Whom Should RSPA Hire for Their CEO? It Depends How Honest They Are.

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On Saturday morning, tomorrow, in an air conditioned room in Las Vegas, RSPA’s board will sit down with a consulting firm to discuss their search for a new CEO. The hire will be critical, as RSPA again finds itself atop an industry writhing in discomfort.

Not long ago did the RSPA take up its new name, the Retail Solutions Providers Association. Prior, RSPA existed as the ICRDA (Independent Cash Register Dealers Association). In 2005 the association merged with the SDA (Systems Dealer Association), keeping a tight focus on the reseller channel. As the industry evolved, and technology become more important, new opportunities sprouted in the merchant ecosystem and RSPA adjusted its scope accordingly:

We are the only association connecting the Point of Sale technology ecosystem. Our members include resellers, distributors, hardware manufacturers, software developers, consultants and service providers who bring retail technology solutions to the marketplace.

It’s been 12 years since RSPA officially rebranded, but the industry is more different now than it’s ever been.

While the ICRDA and SDA conveniently held the word “dealer” in their titles, they existed in an era that was pre-internet and thus dependent on dealers. The only way for customers to discover and support their clunky cash register purchases back then was through local representatives.

Fast forward.

In 2009 Square launched and proved that the internet, 20 years after its debut, could finally be leveraged in brick and mortar. With little more than a robust marketing program, Square has accumulated over 3 million users and is on pace to hit revenues of $2B annually.

Square did not use dealers. Square handles all support in-house. And Square, because of its access to merchant data, created (or partnered to create) new merchant products that bolster its own revenue, including a loan business that has originated more than $1B in capital since inception.

What Square successfully built on its way to IPO is inarguably occurring across the broader brick and mortar ecosystem. Dealers, who once held a monopoly on merchant POS systems, are finding themselves standing on ground that’s crumbling beneath them.

RSPA needs to take these macro industry trends into account when making its important hiring decision. As an industry association that exists to serve its members, RSPA needs to be aware that its membership today might not be its membership tomorrow.

Why do we say this?

Mercury Payments showed POS dealers they could make serious money by referring or selling payment processing. This was in 2001. Yet there are a non-trivial number of dealers out there that still haven’t figured this out. In fact, RSPA’s RetailNow show this year includes at least two sessions dedicated to this topic. Despite the decline of traditional POS dealer revenues, there are dealers who are not yet on the more lucrative payments bandwagon. The dealers that haven’t figured this out aren’t ever going to figure it out.

But that doesn’t even begin to touch on the larger trend: too many of today’s dealers are complacent. They’re doing the minimum amount of work possible and become legitimately confused when a customer purchases a POS system online directly. Seriously? You’re hemorrhaging money as your hardware, software and service revenues fall but you won’t do anything to change it? You don’t keep in constant contact with your customers and won’t put in the effort to solve their business problems? No matter how hard it tries, RSPA is not going to improve this level of dealer indolence either.

RSPA’s board needs to answer these questions honestly:

  1. Is hardware getting easier to buy, or harder?
  2. Is software getting cheaper and faster to build, or more expensive and slower?
  3. Are systems getting more reliable, or less reliable?
  4. Does the internet make transparency and communication better, or worse?

Where would we recommend RSPA’s board look when thinking of the future?

Last year we observed that RetailNow had more payments presence than ever before. This should no longer be surprising. In the ICRDA days dealers positioned themselves as experts in POS (technically cash registers) with great support. And since merchants couldn’t turn elsewhere to buy or service a POS, they had to take a dealer’s word for it.

Now POS has become sufficiently commoditized that it can be sold by anyone. The quality of the POS hardware and software has only gone up, meaning that support is less of a concern. While payments people get the bad wrap for being sales minions and little else, that might be all that matters insomuch as the initial POS sale is concerned. Support can be punted to HQ or, if needed, to on-demand local support providers (who are cheaper because they’ve shed the overhead of a stand-alone dealership). When payments companies are spending tens of millions of dollars buying POS assets, it’s hard to see any other future playing out – they literally control the POS channels now.

As transaction data moves to cloud, an entirely new ecosystem will evolve. Like the move from cash registers to POS, the move from local server to cloud will bring even more players into the fold, including behemoths Amazon, Facebook, Google and Microsoft and a bevy of fledgling companies.

Forest fires are healthy. They clear the way for new saplings and replenish the soil. The market is going to push out shitty dealers, which is a good thing: RSPA shouldn’t support dealers that don’t want to be here.

As far as RSPA is concerned, it needs to take an honest view for where this industry is going. RSPA must recognize when to cull its losses and move on, or the association will be swept up in the forest fire itself. You cannot fight the market.
Hire wisely.
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