Point of Sale (POS) technology has made significant leaps in the last few years.

For example, In the past, a shopkeeper used a manual cash register that they would have to open and close all day. With this setup, data collection was limited to duplicated itemized receipts. In comparison, retailers today have access to sophisticated POS technology that allows them to store impressive amounts of data and access a myriad of other features as well.

If you're setting up your own retail business, it is critical that you have a reliable POS system. This allows you to process payments, tweak items in your inventory, and keep an accurate bank of transaction-related information.

An automated POS system also reduces the chance of human error and keeps your transactions transparent.

There are two kinds of POS systems that retailers can choose from cloud-based and legacy-based POS systems. Both types have their advantages and disadvantages, so it can be difficult to pick between the two.

This article will offer a closer look at both of these systems and conduct a detailed cloud-based POS vs legacy POS comparison.

Hopefully, the information provided here will help you make a better-informed decision about which type of system is best for your unique business.

What is a Cloud-Based POS System?

While you are probably more familiar with traditional POS systems, the cloud-based model may be entirely new.

Cloud-based POS is essentially Software as a Service (SaaS). Your data is centrally hosted on an online (cloud-based) server. With this approach, you purchase a subscription-based license to use that service. However, remember that not all cloud-based POS systems use the SaaS model since some don't use 100% cloud storage.

To simplify things, a cloud-based POS system keeps your entire database on a remote server instead of using something like physical hard drives for storage.

When you need to look up a relevant piece of information, the system retrieves it from the cloud and shows up right in front of you. This encompasses all types of data for retail businesses, including inventory, customer data, transaction reports, etc.

Differences between Cloud-Based POS vs. Legacy POS Systems

POS Systems

A legacy POS system also referred to as a "traditional" POS system, uses a local network to store important information. Some people call this "on-premise" POS because it keeps information on physical hard drives in the shop.

Think of this as taking pictures with your cellphone. Unless you've stored the photos in cloud-based software, you can only access them if you open your phone.

A legacy POS system requires owners to be present at the retail location to input, analyze, or retrieve information. This means they cannot create reports from home, replace or update stock items online, or perform other tasks that may need to be done unless they are on-premise. This makes dealing with a legacy POS quite frustrating and often slow.

The table below shows some of the clear differences between cloud-based POS and traditional POS systems:

Cloud-Based POS Legacy POS
Data Collection Stored on online servers that offer mobility, i.e., you can retrieve any piece of data at any time. Stored on local servers that are part of a closed internal network; can only be retrieved if you are at the physical location.
Data Access Access data through multiple touchpoints, i.e., you can change inventory from home or contact consumers through your phone if necessary. Data can only be accessed by logging into the local servers and is vulnerable to system failure, breakdowns, and other dangers. Requires frequent backup, which takes up more space.
Payment A subscription-based model that is cost-efficient and has no hidden charges. POS company also provides access to future upgrades and data backups. Large upfront fees and regular maintenance fees, which can vary based on the nature of maintenance required. Typically more expensive than Cloud-Based POS.
Hardware Personnel can use tablets, phones, laptops, or any device that has internet access. The system integrates other tools, like card readers, printers, and more when required. Large terminals, usually around 15 inches, which are hard to move around once they have been set up on-premise.
Maintenance Most issues can be resolved online. Most issues are resolved on-site by a maintenance team.
Software Updates Updates are processed automatically and online. You don't have to wait for someone to visit and manually upgrade the system. Updates are also executed in real-time, meaning you can use new features immediately. Technicians execute software updates on site. Manual updates take much longer than online updates, meaning you might not be able to use the system while it's undergoing an update.
Data Security Vendors create and implement safety features and execute automatic backups that prevent data breaches in most cases. Data is safe from breaches because it is stored on-site but needs frequent backups in case of a technological shutdown.

Why Should Retailers Switch to a Cloud-Based POS System?

With technological advancements progressing at lightning speed, retail businesses should strongly consider upgrading a legacy POS to a cloud-based POS system. Below are some reasons why retailers should make this change to further grow their business.

1. Focus on Feedback

A cloud-based POS system's most significant advantage is instant data access. With this instant access, you can log in and analyze your sales information anywhere, even from the comfort of your home. This means you can make necessary changes on the go, prevent disappointed customers, and circumvent potential losses.

In fact, according to National Retail Security Survey 2020, around 56.5% of retailers use insights from their POS systems to prevent losses and boost sales. Consumer data is a goldmine, and cloud-based POS systems put this at your fingerprints in real-time.

In comparison, pouring over data reports from a legacy POS system would take time and require you to be on-site for hours to perform the work.

2. Increase Retention Rate

Cloud-based POS systems offer tons of data. Combined with data warehouse software, it can help you extract valuable insights that ultimately boost your customer retention rate.

One report even states that approximately 86% of restaurants use data from POS systems to streamline their loyalty programs and create targeted discount activities.

Using real-time insights from a cloud-based POS system will quickly identify which consumers to connect with and focus on to drive the most value. Doing this will eventually increase your average order value, as loyal consumers make repeat purchases.

The best part is that you can share this data with your marketing agency, which would not be possible with a legacy POS.

3. Endless Scalability

POS System Scalability

Remember that whichever POS system you choose will have to scale up as your business grows. This is particularly important for retailers; you need a more overall POS system as you open more store locations.

Legacy POS systems cannot quickly scale at the pace you may need, at least not compared with the ease of a cloud-based system. You would need to purchase new equipment and local servers and pay technicians to install traditional POS systems with every new location.

On the other hand, cloud-based POS systems can easily scale as your business grows. The features you already pay for, like CRM, inventory management, analytics, and more, will scale up with the business.

Your cloud-based POS can integrate new features with no hassle and quite literally with a few buttons. This means you're always technologically ready and growing.

4. Light on the Pocket

A cloud-based POS system will put your budgetary concerns to rest. Not only are cloud-based POS systems significantly cheaper than their traditional counterparts, they also offer many more features and capabilities.

Think about this: if you store your data in a legacy POS system, you can find yourself paying anywhere up to $50,000 for the necessary on-site servers and bulky equipment that has to be installed.

Cloud-based POS systems work on a pay-as-you-go subscription model that works like a dream. You don't have to sign up for a lengthy contract; you can keep changing the services you require, and maintenance is done remotely. So, forget about having to pay for scheduled maintenance visits. A cloud-based POS system will save you time, money, and a lot of headaches.

5. Provides an Intuitive Experience

Using a cloud-based POS system means you can train staff to log orders on tablets and phones instead of old-fashioned registers. This optimizes the order process, makes tasks such as returns and exchanges more efficient, and reduces waiting time for impatient customers standing in line.

There is also no steep learning curve associated with deploying a cloud-based POS system. Instead, your staff can pick up on it immediately, decreasing communication breakdowns, confusion between employees, and chances of human error.

This easy setup also makes it easier to process discount coupons and vouchers on an automated system that has empirical data stored in it already.

A legacy or traditional POS system can cause delays and frustrate waiting customers. On top of this, they are repairing a fault in a legacy POS system that requires on-site help, with a technician having to be physically present. Cloud-based POS systems don't suffer frequent breakdowns; even if they do, the issues can be fixed remotely and in real-time.

Develop a Cloud-Based POS System with Imaginovation

Are you ready to upgrade your retail business and give it the boost it needs? Simply reach out, and we’ll help you with the best cloud-based POS system tailored to your unique business needs.

We have vast experience with innovative, out-of-the-box, and futuristic tech solutions, and we would be happy to help you and your business succeed.

Imaginovation is an award-winning web and mobile app development company headquartered in Raleigh, NC, with a team of experts ready to take your POS journey to the next level.

We deliver on our promises and will curate incredible cloud-based POS software for your business, so you can evolve with the times and always stay on the pulse.

Don't hesitate to talk reach out to us today, Let's Talk.


Michael Georgiou

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