Dominic Hill
What is a POS?
A Point of Sale (POS) system is a combination of software & hardware used in a retail environment to capture a transaction related to a customer purchase in-store. Learn more about Point of Sale (POS).
What is the problem?
Just like most weekends, John*, the 3rd generation owner of a successful family jewelry store in Massachusetts, was playing golf with his friends, which included independent retailers from other industries. A few holes into the first round, John started discussing with his friends the challenges he was facing with an out-dated Point of Sale system. As they continued to talk, John couldn't help but notice the stark difference in the quality of software his friends had access to compared to what is available within the jewelry industry. As his friends raved about the value they were getting from their software providers, John was left feeling envious and frustrated.
John’s business is operating the same Point of Sale system today that it installed back in 2006. He has considered replacing it, but is frustrated at the lack of options available to him. “I’m not willing to go through the difficulty of replacing our core software, just to achieve a marginal improvement,” he points out.
John describes what he is experiencing as a “PoS crisis”. He posits that independent jewelers are stuck with a cottage industry of jewelry-specific technology providers, none of which meet his expectations. “Whatever I am buying for my business, I always expect best-in-class,” he says. “My customers won’t settle for anything less, and neither will I, yet this is one area where I feel stuck.”
Shared Pain
It is not just John who feels this way; across the US, other jewelry businesses share similar frustrations. Sam and Mary*, who sell high-end jewelry and leading brands from two stores in Florida, describe their Point of Sale system as a “necessary evil”. Anne*, a jeweler from New York who has transitioned through four PoS systems in 15 years, is less accepting of the lack of options in the jewelry industry. She says: “We just can’t seem to get it right. It shouldn’t be this hard.”
How did we get here?
For starters, the jewelry business is one of the most complex industries that has ever existed from a software perspective. With different metals, purities, diamond grades, finger sizes and pull sizes, the products don’t fit neatly into any model that works well for other industries. This complexity has created two powerful forces that, running in parallel over many years, have left us with the so-called PoS crisis: specialist needs and sector-specific solutions.
Specialist Needs
The complexity of jewelry products led to the emergence of specialist software firms. Typically, these have been spin-offs from software coded for an individual business, resulting in the unfortunate reality that these companies are often run by jewelry professionals rather than software experts. This explains why jewelry-specific PoS software has evolved comparatively little over time. It is also why they remain typically difficult to use, poorly supported and expensive by comparison to products from larger software providers. Consider how much you spend on Shopify per year versus your PoS… which is easier to use and maintain?
Frequently, these jewelry-specific providers have not invested in modernizing their offer. As such, their customers – all of whom will have benefited from the switch to cloud in their personal lives, such as on their smartphones – have been denied the efficiencies that cloud software could have enabled for their businesses. Many still face large fees for system ‘upgrades’; something unheard of in cloud systems, where it has become the norm that paying customers will automatically have access to the latest generation of the software.
This raises the question of why bigger, better software players haven’t swept these firms out of the way if they are truly so unsuited to running software companies. And the answer has to do with scale.
One size does not fit all
The best software companies are almost universally backed by venture capitalists. These companies tend to build software to address the largest possible market. In order to succeed across diverse categories, this means their products, by definition, must be generalist rather than specialist solutions. While the jewelry industry might be large in terms of retail value, it is dominated by a relatively small number of firms. Therefore, it does not represent an economically viable target for software businesses with subscription-based pricing models, to consider modifying their generalist products in order to accommodate a specialist sector.
In medicine, there is a name for diseases that are complex to tackle and that affect a small number of patients: orphan disease. Such diseases do not tend to attract private sector interest, and, as such, the research around and treatment of these diseases has not moved forward in decades.
Similarly, the jewelry industry has been an orphan industry in software terms. This is the underlying explanation for the PoS crisis that John describes. As he says: “We are a small business competing against more powerful, better-resourced competitors. I play golf with small business owners from other industries and they seem to have access to high-quality, well-supported and, frankly, better-value software. I feel like the evolution of software has passed our industry by. Surely, we deserve a level playing field.”
The good news for John is that solutions are now evolving to a point where finally some options are on the table for his business.
*Names have been changed to protect the anonymity of our sources.