#17- Point of Sale (PoS) ecosystem is a big opportunity: Retail Tech, Lending and Payments

We live in two opposite extremes when it comes to retail payments- cash and cashier-less tech. In between lies, the PoS ecosystem.

Amazon Go Store-technology is trying to kill of PoS equipment and cash at the same time. It optimizes customer experience too and saves on employee costs at the store.

This technology is currently available in over 20 amazon go store locations, uses cameras, sensors, and computer vision to let customers walk out of the store with groceries in hand and avoid cashier checkout lines.

According to the verge, Amazon Go’s cashier-less tech may be launched in all Whole Foods as soon as Q1,Q2 2021.

Amazon acquired Whole Foods in a 13.7 billion USD deal in 2017. Whole Foods has 500 stores in North America and seven in the United Kingdom as of March 4, 2019. Thus, no one can stop Amazon from implementing this in their own subsidiary.

Amazon even earned a lot of criticism when it said it will offer the Amazon Go Tech to other retailers.

The fear and concerns in a post-COVID-2019 world are genuine as the cashier-less model is “a direct threat to 15 million American retail jobs.”

Thus it will not be an easy road for Amazon to take this tech to other retailers.

Few reasons why PoS (Point of Sale) hardware and software matters

The shift will be first from Cash to Digital/mobile Payments with PoS Hardware/software (2020 to 2030s) and then finally to cashier-less-tech with face recognition- tech or biometric alone (2030's).

1. The employee unions and lobby are very strong in both emerging markets and developed markets to eliminate the jobs at the retailers
2. In emerging markets, there are other threats too- like sabotage, store robbery, shoplifting. Thus the adoption might be limited
3. A lot of mom and pop stores are run by family members, and hence they are self-employed in their own business.
4. Cashierless tech will be very expensive to implement in cases of small stores and unorganized retail sector. The hardware price, 5G, and sensors, RFID chips cost needs to come down further for all retailers to adopt it. There has to be a business case.

Over the next 5-10 years PoS (point of sale) ecosystem matters

1. SME/retailers need support to go digital and to simplify business operations (invoicing, inventory, accounting, etc). They are willing to pay for such subscription services if the proposition is clear.
2. PoS transaction data can solve a lot of lending and working capital requirements they may have. Fintech and players like Square capital are quick to jump onto the opportunity
3. Players like Alibaba are taking a very different approach and helping mom and pop stores with the ‘new retail’ makeover. Unlike Amazon, Alibaba believe in O2O (offline and Online) integration plus they want these stores to move on Alibaba cloud system and Ant group payment systems.

A clear winner or even a worthy contender is yet to emerge outside- America and China, in the PoS ecosystem strategy. Huge potential in markets like- India, SEA, Latam, ME and Africa.

Any Best in Class Model in PoS ecosystems?

Square with revenues of 4.7 billion USD is aiming to be a 60 billion USD revenue company.

Square (founded by Jack Dorsey) is winning at the ecosystem strategy when it comes to PoS, Payments, and Lending. Contactless hardware Integrated, elegant hardware is an important differentiator and awareness driver for Square’s Seller ecosystem.

By offering the right PoS hardware and software, it is helping the seller with all the operational hassles that a small business faces (SME or stores). As it is capturing the transaction data, it can even grow its lending business further.

Customers increasingly used Cash App as a way to send and spend money: In June 2020, Cash App had more than 30 million monthly transacting active customers, with more than 7 million spending on Cash Card.

According to its investor presentation- US alone has 21 million SME’s, and hence Square is going after the USD 60 billion opportunity, spread across 4 main areas.

1. US Payments —26 billion USD
2. E-commerce- 6 billion USD
3. Software- 12 billion USD
4. Square capital —15 billion USD

Best regards,

Sidhartha Sharma

Digital Strategy and Ecosystem Expert