March 28, 2001, 12:00 AM

Making the Connection

(Page 3 of 4)

It’s not just the full-functional POS checkout devices that are allowing retailers to perform new and interesting web-based transactions. The payment-only terminal is finding new life as a connection to the web. Food.com, for instance, is promoting a system whereby customers can send carry-out or delivery orders to restaurants or make reservations using the restaurant’s VeriFone credit card terminal.

 

 

E-food to go

 

 

Food.com expects a pilot test of the system will not happen until later this year. Food.com already has 12,000 restaurants participating in its fax program and about half are candidates to convert to an electronic system once the technology and the process prove themselves says Karen Orton Katz, senior vice president, sales and marketing for Food.com. Here’s how it will work: A customer at the Food.com site sends an order by e-mail to the restaurant, which receives it on its VeriFone terminal. The terminal emits a special tone when an order comes in. The restaurant employee reviews the order and accepts it or rejects it. The restaurant can make the accept/reject decision on each item, so if something is sold out, the restaurant can tell the customer right away.

 

Once the order has been reviewed and approved, the terminal can send the order to the kitchen over the restaurant’s internal food-ordering computer system. The restaurant then sends a verifying e-mail back to the customer.

 

Orders coming to restaurants in the fax program are 20% higher than the average ticket and 80% of the customers are incremental business for the restaurant, Orton Katz says. An additional benefit that a restaurant gains is the e-mail address of the customer, which the restaurant can use for future promotions. A chain restaurant would pay $2,000 per restaurant to license the software and $79 per location each month to participate in the program.

 

The dining-out market is finite and Orton Katz believes that once a few chains move market share, others will come quickly into this program. “There’s a follow-the-leader mentality in this market,” she says. “Once we get some high-visibility testers, the others will follow.”

 

 

The hurdles

 

 

VeriFone, Hypercom and the other vendors of payment terminals would all like to see the terminals put to additional use, since it would allow them to raise the price on terminals that have greater functionality than terminals today. But there are a couple of barriers to achieving that goal. For one thing, merchants don’t like anyone to mess around with their payment terminals. And for another, the terminals generally don’t contain very fast modems. “If you want to innovate, you’ve got just about every barrier you can think of stacked against you,” says Stuart Taylor, director of emerging markets and business development for VeriFone.

 

That’s not stopping VeriFone from pushing forward with new uses for its terminals. It is promoting a system with Perks.com whereby sales clerks are rewarded for various activities with points. The POS terminal would use a web connection to send the points a clerk earns with each sale to a central data repository. The program has yet to sign up a retailer.

 

Like VeriFone, Hypercom is developing advanced uses for the payment terminal, but has yet to find any takers. Among its planned offerings are e-receipts, whereby the customer would receive an electronic receipt via e-mail and the merchant would store the receipt electronically. Hypercom is also looking at ways to enable terminals to print marketing messages on receipts, with graphics and coupons. And it is looking at ways to allow the terminal’s screens to display electronic marketing messages to customers.

 

Down the road, Hypercom is considering linking a web store to a physical store so that when an order comes in to the web store, the order is sent to the Hypercom terminal so store personnel can fulfill the order. And it’s looking at employee time and attendance functions. “We want to be able to assure every merchant that the terminal has earned its right to be on the countertop,” says Nick Logan, president of epicNetz division of Hypercom.

 

While everyone enthuses about the marketing possibilities that tying systems together makes possible, the realities of the current economy are playing just as big a role in focusing retailers’ attention on this issue. “In a retreating economy, retailers are returning to the fundamentals and looking to maximize their investment,” says Greg Bandler, vice president of marketing for Triversity, a software and systems developer that ties point-of-sale applications with customer service applications. “They are tying their systems all together in a logical fashion.”

 

In fact, The Shoe Company, a Canadian retailer with a chain of stores and a web site, is using the Triversity system not only for customer service and marketing applications, such as coordinating marketing campaigns and its loyalty program across channels, but also for integrating transaction processing systems into one platform, which the company says reduces costs.

 

 

Reducing the confusion

 

 

There also are other behind-the-scenes ways in which retailers can use POS systems integrated to the web. For instance, new sales associates could access a web-enabled POS system for training, says Fujitsu’s Paschal. Although the company has no takers yet on the idea, Paschal foresees sales clerks taking an assessment test on the POS terminal, having a central system analyze the clerk’s strengths and weaknesses, then recommend training and deliver the program to the point of sale. “The average sales associate lasts six months and they spend the first month probably confusing more customers than they help,” he says. “We think this system could reduce that to two weeks.”

 

By no means are all retailers sold on the benefits of web connection. Some retailers, according to LakeWest Group, “openly wondered why anyone would want to give Internet access to store personnel.” And some fear being the leaders in the web-connection movemenet.

 

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