Powerful cloud-based POS service winning a huge world-wide customer base, 11,000 in 80 countries. Andrew Patterson talks to founder Vaughan Rowsell

By Andrew Patterson

Picking up a coffee recently, I was intrigued to observe the complete sales transaction being recorded on an iPad mounted on a simple stand.

Curious, I asked the café owner how it worked.

“Simple” she said. “It’s a cloud based point of sale system and it’s the best thing to have happened to this business since we installed it.”

Welcome to the latest revolution in cloud computing.

Winner of the Service Product of the Year category at this year’s annual Hi-Tech Awards, Auckland based company Vend is the latest SAS (service as a software) business to disrupt the traditional retail sales paradigm.

With over 11,000 registered accounts in more than 80 countries, the company already processes more than 1 million transactions a month.

Its cloud based software enables retailers and other businesses to accept payments, track customers, manage inventory, provide loyalty incentive programmes as well as run business analytics for real-time insights into their business performance from literally anywhere.

Creating a new paradigm for business software

What also makes it attractive to business owners is that it’s highly scalable from one store to hundreds and is designed to be run on a web browser or tablets such as the ipad; much like internet banking.

Traditionally larger retailers, by virtue of their scale, have had the advantage of being able to use more sophisticated software products to analyse and track their sales and inventory. What Vend has successful done is level the playing field by providing smaller retailers and business owners with a range of tools more powerful and intuitive than those run by many of their larger competitors; at a fraction of the cost.

Vend CEO and founder Vaughan Rowsell says it wasn’t so much a “light bulb moment” that led to the idea for the product, but more an observation there was clearly a gap in the market waiting to be filled.

“It was a few years back, right at the peak of the global financial crisis. I was taking the opportunity to have a look around the marketplace. I've always been a software guy and a huge user of the cloud and a passionate believer in what cloud computing can bring to businesses. But this was like three years ago, before the cloud was the cloud we know today.”

“I'd been observing what Rod [Drury] had been doing with Xero, and a few other companies around the world, like Zendesk and others, and saw how they were reinventing industries such as accounting, helpdesk software, customer relations management (CRM) systems, and I really wanted to get in on that space.”

“So I had a look around and, without looking too far, I saw that retail was suffering from really, really bad software. It was all closed, expensive, old-school type software. What started out as more of a hobby project, that itch you want to scratch, eventually gained momentum and I began to wonder if you could create a product that actually moved bricks and mortar retail.

“Obviously e-commerce has been online almost as long as the internet has been around but I was looking to create that next step in the process that seemed to be missing.”

Delivering value for customers

According to Rowsell, the reaction from customers who were given an early prototype of Vend’s point of sale software was overwhelming.

"How much do you want for this?" and "Where have you been for the last five years?" were typical of some of the comments Vend received encouraging him to push the project to the next level.

While convenience was a popular feature, it was also cost and functionality that had significant appeal for retailers trying to contain their costs.

“For a small retailer, establishing a point-of-sale system can often run into thousands of dollars. That's a huge capital outlay at a time when you have multiple spending demands being placed on you and obviously that money is generally better used elsewhere, like on staff or promotion. One of the real benefits of SAS and cloud-based computing is you can take that old model and deliver it on a monthly pay-as-you-go type basis.”

‘However, once you've got them on the cloud and using a cloud based product, there’s also other appealing benefits such as the store owners being able to go home and do their end of day reporting and getting ready for the next day without having to stay behind and do it on the spot.”

“Integration with e-commerce is another big benefit. Up until now they've had to manage their e-commerce system separate from their in-store inventory and point-of-sale system, and so they were managing these two different platforms. What we’ve done is bring those two platforms together.”

“Interconnectivity is one of the core benefits of cloud computing so you start using one cloud App and then you use two, you can connect the two of them together and then you start building out your entire business suite of tools that you use, all on the cloud and all really highly accessible.

Getting the technology out of the way

Vend is almost minimalist in the way it operates. It’s one of the company’s core beliefs that in retail you need to get the technology out of the way. Apple stores internationally have become something of a new benchmark for minimalist design and layout where there is no obvious checkout. You don't queue to make your purchase instead the transaction can be completed from literally where you stand in the store. Roswell believes this is a trend we’ll see more of in the future.

“We’re starting to see savvier retailers now using devices such as the iPad as the checkout. And because it's a portable device not only you can walk around with your customers in-store checking them out as they go, but you're also using it as a discovery device you can also look up product information and things like that on the spot which really improves efficiency.”

“You can see the iPad is really starting to revolutionize retail. But iPads aside, we built Vend to work on any computing device that a retailer could use, because there's a wave of them. You've got Android tablets, iPads, Macs, PCs. Just simplifying the whole process to get them up and running quickly so they can literally grab their MacBook, fire it up, and they can be up and running with cloud computing software in a matter of minutes is very appealing.”

“They don't need software or IT people coming in, plugging things in; they can do it all themselves. It’s that democratization, giving the control to the store owners so they can choose what technology that they want to use, they can set it up, and then they can run it that’s an important selling feature.”

Flexibility is key

Making the product easily scalable has also offered smaller retailers, in particular, flexibility that has been difficult to obtain without committing to significant cost outlays.

“One of the biggest challenges we found for retailers is going from one store to many stores, because then they have to replicate everything. For their data systems, typically it's meant that they've had to go through really costly exercises to connect their stores up and pull all that data together and then they've had to manage each store individually. Whereas by putting them all on the cloud, when a retailer wants to open a new store, it takes just a couple of clicks and they can be up and running. And this just blows people away. It means retailers can now take up opportunities to do pop-up stores, or go to a conference and set up a stall there, and all they need to do is grab an iPad and turn up and they're in business. It just makes it that simple.”

Security issues

There’s one big issue that looms large in people’s minds. Many remain concerned about the security of cloud computing. The idea that someone else has access to your data is probably the one aspect of cloud computing that many business owners and individuals find off putting. Rowsell believes that’s changing.

“Initially it’s fair to say there was a lot of fear of the unknown. People were not sure how secure cloud computing would be, but what they've discovered, particularly over the last year or so, is that using a cloud provider like us or like Xero or people who are in the business, their data is actually safer as well as being retrievable. So they're moving from a server out the back of the business which holds all of their data, which they never back up - despite having the best intentions to do so - to using a sophisticated cloud based platform where we look after the data for them.

“To an extent, the security question has kind of melted away. We find people are less worried about how secure the data is; they’re more focused on how they get to their data when they need to and being able to access it from multiple platforms.

However, Vend says it has built extensive back end systems to ensure it honors its obligations to ensure data security and integrity.

“We're entrusted with customer’s data, so we've got to make sure we're taking good care of it. For instance, we do hourly backups of the data just in case something goes wrong as well as maintaining robust systems to ensure that nobody else can get access to our customer's data. Payment security in also very important so we partner with people who know their stuff in this space. We've got a global partnership with PayPal, with their in-store payment technology, DPS in New Zealand, Hiero in Australia, and so on.

“We’ve also found that many retailers can be very lax with maintaining appropriate security for credit card data. It's a huge liability for most retailers, keeping customer data, and in our experience most don’t do it very well.”

“Simply moving to a platform like Vend, where we abstract all of that away from them, they don't need to worry about PCI compliance on their network, it just makes it a lot easier and it also ends up being much safer.”

Cross collaboration pays big dividends

Cross-collaboration with Xero is also paying dividends for both companies by effectively co-creating value for each entity.

“That's something you can do in the cloud. So we're big fans of Xero and Xero are big fans of us. We're both Kiwi companies so we have that connection as well, but we also do the same with offshore companies as well. Same with Paypal, we've got a global strategic partnership with them as well as Shopify, based out of Canada and others. You don't need to have formal agreement in place, often it just evolves.”

“Basically we just sat down and said: Hey, we like what Xero is doing, we like what Shopify is doing, and they like what we're doing. Let's look at the opportunities of where we can collaborate and share customers. If you're sharing customers and you're providing win-win opportunities for customers then that's really where the benefit exists.”

“You don't need to get tied up in six months of negotiating commercial terms to get an agreement in place. Remember, this is cloud based software. It's open. It's really easy to connect. People think in a similar space. So just go out and build amazing stuff and give it to customers, and then customers will reward you in return.”

“I’m convinced this presents a real opportunity for New Zealand. Cloud computing could be New Zealand's Nokia. So it's super exciting. I don't know what we need to do to encourage it, other than just keep blazing that trail and showing the way.

A vision for NZ Inc software – lets collectively kick arse!

Rowsell is adamant that the opportunities from this point are almost unlimited.

“I really encourage other companies to get on board the cloud train and start thinking more in this space."

"I keep saying, at Xero and Vend we're both developing really strong ecosystems around our products. It's about building beautiful platforms. So there's an opportunity for New Zealand to build a suite of businesses creating platforms that cloud-enable businesses. So Xero is taking really good care of the small business accounting space. We're taking really good care of the retail point of sale space. We want to see other verticals, other cloud based platforms, taking care of similar verticals in business as well. Then, by teaming together and combining forces, we can be this huge Voltron thing that goes stomping around the globe and really kicking cloud arse as they say!”

“I don't know exactly what the mechanics are to make that happen, other than just having really inspirational stories told often enough that effectively sends the message: hey dude, you can do this too."

“YouTube was started by two guys in a garage in the U.S; same with Twitter; same with every recent successful software start-up out of the U.S. The only thing common between them was that they all began life in the U.S. There's nothing stopping the same sort of stories happening out of New Zealand, nothing. There's absolutely no sane reason why it couldn't happen here, other than aspiration and just going for it.”

IPO potential

How likely is it that we’ll eventually see Vend listing on the NZX in due course?

“You'd be surprised how often I get asked that question. It’s a possibility. We’ve just raised $8 million of new funding, which will help us get to the next stage of our evolution as well as enabling us to continue to grow our teams, and grow our presence in markets offshore. So that's going to keep us pretty busy for the next 12 to 18 months, and then we'll probably re-evaluate it then.”

Who else is willing to step up and be the next disrupter?