We’ve been really hammering on this idea that technology and the internet is significantly disrupting brick and mortar. Yes, brick and mortar is about 20 years late to the party, but you cannot escape innovation forever.
One of the biggest beneficiaries of this innovation is the merchant, who is able to get higher quality solutions at lower prices than have previously been available. On the other side of that equation are those who refuse to change business models. In our world we’ve noted that the POS reseller is probably the first casualty. A simple graphic explaining what’s happening to core POS revenues can be found below.
No matter what evidence we bring to bear there are those who simply refuse to acknowledge these trends. These are resellers still trying their old tricks of pushing overpriced hardware (when a merchant can just as easily find the same hardware on Amazon), overcharging for service contracts (even though newer POS systems are much more stable), and otherwise refusing to learn new skills that make them valuable.
Where these casualties are first showing up is downmarket, where cheap merchants are buying POS systems directly from the POS manufacturer and setting the systems up themselves.
“But a merchant will never be able to set a POS system up by themselves!”
Oh really?
On Square’s latest earnings call Jack Dorsey, Square’s founder, said something that should worry the hell out of resellers – at least those that serve smaller merchants or don’t want to learn how to become a business advisor.
Jack noted that 60 percent of Square for Restaurants sellers have installed the technology on their own, which is, “rather unusual for the industry. Typically, restaurants go to the point-of-sale provider, and they need help to set everything up.”
Boom goes the dynamite.
We would have guessed these merchants were sub-$250,000 type merchants, but apparently they’re much larger.
“For businesses that use Square for Restaurant, the average annualized gross payment volume stands at more than $650,000, which demonstrates that the product is resonating with larger sellers.”
If you’re wondering what it’s like being right all the time we’ll tell you it’s pretty lonely. At least in brick and mortar.
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