Case Study: The Benefits of Running a POS System in the Cloud

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When David Steingard began researching point-of-sale systems to use at Laughing Man, the New York City coffee shop he founded with the actor Hugh Jackman in 2011, he was surprised at how expensive checkout terminals had become. Rather than paying $15,000 to $30,000 for a traditional POS system, Steingard opted to go with ShopKeep, a mobile system that runs on the iPad. Steingard says cloud-based POS systems are cheaper, faster, and easier than traditional checkout terminals, and ShopKeep in particular offers a number of reporting and inventory control tools that competing products don’t provide.

What makes Laughing Man different from other coffee shops?
What makes Laughing Man different is that we’re part of a business model where we incubate companies that can be successful on their own and are half-owned by Laughing Man Worldwide, which is our philanthropic end. One hundred-percent of profits from Laughing Man Worldwide go back into incubating new companies, giving to education, and giving to other programs abroad. So, we’re part of a new social business model. At the same time, we have amazing coffee that can compete with any of the other specialty coffee shops.

Where did your interest in using ShopKeep as your point-of-sale system come from?
Just an Internet search on various POS systems. We have a very small space, so we needed something that was as minimal as possible. We needed something that obviously was affordable, but had enough robust inventory features. It really came down to — there was ShopKeep, there was Square, and there were a couple of other things. But ShopKeep was the only one that fit this great niche of having enough reporting and inventory control, and a really good interface for a shop that wasn’t just scanning on an iPhone. Square just didn’t have enough of the robust features we needed, so that’s how we ended up going with [ShopKeep].

How do you use the inventory control features at Laughing Man?
There’s a back office that you get into through your portal on the Internet for adding inventory, pricing, tracking inventory, and [generating] reports on sales and the percentages of sales. It’s just a very easy interface. Then, when you go to use the iPad app, it’s all loaded up there and ready to go. The functioning between the printer receipt and the cash drawer and the iPad is fantastic. The cash drawer is wireless, so you just hit [the button] and it opens. I’ve even taken this thing to conferences and other one-off events, and it worked immediately. It’s portable. That’s the kind of thing people would use Square for, but I’ve found [ShopKeep] just as effective. Additionally, I love the company. I only know David [Olk, co-founder of ShopKeep] because he randomly came into the shop and I found out who he was. But the customer service is great. When you call them, they pick up and answer.

What is the benefit of going cloud-based in your POS system, versus traditional POS systems?
It’s cheaper. Your traditional POS system will cost $15,000 or $30,000, and that’s why it’s a bizarre thing. There’s Square, there’s ShopKeep, there’s a couple of other things, and then it jumps to full-on terminals that you run supermarkets on. So certainly in the cloud I don’t need a server; I don’t need anything. The major advantage to using the cloud with anything is usually going to be the cost structure of it.

How do the costs work with ShopKeep?
You pay a monthly fee and then you pay your transactions through your merchant account, which they have nothing to do with. I think they work with more [merchant accounts] now than they did, but you can work with anybody.

Are there any particular features with ShopKeep that make it especially useful for you and your staff?
For us what’s nice is you can categorize items. What that means is, when you go to the iPad, you can swipe through the screens. So let’s say I have all my coffee drinks, then I also sell packaged coffee. I can swipe the [coffee drinks] screen and then I can get to all the packaged coffee. I can then swipe and I get all the [coffee brewing] gear. It allows you to very clearly identify the sections of things you’re going to sell, and then obviously find the item within that, instead of just a big, long list that you’ve got to run down. I just think the application is also just beautifully designed, as far as the interface. It’s very easy to use and easy to adjust on the back end. I think that’s something user-friendly-wise that’s really good.

What makes the iPad superior to the iPhone or other handheld devices when it comes to processing in-store transactions?
To me, it’s faster. I’ve never used the iPhone for a POS, but the iPad is just the right size screen. I can have multiple buttons on there; it’s clear; I don’t have to squint; I don’t have to hold it. It’s just much more user-friendly and faster, from my experience in a shop. It can stand there; you can push a button. Although the iPhone is smaller, I would think it would be a bit more cumbersome to find the [product] and push the right button. For travel, maybe it’s good. But like I said, I’ve traveled with this and used it as a POS, and it works phenomenally. So I think it’s a matter of if you have a tiny book, or if you have a book that’s a little easier to read.

Do customers know you’re using anything other than a traditional POS system? Do they interact with the ShopKeep app in any way?
There’s a swiper on the side [of the iPad], and a few people a day are like, “Oh, that’s so cool. What is that?” Some people mention Square and things like that, but everybody is intrigued by just how elegant and simple it is. You would think they would know that there must be something like this out there, but they’re all blown away that the iPad can work as such a good POS system.

Do you use any of the CRM tools that ShopKeep offers for marketing?
We haven’t explored that much, no. Right now we use MailChimp for our email outreach. But at this stage, the truth is we don’t do much of that anyway. We’ve only been open five months, and we haven’t really done a robust mailing or anything like that. So we haven’t really used many of those features.

Stephanie Miles is an associate editor at Street Fight. This interview has been edited for length and clarity.

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Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.