It wan’t long ago that Tablets were supposed to be taking over the Cash Register. Why have an expensive piece of dedicated hardware when you could have commodity hardware and just cycle through the best “point of sale’ apps? This was the future hinted at by Urban Outfitters when it made an announcement about moving its stores to iPad-based POS systems back in 2012.
But that future didn’t really arrive, even though companies like Square have attempted to eat into the lower end of retail sales with POS applications.
Many startups have failed in this area because while they can build an app for users to pay or redeem discounts, they can’t get it integrated with the POS. They build for users but not for retailers. This creates too many problems for the retailers, and usually doesn’t link into the old-fashioned stock systems.
UK Startup Shopwave (not the US firm of the same name) thinks it’s come up with the answer. To do this it’s raised a previously undisclosed angel round of £340,000 through Crowdcube and joined the Telefonica-backed Wayra accelerator. But it hopes that it’s lightweight model of offering a very cheap POS app which covers all the bases of the average retailer will bring in plenty of revenues to keep it going.
Founders Ben Brown and Julian Polzella have history in this space. They were at VouChaCha, the mobile voucher startup which was acquired alongside Markcomedia for £55m by Monetise.
Through that experience they learned that every time people had to redeem a voucher from the app, the voucher could not be easily integrated with the POS or had to be manually entered. So they decided to build Shopwave, not to go head to head with startups but with the incumbents POS players.
Instead, they plan to go after national retailers in an attempt to have their platform trickle down to smaller businesses. This is the opposite of the Square approach, which is to attack from the bottom up.
The biggest players in the POS space so far are Micros (which was acquired by Oracle) and NCR. Together they have 70% market share. To attack the incumbents, Shopwave will process payments via all the existing incumbents (iZettle, Veriphone, FirstData etc).
In the UK no national retailer has yet jumped to the iPad, but a small number in the US have. The fast-growing coffee chain Timberyard UK has taken on Shopwave, along with Street Kitchen, and 67 other UK retailers.
The incumbents are fighting back. So far, Micros has created an Android Tablet POS, but this is sold and marketed as a dedicated device at a hefty mark-up.
However, Shopwave is not just a till on an iPad. It’s hoping to build out an entire platform.
It’s hoping its open platform will allow developers to build new and unique apps via their API, which is up and running now.
For instance, you could build loyalty apps, or a “same coffee as usual” app, or a wallet app etc.
Shopwave’s business model consists of a flat per-terminal-per-month fee, or a combination of the Point of Sale app plus a slice of payment processing fees. Down the line, it could take an Apple-style revenue share from the apps built for the platform.
Of course, this would eventually turn into a very simple model: Giving away the POS app for free and simply booking revenues from payments processing and the apps for the platform. But that’s a ways off.
So if Urban Outfitters hasn’t thought of looking at this startup yet, it probably should now.