Point of sale management

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Point of sale management

Buy now pay later vs credit cards

POS SOFTWARE

Right now if you go into any shopping centre, you will see almost everyone is offering a buy now pay later(BNPL) option. There is little choice for many shops as Australians are dumping credit cards and going for them. Already more than a million Australians have stopped using credit cards and are using these services. So today BNPL startups are popping up like mushrooms in Australia, and although there are plenty of players in this market already, the interest now is that CBA bank has announced that it is moving in a big way into this market and soon I am sure the other banks will also move into this market.

Although each offering of BNPL is different, I think the following is a fair comment, unlike the credit card most of the fees are paid for by the merchant, not the customer. Most merchants that use these services do so because these services do push their stores thus increasing their sales.

The other issue is that a BNPL customer if you have the right products for them, is a good customer. Here is an analysis of a zip customer 

 

 

They buy more each time, and they buy more often, the operative point being here, do you have the products for these customers? 

So the big problem for many of my clients is that with credit cards whereas the fees are relatively small and can be either absorbed and/or charged to the client, with a  BNPL model, the costs are much higher, about 5% and it can be tough to charge this back to the customer as both the customers and the BNPL do not like it this chargeback. A hairdresser who was my client, charged a woman a surcharge because she used zip, the customer went on social media to complain, within hours zip picked it up the twitter and rang her and asked her to please explain. 

This leaves many of my clients with a problem, either give up a large number of clients and a major market or offer BNPL. The answer will be a decision for each store. 

If you do laybys, I do suggest that you switch at least for this service over to BNPL. If you do your sums, the extra costs and bother to you in laybys are just not worth this 5% fee.

If your layby customers do not have a BNPL account consider this when I did an experiment, I found that it took me about 2 minutes to get a BNPL account.  

Now assuming you do decide to go into this space well the question is which one do you use. Currently, there are two big ones, Afterpay and Zip. You can go for others but these two you need to look at first. Both are I think are reliable. Both run extensive marketing campaigns which do benefit the merchants that do use them. Both have a lot of followers. Generally users of these services, I find have both.

As a comparison, Zip big plus is that it lets you sell higher-priced items, its costs are a bit lower, and it pays faster. Plus it is easier to get, and they bug you less. Afterpay will put conditions on its use and in fact on all payment types that you use which blew my mind, if you have Afterpay in your shop, if you do a cash transaction you must abide by Afterpay conditions even though it has nothing to do with them. I have never seen Zip do anything like that. This is why I suggest if you are thinking of entering this market, try Zip first. Once you have bedded it down then look at others.

If you want to investigate more, click here.

PS Whatever you do, what you need to consider is that BNPL is clearly the future, soon I predict that all shops will need it.

 

 

 

 

 

 

 

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Map your shoplifting.

POS SOFTWARE

Drawing a map of where your shoplifting is happening in your shop can be very useful. To do this, you need to have done a stocktake in your point of sale software.

Now what we want to do is draw up your shop on a big piece of paper or white cardboard. I suggest using a pencil as you do sometimes need to correct it. To get the figures either use a tape measure or pace it out.

Now, this might be what the planogram for your shop looks like.

 

Once you are happy, with what you have done this, make at least four photocopies, label two quantity and the other two value. The rest put aside, you can certainly use them. 

Now go to your point of sale system and get the valiance reports in the stocktake section.

Now on one of the quantity planogram jot down the figures for missing quantities and on the value planogram put down the numbers for missing values. The subtotals there will speed up the process.

When you are finished, start adding up the totals for each area. Now divide the result into three groups,

Blue = Good
Yellow = Moderate to bad
Red = Very bad

They generally stand out

Now on the appropriate fresh planogram for quantity, mark with the appropriate colour. Now do the same with the fresh value planogram. 

Now your planograms will look like this.

 

Your quantity ones will show you the number of times people have stolen off you and the value one, how much it has costed you.

See where the green arrow points, apparently there is something to investigate at these spots. See the green arrow pointing to red. This is a problem area. Everything around is blue, so it is not the location it probably is a blind spot or the goods there are very desirable for people that shoplift. 

What is a real worry if it is behind the counter because then its staff.

One point to watch, it that although you have identified the area where the loss is coming from it may not be the spot the actual shoplifting is done. 

Give it a try as I am sure you will find something.

 

 

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Wasted discounts

POS SOFTWARE

Technically a wasted discount in retail is a discount that you give for an item that you would have sold without the discount because consumers would have bought the products at a full price so the discounts didn’t generate extra sales or volumes. This is a big problem in loyalty marketing as the first ones, in general, to take advantage of discounts are the regular customers the business has.

So with this in mind, a well-known management company  Nielsen Pacific, looked at the food and grocery marketing in Australia, which is worth about $51 billion a year. They estimated that now about 38% of all products sold this year were discounted, and of that, about 20% of the discounts in total were wasted discounts. 

Reading their report I decided to do a calculation of the effect of discounting, particularly just how much extra one would have to sell to generate the loss of income due to the discount. Now I will do the calculation without GST as it changes nothing here.

So let us imagine you are selling 100 of a product a month at $1 with a margin of 30%. 

Turnover = $100

Cost  = $70

Profit  = $30

Now say you give a discount of 10%, what you need to do is now sell 150 products as your turnover now is 150 x  $1 x (1-10%) = $135. Your cost is 150 x  $1  x (1-30%) = $105. Your profit is $135 - $105 = $30. So you have had to sell 50% more to get the same profit without a discount.

In reality, you will need more as handling costs, storage costs, display costs, etc will be more too but let us leave that point for another day's discussion.

Now if I do the same calculation for a discount of 15%,  you have to sell 200 products or 100% more to get the same profit before the discount was issued.

So what I decided to do was to make a graph of what it looks like which I think you will find interesting. 

 

The blue line is for a product that has a 25% margin, the red line is for a product with a 30% margin, and the green line is for a product with a 50% margin.

As you can see the low margin products are much more affected by discounting but even here once you start hitting 15% discount a product with 50% margin, needs a lot more sales to justify the deduction. 

As a rule of thumb in retail, every 1% discount needs at least a 3% increase in turnover to breakeven.

This is why wasted discounts in loyalty marketing are a big issue.

If you want to know what your discounts are, check your end of day reports.

 

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Bill payments, to do or not to do?

POS SOFTWARE

 

The number of bill payments over the years have dropped over the counter, but it is still a big market, so many of our clients do process Bill Payments over the counter. The big plus is that it brings people into the shop. 

I would say in it promises to be a big market for the next few years. It is not just the older people, but large numbers of young and middle-aged people who pay over the counter because they can do it in cash and there are also transient people such as people who are temporary residents who have limited access to Australia's banking. These people all use phones, electricity and heating and even in this day of the internet much is paid over-the-counter.

When I did a benchmark study of our clients, I would say taking out the people that do very few, probably just their own bill payments, that left the average shop doing about 2 to 3 bill payments a day. So clearly it does bring people into the shop. How much would you pay to a Facebook consultant to get that numbers of people into your shop and buy something?

Looking at sales history, it does appear that they do buy more, although how much tends to vary a lot. 

The time taken to do a transaction is minimal. My benchmark study shows what I saw seconds. 

You get paid instantly.

On the other side, quoted fees for each transaction are small, but with our system, you are under no obligation. You can charge more if you want, by introducing a service fee. No-one can stop you because we are not an agency and we are not telling you how to run your business.

Finally, there are no commitments. If it does not work for you, you can stop using it whenever you like. 

PS If you are doing Bill Payments now, contact us as far as I know our offering is best as unlike others we do not charge or take anything out of your commission. Most importantly we probably have more billers - Australian Post, for example, I saw in a post with BPAY had about 2,000 to 3,000 billers while our Bill Payments service has over 40,000 billers. From a marketing perspective, there are many advantages in this larger pool of billers as our clients as in many areas will have a monopoly on many products as they are the selling long tail and niche products. Also, in practice retailers today make most of their profits from items that few others have. Someone needs to pay an obscure bill, and they need to pay in cash, where are they going to go? They cannot go to a post office as they do not handle it. So hopefully, they will come to our client, once a month.

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Using PLU and SKU numbers

POS SOFTWARE

 

PLU (Price Look-Up code)   and SKU (Stock keeping unit) numbers are used to sell items at the cash register without scanning.

Often they are used because many items are not easy to put on a barcode such as alcoholic drinks at a bar, fruit, vegetables, cardboard sheets etc 

I do suggest that if you do use PLU or SKU that you stick to the following convention. 

PLUs generally, are a 4-5-digit number that are supplied by your supplier. On fruit or vegetables at the supermarket, you have probably seen this code on the little stickers on your items as such they are what we call universal as they can be used by many stores, not just your own. There is a series of numbers between  3170–3269 that you can use if you want for your internal use, but our clients do not need to do this as they can use SKU. 

SKU are generally 1-3 digit numbers which you assign yourself. They are as such applicable only to your products and stores. You can customise your SKUs so that you can quickly tell specific information about a product by looking at the number if you want. In my experience, this works very well at the start but after a while gets very messy. So I would recommend you use 1,2,3 etc.

Setting it up is very easy.

1: Open Stock Maintenance and look up the item.
2: Click on the "Prices" tab
3: Scroll to the far right on the pricing grid, and you will see the "PLU" field.
4: Click EDIT and enter a number here (for example, 101 for an SKU and 4152 was the PLU for the apple above)
5: Click SAVE

Now, in the cash register, when you are ringing up a sale enter the PLU into the "price entry" box, and press ENTER and our point of sale will find the item immediately!

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Warning on discounting below cost

POS SOFTWARE

Our Point of sale software can be set up to issue a special warning if a stock item being scanned price is under cost. This warns people scanning that item at the cash register that something is wrong and needs to be checked.

If you feel that you may have a problem here or you just want to check if you are selling too many items that are excessively large discounts,  I suggest you do is run the following report. 
 

Press transaction enquiry as highlighted in red, now select the relevant options, it actually, a good idea to do it once and then do it again with different departments that appear and check out the results.

 


 

 

 

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Shop profit and sales this year to last year

POS SOFTWARE

The $64,000 question many of you will be asking now is how well did I do this year in my shop compared to last year. Just how am I travelling? 

 

Now is a good time to find out and it is very easy to do.

 

Go to Reporting Documents > Dissection Family Class Period Sales Comparison.

 

 

Now put in the financial year dates, in this case, I put down that I want a report on all products. 

Note there are many more options here but let us keep it simple, you can always experiment later if you want to learn more.

 

Now on the basic version, you get a very detailed comparison by department and class.  It will make I am sure fascinating reading, in my view the two most important metrics here are Qty which are the number of sales for each department and the $ Profit made by each department. 

 

What can be also useful is running the same report comparing last year with the year before that, this will give you a two-year trend analysis.

 

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Slow-moving stock

POS SOFTWARE

Stock planning in retail is tricky. What you do not want is a shop full of slow-moving stock, you need stuff that sells! Besides the problem that this stock is taking up space and capital, it is also not bringing in customers.

There are several ways to identify what is your slow-moving stock, but as a rule, a stock item that sells under $100/year is slow-moving. The first point before you can do something is to identify all these items.

So go to Register reports > Stock > Slow moving Stock lines

Now I put in a year of sales, and I say anything that I have stock in and have sales of less than $100. 

 

I find it best to work by department separately, so in this shop, I was looking at the stationery department.

Now we got a report of 81 pages of detailed information of all the items that we considered slow-moving. It totalled almost $80,000 worth of worthless stock. 

So we have someplace to start.

Such stock analysis can provide you with insights to improve your decision making that can help you reduce costs and improve sales.

Give it a try.

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Calculation of Stock Shrinkage% and Damaged%

POS SOFTWARE

After you do a stocktake when you do your financial figures, you will need the following four numbers.

1) The value of your stock that your computer thinks that it had at the end of the financial year. If your point of sale is up to date, print out a report of your stock valuation before starting the stocktake. If you do not trust the figure in your point of sale software, then you can, or your accountant can give you an estimate. This is the (Perpetual stock value).

2) This comes out of your stocktake and is the value of your stock you have at the end of this financial year. Your point of sale software will have this figure once you enter in the stocktake figure in the stock valuation report. (Physically Counted Inventory Value)

3) What is the total sales of your shop less the non-stock items, e.g. if you sell touch gift cards, these are not stock items so take them off your overall sales figure.  Your total report should be able to give you this figure which is your (Sales of stock product)

4) Value of the damaged goods you counted. (Damaged stock value)

Now please do the following calculation.

Shrinkage% = ((Perpetual stock value)-(Physically Counted Inventory Value))/(Sales of stock product) x 100%

A typical figure here is about 1.4%, but it does vary a lot. I have seen estimates between 0.1% and 6%. 

Now what you may also want to look at is your damaged goods, these have a different story and it can be an exciting story to tell.

Damaged% = (Damaged stock value)/(Sales of stock product) x 100%

Once you get these figures, please let me know as I am interested in this sort of stuff.

 

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Multi cash draws

POS SOFTWARE

Here are tips for queue handling. 

1)  When managing your store’s queue, it is important to influence your customers’ perception of their waiting. Studies show some of the problems can be alleviated by reducing the boredom, can you do something to keep them entertained? 

2) When the queues start to get really big, here is a tip, use a function in our point of sale software which allows one computer to run multiple cash draws. It is best to be prepared by having your extra cash draw ready to go but in a pinch, you can always move the cash draw itself from a non-busy area to a busy area. Now when the lines start to bank up you or your employees only need to switch on the cash drawer and start serving your customers.

3) I would suggest that you set up a policy that if say more then four people are lined up, activate a queue line and make sure that the people waiting are notified that you are trying to serve them and make a new queue. Now, this is an interesting study done in the TV show myth busters episode 242 which you may want to consider, what myth busters did was examine whether one long queue is more effective than several and what did people think. 

In a grocery store, the best way to move customers through a series of checkout counters is to have one long line and route each customer to the next available checkout.

BUSTED

Adam and Jamie set up a mock-store in an empty hangar, with fully stocked shelves and 5 checkout counters manned by experienced cashiers. Upon entering the store, each of 90 volunteers selected a specified number of items and recorded the time when they queued and the time when they reached a checkout counter. For additional realism, a percentage of shoppers were instructed to slow things down by asking for a price check or by paying with a personal check. After checking out, the volunteers would indicate their overall satisfaction with the experience.

In the initial test, the volunteer shoppers were free to choose their own checkout counter and queue behind it. The average wait time using this method was 5:39 and the average satisfaction rating was 3.48 out of 5. In the second test, shoppers were guided through a single serpentine line and then directed to the next available checkout counter. The average wait time using this method was higher at 6:56 but the spread between minimum and maximum times was tighter. The average satisfaction increased to 3.80 with the single-line method due to it being regarded as fairer. Adam and Jamie judged the myth as busted based on average time, but also called the single-line method better based on customer satisfaction.

 

 

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