• Ellen Pace

Vendor vs. Custom POS System: What Point of Sale is Suitable for Your Business?

Updated: Dec 22, 2021

Point of Sale software: Vendor vs. Custom

Recently, I discussed the eternal question "What Point of Sale is better: vendor or custom?" with my colleague. He's convinced that the last one is more powerful. It's flexible, highly scalable, can be configured in any manner, etc. Meanwhile, retailers, HoReCa representatives, and other businesses prefer POS software as a service like Shopify, TouchBistro, and Lightspeed.


Today I decided to dot the I's and define a winner in this struggle. Below you will find all the data about vendor & custom POSs that companies should analyze before a purchase.


Is a POS System the Same for All Businesses?


POS is a set of software and equipment that conducts settlement operations, provides tax information transferring, and performs several other functions depending on each business type.


For example, a grocery retail Point of Sale is measured with the above features. Here, POS is just a convenient place for quick customer service.


In non-food retail, a system covers significantly more procedures and can be rightfully considered as the store management point. It's able to track goods and run the majority of processes on the sales floor.


Even within the same industry, POS performs different tasks.


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How Do POS System Providers Design Supplier and Custom Products?


There are two ways to get the Point of Sale software: to buy a subscription to an existing solution or order a product development from scratch. In the first case, we are talking about a Vendor POS; in the second case - about a Custom one.


Vendors can develop both solutions. A vendor or a supplier is a separate, outsource company that provides software development services for its clients.


If a supplier creates a versatile POS solution for a specific business niche, like hotels, it's a Vendor Point of Sale. Vivid examples of such solutions can be Microsoft, SAP, Oracle products.


But if a customer contacts the supplier company directly with a request to design POS software, the result will be considered a Custom system. A vendor will work on a software package for only one customer, assessing its needs and business processes. In other words, the main target of such a Point of Sale is to solve a particular company's issues. Along with an outsourcing company, any client's internal IT team can design and maintain a POS solely.


Thus, the vendor Point of Sale is a system designed on the developer initiative for business industries. This solution operates on a subscription basis. While custom POS is developed for a particular company and considers only its features.


Custom-Made And Vendor POS Systems: Pros and Cons


Each of the systems is efficient in its own way and suits its audience. However, some of their disadvantages are best considered before purchasing, as they can significantly affect the POS further usage. But the benefits first.


Businesses should pay attention to a Vendor POS system because of its:


Reliability. Especially when it comes to large vendors' products. They ensure impeccable data safety and fast system operation.


Availability. Subscribing to a SaaS product is significantly cheaper than development from scratch.


Speed. A company can start using the digital product right away, while custom POS designing can take months.


Scalability. A system can process a countless number of users' requests every second, doing it without crashing.

Vendor POS Systems

On the other hand, the Vendor POS system has several cons, including:


Vendor-lock & dependency. A user will not adjust the software to fit its business or update components - the supplier does it all. Even when a supplier is ready to change a software following a subscriber's order, it might be too expensive.


General approach. A vendor cannot consider each specific company's wishes. It analyzes the needs of its audience as a whole and develops something average. This product isn't always suitable for industries with dynamic market conditions.


Unreliable vendor. The system should contain & provide high-quality components, functions performance, and data safety. If the supplier can't ensure it all, better to stop using its services.


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Among the primary advantages of the Сustom Point of Sale system, it's worth highlighting the following:


Individual approach. A POS is developed for a certain company, considering its strengths and weaknesses. Thus, it will always work more efficiently than the Vendor counterpart.


Flexibility & independence. Companies have an opportunity to update the software components as soon as the need arises, especially when the solution was designed on an open-source platform basis.


Multifunctionality. These Point of Sale systems can be hybrid, in other words - they can perform functions and use components specific to different types of Point of Sale.

Custom POS Systems

Some of the main disadvantages of a Custom POS are:


Higher cost. The Custom POS development cycle consists of a few stages: an analysis of the current customer's situation, development itself, testing, and maintenance. All of them need significant investment and impact on product value.


Time-consuming. The development phase can take much more time compared with Vendor software implementation. The time frame depends on certain business features and process complexity.


What’s the Best POS Solution: the Choice Between the Custom and Vendor One


Probably you’ve already noticed huge distinctions between the Vendor and Custom POS systems.


In the first case, the development result is less flexible. It's designed for a wide range of users and considers the general audience's needs.


In the second case, the POS system is designed based on specific customer analysis. It's used within one company and allows updating the system when the user needs it.


Point of Sale for Small & Mid-Sized Businesses


Based on its features, the Vendor system is more suitable for chains of restaurants or cafes, bars, and family hotels that have a standard set of processes and simple requirements for the POS software. HoReCa industry has and uses a variety of Vendor solutions. It's because many hotels or restaurants successfully operate without a chain creation. They need convenient, low-cost products that run smoothly and quickly to implement. Small shops also buy a Vendor POS because they have no issues that this system cannot cover.


Who Chooses Which Type of POS

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Point of Sale for Big Players


HoReCa: A large business has completely different needs. Here chains of restaurants, hotels, shops, and gas stations mostly use Custom POS systems. It's hard to manage processes within a sizable system if the software wasn't designed for its scale. Based on it, restaurants and hotels order development from scratch for keeping track of products and assets more efficiently.


Retail: Retailers buy customized software to control the activities of all stores around the world equally well. The retail market is so dynamic. It requires adaptability and quickly responding to the surrounding business environment. The Custom Point of Sale system allows it an opportunity to make improvements.


Fuel Stations: Since POS performs almost all functions related to equipment and process control in gas stations, this industry especially needs versatile software solutions. In this case, Point of Sale should handle a convenience store, a fuel supply, cars refueling process, tax reporting, etc. Therefore, for gas stations, Custom systems are the most suitable solution.


The Bottom Line


Choosing between a Vendor or Custom POS system, a company should focus on its business niche, the scale of its activities, priorities for today, and the main goals for the future. In this case, it's easier for management to determine what solution will be the most efficient in a particular case.


Still have questions? Drop us a line and receive advice on what POS will suit your business.

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