From Cash Register to Competitive Advantage: The POS as MVP
September 19, 2019
Today, point of sale (POS) systems are hot shots compared to those of just a few years ago. Once relegated strictly to tasting rooms and back office functions to simply transact purchases, smart POS systems now have the power to maximize marketing potential. Oracle Systems’ POS tagline sums it up: from “Point of Sale to Point of Service.”
POS systems have become the onramp to a dazzling display of digital marketing opportunities by enabling tasting room staff to customize pitches, empowering marketers to kickstart automated follow-up email marketing, and revving up club managers who can turbocharge wine club conversions and increase average orders.
More advanced POS products have also enabled a new wave of integrated systems, creating dynamic, personalized websites that offer more customer-centric, Amazon-like e-commerce experiences—something wine marketers have wanted for decades.
More than 40 vendors in the winery POS space today serve an estimated 6,300 wineries producing more than 1,000 cases a year. Experts estimate wineries spend more than $7.5 million per year on their POS systems, a figure based on multiplying the number of wineries by a minimum monthly payment of $100 a month, for $1,200 a year. [Keep in mind that larger wine companies with more brands, consumers and locations will likely pay much more.]
What’s Changed in POS Technology
Once solely a standalone solution, the POS systems now available on the market range from baseline, POS-only products, such as Square and Quickbooks POS, to fully integrated product families, such as the offerings from industry leaders, WineDirect (1,200 winery customers), Orderport (700 wineries) and VinSuite (500 wineries), among others. New companies like Bloom, TruviCommerce and Commerce7 are pushing the envelope, bringing new capabilities to wineries across the spectrum.
While systems can be installed to run locally, most of today’s popular programs are cloud-based (online). Mobile has almost become standard. Wherever they reside, POS systems can stream data to centralized repositories where everyone at the winery can access them.
POS systems now act like an amplified caller ID—they display tasting room employees an incredible amount of customer information, from purchasing histories and in-house customer notations. Mobile systems also free tasting room staff to conduct more tableside activities, increasing the amount of attention guests receive—with the goal of upping sales and wine club conversion rates.
Most importantly, the data that POS systems collect is no longer static—employees can pull figures at the end of the day to see sales performance. Today’s POS data is dynamic. It moves—into reporting and analysis dashboards to provide near real-time feedback to everyone who needs to see the numbers—making it far more valuable and actionable. Data flows.
Determining the Right Platform for Your Operation
To former Quickbooks executive Ridgely Evers, who owns and runs DaVero Farms & Winery in Sebastopol, as well as Captina, an integrated direct-to-consumer software solution for wineries, the key question is whether to look for a standalone POS solution or an integrated system?
“You have to start with the problem that the customer [the winery] is trying to solve,” Evers said. “This goes back to a classic software question in the industry: do I want to find the best-of-breed solution in each category or go with an integrated product?”
Computer users may recall this as the difference between the Windows/Microsoft world and the Apple/Macintosh world. The former was devoted to uncoupling software and hardware while the latter focused solely on marrying the hardware and software together to promote ease-of-use for customers. The split still persists today.
Evers said wineries, which are essentially small businesses, should go for the integrated solution: If wineries get the software decision right, the world of interconnected data that has long been a source of competitive advantage in the greater world of e-commerce can open the gates to growth.
Winery-specific software has traditionally lagged behind other industries in delivering both data and the seamless online and bricks and mortar experiences for two reasons. First, the market for this software is fairly niche in size (more than $7.5 million with roughly 6,300 potential customers). Second, the wine industry niche has regulatory requirements to comply with.
And yet, one could say the period from 2018 to 2019 was a banner year in which the industry’s software vendors matured and new, innovative players launched next-generation solutions and capabilities.
Need to be able to channel food sales separately in your POS? Check. Need to enable customers to tip sales staff with their tasting room wine purchase (and thereby increasing staff pay and retention)? Check. Need to parse different tax rates in a single transaction for wine consumed onsite versus wine shipped to the customer’s home in another state? Check.
Despite the fact that the pool of potential buyers is small and the burden of regulation large,
these and many other wish-list features have become a reality as a diverse spectrum of POS systems have proliferated to meet wineries’ growing needs.
In response to piecemeal systems, most winery software vendors today are migrating their product lines to a fully inclusive suite of solutions that help wineries capitalize on their data with the goal of integrating data into databases that can pro-actively help employees sell more efficiently. They also document activities and create reports that meet the needs of finance, operations and marketing departments.
To do this, the software must provide a suite that offers a minimum of three essential products: POS, wine club and e-commerce softwares.
“Back in the day, winery software companies would specialize in one or two, but not all three types of software,” said Jeff Carroll, product management director at Avalara, a leading provider of automated tax compliance software. “You would see companies like AMS and VinNOW and Microworks that would have a point-of-sale system plus wine club but not e-commerce. And then you would see other companies like eWinery Solutions, which is now
VinSUITE, or Vin65 which is now WineDirect that would have e-commerce and wine club, but not point-of-sale.”
Evers sees the market moving toward integrated solutions as a plus for wineries. “The software decision is incredibly important because you are talking about the operating system for your business,” said Evers, whose career in Silicon Valley at Intuit launched one of the world’s most popular small business accounting packages.
“What it really comes down to is what are your competencies in your organization and where do you want to use your energy?” Evers said. “If you're going to do best of breed, then you’re the one responsible for the integration and interoperability. The vast majority of solutions in the wine industry are for best of breed in a category: You've got a point-of-sale problem, you've got a club management problem, you've got a shipping problem, you've got a reservations problem.”
But that leads to customer self-service, or picking and choosing individual platforms, a model he discourages wineries from pursuing. “The winery owner needs one vendor to be held accountable when data doesn’t integrate or problems arise,” he said.
While Evers is not bullish on e-commerce as a growth path, Carroll said that e-commerce is the future because, as he sees it, growth opportunities for wineries are shifting.
“Wineries have been able to get basically free growth over the last 14 years, maybe even 20 years, where new states keep getting added to the [DTC shipping} mix,” Carroll said. “But now that is almost over. Wineries need to start getting better at the marketing piece of it and compete in order to sustain that growth and therefore be a little bit more sophisticated in terms of marketing. For POS, it’s not just about checking out—it’s also about capturing customers' contact information and marketing to them in the future.”
“Generally, wineries are behind the curve but are catching up. Customer segmentation is going to become important. E-commerce will become more of a business driver,” he added.
POS Pain Points and Opportunities
In 2019, the winery POS category falls into three main market segments:
1. Wineries with a standalone POS
2. Wineries with an integrated suite
3. Early adopters looking for more powerful marketing innovations
The early adopters are making a bet on developing an e-commerce strategy as their emerging growth frontier and are looking for more powerful marketing innovations. They’re willing to buy into platforms that provide personalized e-commerce.
However, wineries across the board struggle with ease-of-use of these systems for their employees.
For some, when it comes to choosing systems, conflicts arise between departments, raising thorny issues about whose needs come first: finance (traditionally the heavyweight stakeholder in POS) or marketing (the department charged with club sales and e-commerce forays). New styles of coordination, collaboration and teamwork are sometimes needed, experts say.
Liz Mercer, Bluxome Street Winery general manager and WISE Academy instructor and content developer, has helped dozens of wineries make software buying decisions. In the span of her 18 years in direct-to-consumer wine marketing, she’s used many of the leading POS systems—including Microworks, eCellar, Vin65, VinSUITE and OrderPort.
“There are two big frustrations today wineries face with POS systems: reporting and providing an integrated guest experience,” she said. “The issue with reporting is getting enough complexity without massaging a lot of data. Secondly, wineries face challenges in providing an integrated experience for guests across the tasting room and purchasing.”
Continue reading this article in the August 2019 Wine Business Monthly starting on page 122
See a panel focused on POS systems during the upcoming Wine Industry Technology Symposium