for products and services is an important focus for marketers because consumers tend to make purchasing decisions on high-margin products or services at these strategic locations. Traditionally, businesses set up POSs near store exits to increase the rate of impulse purchases as customers leave. However, varying POS locations can give retailers more opportunities to micro-market specific product categories and influence consumers at earlier points in the sales funnel.

For example, department stores often have POSs for individual product groups, such as appliances, electronics and apparel. The designated staff can actively promote products and guide consumers through purchase decisions rather than simply processing transactions. Similarly, the format of a POS can affect profit or buying behavior, as this gives consumers flexible options for making a purchase. For instance, brick-and-mortar stores that use mobile devices or terminals as POSs can improve checkout efficiency and customer service.

Benefits of POS Systems

An electronic POS system streamlines retail operations by automating the transaction process and tracking important sales data. A basic system includes an electronic cash register and software to coordinate data collected from daily purchases. Retailers can increase functionality by installing a network of data-capture devices, including card readers and barcode scanners.

Depending on the software features, retailers can track pricing accuracy, inventory changes, gross revenue and sales patterns. Using integrated technology to track data helps retailers catch discrepancies in pricing or cash flow that could lead to profit loss or interrupt sales. POS systems that monitor inventory and buying trends can help retailers avoid customer service issues, such as out-of-stock sales, and tailor purchasing and marketing to consumer behavior.

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