ShopKeep Leverages iPad to Disrupt Point-of-Sale System Incumbents

7/3/12Follow @jpruth

The way retailers handle purchases is changing rapidly because of electronic payments, New York-based ShopKeep is betting it can help push this evolution even further. The so-called point of sale is no longer limited to traditional cash registers built around PC-based hardware and software. Companies such as startup Own Point of Sale in San Francisco and point-of-sale giant NCR offer software to process sales transactions on tablet devices.

The idea seems to be getting more traction in the industry as retailers replace their old registers with iPads to process sales. ShopKeep wants to position its technology to make retailers lives easier at lower costs. Many retailers today use point-of-sale platforms based on the old-school Windows XP operating system that’s specially configured to have touch screen monitors, says Jason Richelson, CEO and co-founder of three-and-a-half-year-old ShopKeep, Such units can cost about $3,000 each by his estimates. He believes drastic changes lie ahead in terms of the technology that retailers want. “A huge upheaval is going to happen over the next three years in the point-of-sale space,” he says.

Given the costs of traditional systems, Richelson sees a place for his company to offer retailers a less expensive option on comparatively lower priced tablets. The ShopKeep platform is used by small and midsize retailers, he says, as well as larger companies.

Investors including Tribeca Venture Partners, TTV Capital, and Contour Venture Partners are backing ShopKeep’s plans to disrupt the POS scene.. In January, ShopKeep announced it raised $2.2 million in a Series A round.

Richelson says his company is generating its own revenue and expects to be break even on cash flow within the next year. “We’re getting close to paying our bills” he says.

ShopKeep offers two main types of software. The management platform runs in the cloud and is accessible through the Apple iPad, Google Android-based tablets, and other Web-enabled devices. Retailers can use this software to oversee inventory and other store-related data via the Web.

The technology gets a bit more specialized when it comes to handling sales transactions. Small businesses—many have just one or two stores—that sign up with ShopKeep must use an iPad app if they want to conduct transactions with the platform. The iPad can be mounted on a counter much like a traditional register. ShopKeep sells iPads packaged with additional equipment such credit card readers to charge consumers. Richelson says ShopKeep largely supports the iPad because of the device’s widespread adoption among small businesses.

A Java version of ShopKeep’s sales software exists for Android tablets but he says that platform is only available for larger, enterprise customers.

Richelson is not alone seeing tablets as a potential future for point of sale systems. Square in San Francisco for example makes a credit card reader that functions with Apple iOS and Android devices. Square also offers an iPad app for processing sales.

Embracing new types of electronic payments is part of ShopKeep’s long-term strategy. At select coffee shops, ShopKeep’s software is set up to accept payments from customers who want to use their PayPal accounts. The platform may expand to include electronic payments from such services as Dwolla and LevelUp, Richelson says.

ShopKeep’s roots extend to a wine store he opened in 2004 called The Greene Grape in the Fort Greene section of Brooklyn. Some of the challenges he faced as a retailer inspired the creation of ShopKeep. “I was having trouble with [computer] servers in several of my stores where they kept crashing,” Richelson says. Fixing those databases himself became a hassle. He also wanted a way to monitor his stores’ sales from his home office. “I could not easily see what was going on each store,” he says. “That’s not the way things work in today’s world.”

Back in 2008, he looked for cloud-based point-of-sale systems to resolve his dilemma, but he did not find anything that fit his needs. That inspired the development of ShopKeep. Early funding for ShopKeep came from the stores. Richelson has since handed over the reins for The Greene Grape stores to a partner.

ShopKeep has a staff of 30 and plans to add up to 15 more hires, thanks in part to its latest funding. The company also moved into a 4,300-square-foot office on Broad Street at the end of June compared with the 2,100 square feet of space it previously occupied within the same building. Richelson says he plans to stay in the space at least one year while hiring more staff. He expects his company to continue growing as retailers adopt new technology. “Tablets will be replacing those [point of sale systems] over the next three to five years,” he says.

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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