What are the costs associated with the digitalization of points of sale?

What are the costs associated with the digitalization of points of sale?

From highly innovative cutting-edge technologies such as augmented reality, to the “simple” collection of data that, once analyzed, can increase your conversions, here is an overview of the solutions and the cost of these solutions.

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What are the main investments to be planned to digitize a point of sale?

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• Technological infrastructure :
  • Hardware : The purchase of equipment such as interactive kiosks, staff tablets, IoT sensors, RFID tags, and NFC-enabled payment terminals represents a significant initial cost. Depending on the scale of the project, these costs can vary considerably.
  • Softwares : Software costs include point of sale (POS) management systems, inventory management software, CRM solutions, e-commerce platforms, and data analysis tools. This software may require annual licenses or subscriptions.
    

• Development and Integration :
  • Personalized Development : If the point of sale requires custom software solutions, development can be a significant expense. This includes customizing CRM systems, e-commerce platforms, and integrating these systems to work together seamlessly.
  • Systems integration : Integrating online and in-store systems, especially for inventory management and ERP, can lead to additional development and integration costs.

• Staff Training :
  • Training and Support : Employees need to be trained to use new digital tools, which may involve initial training costs as well as continuing education programs to adapt to technological updates.

• Maintenance and Support :
  • Technological maintenance : Maintaining technology infrastructures, including software updates, hardware repair or replacement, and technical support, requires ongoing resources.
  • Data Security : Setting up and maintaining cybersecurity measures to protect customer data and digital systems are also recurring costs to be expected.

• Digital Marketing and Communication :
  • Application and Web Site Development : If a point of sale offers mobile applications or online services, the development, maintenance, and updating of these platforms represent an investment.
  • Digital Marketing Campaigns : Campaigns to promote new digital functionalities, whether via newsletters, social networks, or online advertising, must be budgeted.

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How to assess the return on investment (ROI) of digitalization?

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• Key Performance Metrics (KPI) :
  • Increase in sales : One of the most direct indicators is the increase in store sales as a result of digitalization. This includes additional sales generated by personalized recommendations, online tools, or improved customer experiences.
  • Productivity improvement : The time saved by employees by automating certain tasks (inventory management, restocking, etc.) can be measured and translated into financial gains.
  • Conversion rate : Analyze the impact of digital tools on the conversion rate, in particular by observing the increase in the number of customers who finalize their purchase after using tools such as interactive terminals or mobile applications.
  • Customer Loyalty : The number of recurring customers or the increase in the average customer lifespan (CLV) can indicate a positive ROI, especially if these metrics increase following the introduction of digital loyalty programs.

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• Cost reduction :
  • Inventory Optimization : Measure the savings achieved through better inventory management, for example, the reduction of overstocks and stockouts.
  • Reduction in Operational Expenses : Compare operational costs before and after digitalization, taking into account savings in labor, energy (for example, through connected lighting or air conditioning systems), and reduced human errors.

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• Customer Feedback :
  • NPS (Net Promoter Score) : The NPS can provide indications on the improvement of customer satisfaction following digitalization. An increase in NPS after the introduction of digital technologies may indicate a positive ROI.

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• Return on Investment Time :
  • ROI calculation : Use the formula ROI = (Net Benefits of Digitalization - Total Cost of Digitalization)/Total Cost of Digitalization to obtain a percentage indicating the profitability of the investment. The time needed to reach a positive ROI (breakeven point) is also crucial in assessing the viability of the investment.

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Are there solutions to digitize points of sale at a lower cost?

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• SaaS and Cloud Solutions :
  • Software in SaaS mode : Software as a service (SaaS) allows retail outlets to access advanced technological solutions without high initial costs. Tools like Shopify for e-commerce, Square for POS, or HubSpot for CRM, are accessible through monthly subscriptions, reducing initial costs.

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• Flow management and data collection solutions :
  • Solutions like Technis that can connect to data collection technologies that are already installed, or that can equip you, upload your data into a single platform and analyze this data. Learn more

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• Second Hand Equipment or Reuse :some text
  • Reconditioned equipment : Buying refurbished payment terminals, tablets, or screens can reduce costs. In addition, reusing existing devices by adapting them for new technologies is an economical option.

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• Open Source Solutions :
  • Open source software : Using open source solutions for inventory management, CRMs, or e-commerce platforms can reduce software costs, although it may require a bit more internal resources to customize and maintain them.

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• Partnerships and Grants :
  • Technological partnerships : Collaborating with technology companies to test their new solutions in stores can offer discounts or free access to certain technologies.
  • Government Grants and Aids : Many governments offer grants or tax credits to help businesses adopt digital technologies. Finding and exploiting these opportunities can significantly reduce digitalization costs.

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• Progressive deployment :
  • Digitalization by stages : Rather than digitizing all aspects of a point of sale simultaneously, a gradual approach allows costs to be spread over a longer period of time, while evaluating the return on investment at each stage.

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Conclusion

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Digitizing retail outlets requires significant initial investments in technology, training, and maintenance, but the potential benefits, particularly in terms of increased sales, reduced costs, and improved customer experiences, may justify these expenses. By adopting cost-effective solutions like SaaS software, refurbished hardware, and by deploying digitalization in stages, retailers can minimize costs while maximizing return on investment.

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