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Retailers Check Out Portable Point of Sale
Retailers Check Out Portable Point of Sale

Portable POS has all the trappings of a great idea. Developers say all the pieces are in place to make it an affordable, customer service­enhancing solution for many types of retailers. Here are some of the benefits early adopters are ringing up.

It's hurry up and wait. Rabid gaming fans anticipate the impending release of the next PlayStation or GameCube the way children dream of Christmas morning. But for gaming retailers like 939-store Electronics Boutique, known to be well supplied with the goods when release day arrives, the flurry of eager buyers means their tiny, 1,000-square-foot stores are jammed with customers waiting to pay, a daunting sight for other shoppers who are reticent to set foot in the joint.

So Electronics Boutique has armed its employees with handheld terminals that give credit card­wielding customers the chance to swipe their cards and be on their way without the torture of a long queue. Commonly called "line-busting," the application uses wireless terminals such as PalmPilots to emulate the cash register and give credit card customers the chance to skip the lines, enhancing the store's customer service image in the process.

Video games are not the only place Electronics Boutique plays at the cutting edge. Despite 10 years of iterations in product development labs and small pilot installations, portable devices for retail point-of-sale (POS) remain novel in the workaday world of the retail store. There are a smattering of high-profile installations, such as the handhelds used to tally orders, but not accept payment, at Home Depot stores, and the portable POS checkout employed within the historic building that temporarily housed a Smith's Food and Drug store at the 2002 Winter Olympics Village. But few are taking Electronics Boutique's stance in making portable POS a standard part of their everyday operations.

That's frustrating for portable POS developers, who are also playing the hurry-up-and-wait game. They insist all the pieces are in place to make portable POS an affordable, customer service­enhancing solution for many types of retailers. But retailers' basic conservatism regarding technology gets in the way, particularly when it involves mission-critical applications like POS. You don't mess with the money machine.

Why Portable?
Line-busting is only one potential application for a portable, wireless version of the traditional POS terminal. Another is enabling temporary sales, such as a tent or sidewalk sale.

Portable POS also makes sense when the goods and orders are large and a store associate is closely involved. In a garden store or home center, an associate and customer can roam the store together, selecting merchandise for the order, tallying the total, and transacting payment on the spot. By referencing suggested selling software via the handheld, the associate serves the customer by ensuring everything is included for the project while boosting the store's bottom line. Personal shoppers can take the same tack in department stores.

Wide-area wireless solutions can take POS on the road, such as enabling processing of a pizza payment or mattress delivery via GSM, CDPD, or Wireless LAN. Merchantbankcard.com, for example, offers an application called AirPay that runs on any Palm PDA and allows wireless credit processing and report viewing via a wireless modem.

College bookstores have extended their sales space to anywhere on the campus via portable POS solutions. Cal State Fullerton, for example, began using PalmPilots running software from Kyrus Corp. and MBS Systems for temporary stores three years ago. Store associates plug a wireless access point into the campus backbone and create an instant store at graduation, sporting events, even campus book signings. "It gives us the chance to take our operation remotely to wherever we want," says Jerry Olson, director, Titan Shops, for Cal State Fullerton.

The college bookstore market has turned out to be a sweet spot for portable POS technology, perhaps because "on a campus they can go anywhere" and set up shop, as opposed to a typical retailer who is constrained by the lease to stay within its four walls, notes Dave Henderson, VP of MBS Systems.

Such portable POS paradigms have been bantered about in retail circles for years. But the original approach consisted of clunky, slow terminals that employed costly, proprietary, and low-throughput 900MHz wireless backbones ­ or ran batch.

Today's solutions are far more slick. Platforms have opened up and the technology got better, so today's terminals are lighter, more powerful and sexier, with features such as sharp, color touch screens and longer-lasting batteries. The IEEE 802.11b wireless LAN standard offers data rates similar to wired Ethernet, and backbone prices have dropped considerably. Prices have fallen into the range of reality. Developer System 3 POS is able to deliver a wireless backbone and two handhelds at about the price point of one POS, says Jeff Pinch, director of operations.

Some retailers use PalmPilots and their brethren for portable POS, but more common are ruggedized handhelds designed specifically for the knockabout retail environment. Accoutrements include mag stripe readers, barcode scanners, keypads, touch screens, even smart card readers and wireless phone capability. Printers are integrated or separate.

More popular than handheld terminals are another iteration of portable POS: traditional POS terminals that are connected to the store network via an internal or externally mounted radio card. That saves the cost of laying wires and makes later store remodels far easier. At Longs Drugs, for example, a 415-store West Coast retailer, wireless terminals saved the retailer the cost of putting in its own terminals immediately after the acquisition of a new chain, then a later rewiring of the front end when a newly acquired chain was reset.

Brian Kilcourse, senior VP and CIO at the retailer, found wireless POS technology not without its obstacles, since he was deploying the wireless network to proprietary IBM terminals.

Meanwhile, competition with other retail segments has piqued operators' interest in technology that can improve customer service. And the world has come to accept the idea that real business can happen on a device not much bigger than your wallet.

Continuing developments promise to smooth out the rough edges:

  • Manufacturers are debuting hybrid devices that can handle POS in peak periods, then work off-peak for other aspects of store operations, such as taking inventory, receiving goods, making markdowns, or enabling the manager to wirelessly monitor what's happening at POS.
  • Point of sale software developers and payment processors are debuting portable versions of their applications, scaled down and sequenced to fit smaller screens.
  • Developers are also at work adding payment functionality beyond credit and proprietary store cards; debit cards are next, once differences are resolved between various financial institutions' encryption standards, according to Colin Haque, senior director, product management for software developer Triversity. Some feel portable POS will really take off when micropayments emerge.

    Overcoming the Obstacles
    The solution seems even more appealing as developers of handheld hardware and software come up with ways to improve portable POS. But retailers still aren't biting the way vendors have hoped. Many announce solutions for the market followed by... nothing; no real deals to tout or case studies to detail. Retail has already passed the early adopter phase of the technology, says Greg Buzek, president of IHL Consulting. But a significant uptick in follow-on adoptions has failed to materialize.

    Some say that's due to the legacy of early RF problems and failed portable POS experiments such as one said to have occurred at The Gap. "There hasn't been that much deployment of newer handheld technology at large retailers," says Driscoll. "Other than Sears," which is using the devices for non-POS functions, "no one has rolled out an open system on Palm and Pocket PC."

    In fact, many larger retailers currently run RF networks installed before development of the IEEE 802.11 standard, presenting compatibility problems for Palm and Pocket PC-based applications as well as networks often too slow for the demands of POS traffic. Triversity, a retail application developer, has addressed this by enabling its portable POS application to run on handhelds via a browser, Palm, and Pocket PC, as well as several legacy operating systems compatible with older RF networks. Home Depot is running its line-busting application on the same handhelds used for inventory and receiving using a Java application from 360Commerce.

    Others cite the inherent awkwardness of the wireless transaction as a real barrier. The setup is great when the customer has only one or two items and pays with a credit card, but transactions outside those parameters are more difficult. Some solutions "do not deal with the logistics issues; how to bag, accept cash, coupons, checks. Mobile POS transactions only work if the transactions are by credit card," says Connie Driscoll, a Michigan-based independent retail consultant. It would be hard, for example, for a store associate to fold and bag apparel while standing in the middle of the sales floor.

    Another problem is what to do about the receipt. Some solutions include a separate, wearable printer attached to the associate's belt, while others dispatch printing to a remote printer. At least one vendor has an onboard printer, but that makes the unit heavier.

    Then there's signature capture; does the associate hand the terminal over to the user to sign on the touch screen, or ask for an on-receipt signature, which is awkward without a checkstand? And what does the associate do with the signed receipts ­ or cash? Storing these in aprons is one possible ­ but insecure ­ solution.

    Some retailers, such as Home Depot, avoid all this by using the portable POS unit for "prescanning;" tallying up the order by scanning each bar code, then suspending the transaction and issuing a coded receipt. The customer then continues to the cash register for the actual payment.

    Software development has been another challenge. The real estate on the typical handheld terminal's screen is far more limited than that of a standard POS terminal. Yet modifying the user interface presents training issues. The processor may be limited as well.

    "Typically in the past, people implemented separate, silo systems for handling mobile devices," says Colin Haque, senior director, product management, for Triversity. The inability to enable all POS functions on the handheld "drove a stake in the heart of a lot of mobile solutions. Our application uses common business logic" so both traditional and portable POS units talk to the same POS server and can perform all functions of traditional POS, such as returns.

    Making the business case is another challenge. Vendors insist retailers have been asking for portable solutions for years. But they need justification for the capital expense. While a retailer could evaluate portable POS technology based on, say, transactions per hour, few have enough peak times to make the increased sales velocity the sole source of return on their investment. And the customer service angle is hard to measure. So for now the application tends to be an add-on. Retailers install radio frequency networks and devices for proven solutions such as wireless inventory and markdowns, then switch the terminals into POS mode when demand warrants.

    But those early adopters must be finding some magic, enough to keep mum about their results. Leather retailer Coach is a longtime user of a solution from Symbol Technologies and Kyrus Corp., but they won't talk about it. Smith's Food and Drug used wireless POS at its store in the Athlete's Village in the 2002 Winter Olympics and a spokesperson called the deployment "a success," but its corporate parent, Kroger, won't let Smith's discuss it.

    What's Next
    Despite the lukewarm reception to the current generation of portable POS solutions, retail development visionaries continue to conjure up more potential uses for multifunction portable POS devices. Triversity's Haig, for example, imagines applications that enable an associate in a consumer electronics store to use the handheld to turn on different stereo components wirelessly, then tally the selected components into an order and take payment right on the spot. Handheld POS units would also be ideal for store loyalty programs.

    Others imagine that consumers' PDAs or cellphones will interact with store systems for purchases. Symbol Technologies has installed portable shopping systems that put store-supplied scanners in the hands of customers to prescan orders as they shop.

    Already, the order-taking paradigm in use for sales-force automation on handheld devices is crossing the threshold into retail. At Virginia Alcohol Beverage Control stores, the handhelds now being implemented for functions such as inventory and receiving may eventually be used by associates to walk the store with large buyers such as restaurant owners, scanning product bar codes to complete orders and dispatching them to the payment system, says Triversity's Haig.

    Bullish developers expect some retailers will begin designing stores differently with portable POS in mind. With the option of setting up checkouts on the fly, retailers no longer have to incorporate enough checkout counters to accommodate peak times while having that space go to waste for the balance of the year. That gains 10­20 square feet of selling space per uninstalled terminal.

    Portable POS has all the trappings of a great idea. The technology is there to make it happen. Now its proponents need retailers to stop window-shopping and open their wallets.

    SIDEBAR:
    Case Study: The USF Story
    Wireless Coupon Program Gets High Marks from Retailers,
    Students, and College IT Department

    Vendors see up to a 10% return for permissions-based marketing messages

    by Elizabeth W. Clarke

    If you think wireless coupons for Starbucks and your favorite pizzeria are a thing of the future, think again. The University of South Florida (USF)'s IT department has launched MoBull Messenger, a wireless coupon and information program in which participating retailers are reaping up to 10% return and the university is expecting to gross $125,000 in the first year alone.

    MoBull Messenger allows USF students to sign up for discount coupons from area restaurants, sporting events, nightclubs, and retail stores, which they receive on their cellphones, PDAs, and pagers. As part of the program, students can also sign up for real-time campus information updates such as class meeting changes, school closings, emergency alerts, and payment deadline reminders.

    When asked how USF came up with the program, George Ellis, USF's associate vice president of IT and the mastermind behind MoBull wryly answers, "Necessity is the mother of invention." According to Ellis, USF, like many universities, found that with the economic downturn, their state funds were being dramatically reduced, and they were suddenly tasked with leveraging technology as a source of revenue.

    "As Christopher Akin, my assistant director of IT, and I saw our funding shrinking, we realized we had to think about developing IT systems that would not only enhance our university's operation but would also generate revenue," continued Ellis.

    Ironically, at the same time, students were telling the university that they wanted to be in closer touch with their administrative requirements, such as financial aid applications and payment deadlines. Ellis had noticed that most of their student body was well equipped with digital devices, and when they did a poll, they found that 91% of their 37,000 students carried a cellphone, while 9% carried a pager or PDA.

    An idea began to form in Ellis's mind, and he and Akin started batting it around. "What if we interfaced an application with our administrative system that could notify our students wirelessly of class meeting changes, emergency alerts, and payment deadline reminders, and used the same system to offer discount coupons to our students from our area retailers?" asked Ellis.

    According to Akin, they knew they could build the application themselves, but they weren't sure they could successfully send the message coupons out to all the different devices and across all the different networks.

    "We knew this portion of the project could cause a lot of problems so we had to look to solution providers who really had the expertise to solve this part of the puzzle," continued Akin. USF chose Air2Web's Mobile Internet Platform, which is known in the industry for its ability to take information out to over 700 digital, wireless devices, with any carrier and across any network.

    Once they had selected the delivery platform, the next step was to develop a name for the mobile service. It just so happens that the University of South Florida's mascot is the Bull. Ellis and Akin were immediately inspired and quickly came up with the very appropriate title MoBull Messenger. Thus, the wireless coupon and information service was born.

    Since launching the program in the spring of 2002, almost 800 students have signed up for the service while 46 retailers are participating ­ including restaurants, clothing stores, bike shops, nightclubs, and hair salons. Not only are the retailers seeing up to a 10% return ­ they're paying as little as 10­15¢ per message for a permissions-based marketing message.

    "This is one of the more interesting wireless retail programs I have seen to date," said Jeff Roster, senior analyst, Global Industries ­ Retail, Gartner Dataquest. "One of the key advantages of this wireless coupon program is that retailers don't have to make any investment in IT infrastructure to participate. The retailers simply pay a set charge for every coupon they send out."

    "What we think is especially appealing about this advertising medium is that it gives retailers near real-time promotion, and it is perfect for vendors with 'perishables' such as food, concert seats, etc.," said Ellis.

    When participating retailers were asked about MoBull Messenger, their enthusiasm was unanimous. "When USF first approached us about wireless coupons, we thought it was a such a creative idea and a fantastic way to reach the students," said Kelli Marak, manager of Banana Joe's/Margarita Mama's, a popular restaurant and bar for college students in Tampa. "We've just started with the program, and are really excited about it. We had a very good response to our first coupon and are expecting more with subsequent offerings."

    "The wireless coupons are great when you're having a slow day because they really help boost your traffic," said Brian Barry, owner of Tampa-based Hair Bandits. "We began by offering a 'buy one haircut/get one free' coupon, and sent that offer out several weeks in a row. Each time we sent it, we found that more and more students responded to the coupon, which we were thrilled about. We also found that with the hair salon business, the longer the promotion was extended the better return we received."

    How MoBull Messenger Was Developed
    USF's IT department assigned two engineers to build their application, and it only took 2-1/2 to 3 months to design and implement it. Initially, USF attended a three-day Air2Web training class in which they learned how to use Air2Web's development tools, and then set to work. They used Air2Web's tools and XML-based APIs to connect their application to Air2Web's platform. USF built their subscriber database using SQL and used ASP code for their Web pages. They specifically chose ASP code so that the system could be duplicated and run anywhere since one of USF's goals is to sell their application to other universities.

    When developing their database, they collected the subscribers' age, zip code, and areas of interest in which they wanted to receive coupons and information ­ such as nightlife, restaurants, retailers, or campus events.

    "We specifically wanted our subscribers to be able to receive what they wanted, when and how they wanted it," said Akin. "Thus, subscribers not only have the ability to choose which areas they are interested in, but which vendors they want to hear from. Additionally, they can select a quiet period during the day when they will not receive any messages if they choose." When new retailers and vendors join the MoBull program, subscribers are notified via e-mail so they can go into their profile and add those vendors to their notification list if they desire.

    How MoBull Messenger Works
    If a participating restaurant is having a slow night, the restaurant manager simply goes to their computer, logs onto www.mobull.usf.edu/messenger, enters the discount they want to offer (such as $2.00 off any large pizza), selects the age of the students they want to target (18­21, 22­25, all, etc.), their geographical location (all of the greater Tampa Area, Northwest Tampa, etc. [subscribers' zip codes are matched up with the geographic areas]), and then confirms the price per message, the number of messages being sent, etc. The vendor's credit card is then charged the amount calculated, and the process of sending out the wireless discount coupon to the students' cellphones, PDAs, or pagers begins.

    Once the vendor sends out the wireless coupon via their computer, it immediately goes to USF's system. The system runs a query against the subscriber database and all of the subscribers who fall into the vendors' parameters are pulled out. The database sends this list to Air2Web's Mobile Internet Platform in Atlanta. Air2Web's platform renders the message to all of the designated subscribers and their different devices. From start to finish, the process takes just a few minutes.

    According to Akin, USF took both a system analyst and marketing approach when building MoBull Messenger so that they could continue to scale and support additional demographic areas, as well as message types. For example, MoBull Messenger is currently utilizing only one-way SMS messaging. However, because of the Air2Web platform and the way USF has designed their wireless application, MoBull Messenger can also support two-way SMS capabilities.

    In the not-too-distant future, USF will add the ability for a student who might have missed a coupon during the day because their device was turned off to go back and pull all the messages that were sent during that time. Potentially, the system could also allow students to pull up their grade postings using the 2-way SMS functionality.

    "We are very pleased with the response we've had to MoBull Messenger from both our students and our local retailers," said Ellis. "Considering that we just launched this program and with very little promotion, we are excited about the uptake. We are mounting a big marketing campaign this fall, and expect the response to be even bigger.

    "The MoBull Messenger Notification Service is an extremely valuable tool that is allowing us to seamlessly communicate with our students and staff, while giving our local retailers a cost-effective medium for advertising. Lastly, it will generate revenue for the university. This is a win-win project."

    Elizabeth W. Clarke currently serves as corporate communications manager for Air2Web where she oversees media and analyst relations. Elizabeth has spent over 15 years working with the national and international press, and has also served as a freelance producer for CNN's science and technology unit in Europe.
    elizabeth.clarke@air2web.com

    About Lisa Terry
    Lisa Terry is a freelance writer based in Allendale, NJ, who specializes in covering technology and business issues.

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    Reader Feedback: Page 1 of 1

    Are these devices based on the same wireless data processing technologies that have allowed Europeans to have portable POS devices for years now? If so, why is it that it has taken such a long time for this type of device/service to reach this country?


    Your Feedback
    David Bernad wrote: Are these devices based on the same wireless data processing technologies that have allowed Europeans to have portable POS devices for years now? If so, why is it that it has taken such a long time for this type of device/service to reach this country?
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