Retail is getting more complex by the day. As customers expect to shop seamlessly across stores, social media, and online, many retailers find themselves juggling multiple systems just to keep up. The result? Rising costs, inventory headaches, and frustrated customers.

Leading brands are taking a different approach. Instead of connecting more systems, they're simplifying their operations with modern retail platforms that naturally bring everything together. The results are new business growth opportunities thanks to lower costs, faster growth, and happier customers.

We'll break down how successful retailers are optimizing their operations—from unifying their data to streamlining fulfillment—and show you how to do the same.

Table of contents

What is retail optimization?

Retail optimization helps businesses run more efficiently, improve the customer experience, and boost profitability through data-driven strategies and technology. It focuses on fine-tuning inventory management, pricing, store layouts, and sales channels. By using analytics, automation, and integrated systems, retailers can cut costs, make smarter decisions, and drive more sales.

The retail optimization framework

We know retail optimization is key to staying ahead, but what does it actually mean? What do you need to do to make sure your operations are sorted and that you’re delivering a consistent experience? Here’s a four-part framework to guide you through the process.

Unified data foundation

A unified data foundation is the backbone of retail optimization. Without it, retailers struggle with disconnected systems, incomplete insights, and operational inefficiencies. Siloed data across online and physical stores makes it harder to track inventory, understand customer behavior, and make informed decisions.

Bringing everything into a single source of truth changes that. With a centralized system (like Shopify), businesses can improve forecasting, fulfill orders faster, and deliver a more personalized shopping experience—creating the efficiency and agility needed to grow.

In fact, retailers using Shopify’s unified commerce solution experience up to 150% omnichannel GMV growth quarterly on average because their sales, inventory, and customer interactions sync smoothly across all channels.

The future of retail: why unified commerce is no longer optional

New research shows businesses using unified commerce platforms like Shopify POS see 22% better total cost of ownership and 20% faster implementation. Learn what this means for your retail strategy.

\nGet the report\n

Technology infrastructure

A strong infrastructure connects every part of a retail business, making it easier to manage sales, inventory, and customer relationships—across all channels. The following tools are essential for smooth operations and data-driven decision-making:

\nPOS architecture: A point-of-sale system syncs online and retail transactions to provide a complete view of sales and customer interactions.
\nInventory control: A system that tracks stock levels across locations, preventing shortages and overstocking.
\nCRM platform: A tool that stores customer data and helps retailers personalize marketing and improve customer service
\nERP integration: Software that connects financial management, supply chain, and in-store operations.
\nAnalytics tools: Platforms that analyze sales trends, customer behavior, and operational performance to support smarter business decisions.

Channel optimization

Seventy-three percent of retail consumers use multiple channels to shop, according to Harvard Business Review. To keep up, retailers need to connect every touchpoint and create a unified shopping experience.

Here are some of the areas to optimize to strengthen customer engagement and keep the shopping journey smooth across digital and physical storefronts:

\nPhysical store layout and operations: Arrange displays strategically to highlight bestsellers, optimize store flow to reduce bottlenecks, and use interactive elements to engage shoppers.
\nDigital storefront and ecommerce: Improve site speed, simplify navigation, and optimize product pages with high-quality images, detailed descriptions, and customer reviews.
\nOmnichannel integration: Implement flexible fulfillment options like buy online, pick up in-store (BOPIS), enable in-store returns for online purchases, and use centralized inventory tracking to prevent stock issues.
\nMobile and social commerce: Optimize checkout for mobile devices, integrate social shopping features like Instagram and TikTok storefronts, and use targeted promotions to drive conversions.

Operational excellence

According to a 2023 McKinsey survey, organizations list efficiency as one of their top three priorities for the coming years. Achieving operational excellence involves creating systems and processes that consistently deliver value while minimizing waste.

Key areas to focus on include:

\nStaff productivity and training: Invest in ongoing training programs, equip employees with easy-to-use POS and CRM tools, and use performance data to identify coaching opportunities.
\nSupply chain efficiency: Automate inventory tracking, use demand forecasting to prevent stock shortages, and optimize warehouse and fulfillment workflows to speed up delivery times.
\nTechnology infrastructure: Implement integrated POS, inventory, and CRM systems to sync data across channels, streamline operations, and improve decision-making.
\nCost management: Identify cost-saving opportunities by analyzing spending patterns, negotiating better supplier terms, and reducing operational inefficiencies without sacrificing service quality.

💡Get inspired: Learn how Monos reduced POS training time to just half-day with Shopify.

Retail optimization examples

Retailers who invest in optimization see measurable results—from increased revenue to smoother operations and more customer satisfaction. The following four case studies show how brands have overcome common challenges and improved their business.

Venus Et Fleur

As Venus et Fleur expanded from ecommerce to physical retail, managing inventory across channels became a challenge—especially during peak seasons. The retailer also needed a way to unify customer data to create a more personalized shopping experience.

By integrating multiple sales channels onto Shopify’s unified platform, Venus et Fleur centralized inventory tracking, reduced checkout abandonment by 12% with a custom delivery date selection feature, and gave store associates real-time inventory visibility to improve upselling opportunities.

Venus et Fleur also saw a 10-15% year-over-year increase in ecommerce average order value, and Shop App customers spent 15% more per order than those shopping directly on the website. With a unified retail strategy in place, Venus et Fleur continues to scale while delivering the luxury shopping experience its customers expect.

BYLT Basics

After years of ecommerce growth, BYLT Basics saw an opportunity to expand into physical retail but needed a strategy that wouldn’t slow the business down. It had to balance inventory across locations, keep pricing consistent, and create a smooth experience for customers shopping both online and in-store.

Shopify’s unified commerce platform gave BLT the flexibility to scale while staying efficient. With Shopify POS, it connected inventory across stores and online, allowing staff to fulfill orders even when items weren’t available locally. It also used Shopify analytics to track performance and make smarter merchandising decisions.

BYLT saw seven profitable store openings in under a year, a 400% increase in women’s product sales, and 50% of direct-to-consumer conversions flowing through Shopify Payments. Its mobile app, powered by Tapcart, is another major revenue driver, accounting for 10% of total sales.

“Given recent growth within our omnichannel approach, it’s made us realize that we need to simplify our tech stack to what’s best fitting within our business,” says head of ecommerce Ryan Groh.

“We’ve put a strong focus into utilizing multiple Shopify solutions and consolidating within their stack as we continue to expand our channel offerings. It’s saved our team a tremendous amount of time, while we’ve been able to further develop our longstanding partnership with Shopify to the BYLT loyal online and in-person.”

Allbirds

Another brand that successfully optimized its retail operations is Allbirds. As it expanded its physical retail presence, inventory inefficiencies became a significant challenge. Stores carried full size runs for every shoe, requiring deep inventory purchases—even for styles that didn’t sell well at specific locations. Meanwhile, online sales were limited to warehouse stock, leading to frequent stockouts and lost sales.

To address these issues, Allbirds implemented Ship from Store on Shopify POS, allowing all 31 retail locations to fulfill online orders. This helped maximize inventory efficiency, reduce unnecessary warehouse shipments, and create a seamless omnichannel experience for customers.

Allbirds also boosted website conversion rates by making retail inventory available online, giving customers more purchasing options. It cut shipping and labor costs by reducing the number of products sent back to warehouses at the end of each season. In-store, employees could use downtime more efficiently by fulfilling online orders, increasing productivity without additional costs.

Mizzen+Main

Mizzen+Main expanded from a digital-native brand to a growing omnichannel retailer. As it opened stores, staff needed to unify customer data, manage inventory efficiently, and create a smooth shopping experience across channels.

With Shopify POS, Mizzen+Main connected online and in-store sales, giving staff access to customer purchase history, loyalty rewards, and real-time stock availability. Shopify’s integrations also helped refine customer engagement, using personalized messaging to re-engage shoppers and increase repeat purchases.

Retail revenue grew by 27% year-over-year, while online revenue increased by 15%. With connected inventory and promotions, the retailer improved order fulfillment and built stronger customer relationships. Shopify’s flexible infrastructure has allowed Mizzen+Main to scale without adding complexity.

“Shopify allows you to create a very large omnichannel business at a relatively low cost, and its ease of use really minimizes the burden on your team,” says its VP of ecommerce Natalie Shaddick.

Shopify POS offers 22% lower TCO

See how Shopify POS reduces retail operating costs and increases revenue better than the competition, based on real data and research conducted by an independent consulting firm.

\nGet the report\n

Retail optimization tools

It’s impossible to experience the results the retailers above experienced without investing in retail optimization tools. Here are some of the top tools to consider and their best features.

1. Shopify POS

Shopify POS is a complete retail solution that connects online and in-store sales, giving businesses full visibility and control over inventory, customers, and orders. By centralizing data in one place, Shopify helps retailers deliver a smooth shopping experience while simplifying store operations behind the scenes.

With Shopify POS, businesses can manage their entire retail environment from a single dashboard. Whether selling in a physical store, online, through social media, or at pop-up events, Shopify keeps everything in sync—helping retailers avoid stock issues, serve customers faster, and drive more sales across all channels.

Key features include:

\nSales channels integration: Centralizes sales, inventory, and customer data management in one platform—no matter where you sell.
\nInventory management: Syncs with your Shopify admin to track orders and stock across retail stores and online stores. This helps prevent overselling and stock discrepancies.
\nCustomer management: Stores customer profiles and purchase history, helping retailers personalize marketing efforts and improve customer service.
\nAnalytics and reporting: Provides sales data and performance insights through daily retail reports and advanced analytics.
\nFlexible shopping options: Supports in-store pickup, local delivery, and ship-to-home, which gives customers more ways to shop.

2. Stocky

Stocky is an inventory management tool built for Shopify that helps retailers make smarter purchasing decisions. It provides advanced forecasting, tracks stock levels, and simplifies purchase order management.

Key features include:

\nInventory forecasting: Predict stock needs based on sales trends, helping retailers maintain optimal inventory levels.
\nPurchase order management: Improve ordering by generating and tracking purchase orders directly within Shopify.
\nStock tracking: Monitor inventory across multiple locations. This reduces the risk of overstocking or stockouts.
\nSupplier insights: Find data on supplier performance, which helps businesses negotiate better terms and improve order accuracy.
\nReporting and analytics: Deliver insights on sales patterns and inventory turnover to support better purchasing decisions.

\"Stocky — Optimize inventory with the free Stocky app for Shopify POS.

3. Daasity

Daasity is a reporting and analytics platform that helps retailers centralize data across digital and physical sales channels. By consolidating insights from multiple sources, Daasity helps you track performance, optimize marketing spend, and make data-driven decisions to improve profitability.

Key features include:

\nUnified data view: Combine ecommerce, retail, and marketing data into a single dashboard.
\nCustomer analytics: Identify high-value customers and optimize acquisition strategies based on retention and lifetime value.
\nMarketing attribution: Track which channels drive the most conversions.
\nSales and inventory reporting: View insights on stock levels and sales trends to improve forecasting and product availability.
\nCustomizable reporting: Create custom reports with advanced filtering and segmentation.

4. Auror

Auror is a retail crime intelligence platform designed to help retailers reduce theft and improve the safety of retail stores. It streamlines crime reporting and fosters collaboration between retailers and law enforcement to address repeat offenders and organized retail crime.

Key features include:

\nIncident reporting: A user-friendly interface enables quick and detailed documentation of thefts and other incidents, making it easier for staff to report and share information.
\nInvestigations: Tools to build, manage, and track cases collaboratively. This helps resolve incidents more efficiently.
\nReports and dashboards: View insights into crime patterns and vulnerabilities of retail stores, which aids in strategic decision-making to prevent future incidents.
\nLicense plate recognition (LPR): Integrate LPR technology to identify vehicles associated with repeat offenders.
\nCollaboration with law enforcement: The tool facilitates secure information sharing between retailers and police.

5. Revionics

Revionics is a pricing optimization platform that helps retailers set competitive prices, maximize margins, and respond quickly to market changes. It uses AI-driven insights to support dynamic pricing, markdown strategies, and competitive analysis.

Key features include:

\nAI-powered price optimization: Use predictive analytics and business intelligence to recommend optimal pricing strategies that balance competitiveness and profitability.
\nMarkdown optimization: Determine the best timing and depth of markdowns to clear inventory without sacrificing too much margin.
\nCompetitive price monitoring: Track market trends and competitor pricing to adjust strategies in real-time.
\nPromotion planning: View data-driven insights to optimize discounts and promotions.
\nScenario modeling: Test different pricing strategies and forecast their impact before implementation.

Optimize your retail store operations with Shopify

With Shopify, retailers can optimize every aspect of their business—from inventory management and omnichannel sales to customer engagement and data-driven decision-making.

Shopify’s built-in tools for POS, ecommerce, analytics, and automation help businesses scale faster, adapt to market shifts, and create frictionless shopping experiences across online, in-store, and social channels.

What’s more, retailers using Shopify experience measurable results: a 150% average quarterly growth in omnichannel GMV, 22% lower total cost of ownership, and 8.9% higher annual sales. If you’re ready to simplify store operations and accelerate growth, Shopify is the platform built for you.

Instant demo: See Shopify POS in action

Discover how Shopify POS helps you manage in-store and online sales from one powerful platform.

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Retail optimization FAQ

What is store optimization?

Store optimization is the process of improving how retail stores operate to increase efficiency, boost sales, and create a better in-store and digital customer experience. It includes adjusting store layouts, improving inventory management, refining staffing strategies, and using data to make informed decisions about product placement and promotions. The goal is to make shopping more convenient and profitable while keeping store operations efficient.

What is retail price optimization?

Retail price optimization is the practice of setting prices based on data-driven insights to maximize revenue and profitability. Retailers analyze factors like demand, competitor pricing, customer behavior, and inventory levels to adjust prices dynamically. This helps balance profitability with customer satisfaction, preventing lost sales due to high prices or reduced margins from underpricing.

What is an example of optimization in the retail business process?

An example of retail optimization is using data to improve inventory management and customer satisfaction. A retailer might analyze sales trends to adjust stock levels, reducing overstock on slow-moving items and preventing shortages of popular products. Another example is implementing buy online, pick up in-store (BOPIS), which helps retailers meet customer demand faster while lowering shipping costs and increasing foot traffic.

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Many retailers bring in strong revenue but still struggle with thin margins, high overhead costs, or unpredictable expenses that eat into profits. The key to maintaining healthy margins lies in understanding the factors that drive profitability and analyzing them regularly.

A clear profitability analysis helps you understand where your money is going, which products and channels are driving the most value, and what factors can improve your bottom line.

In this guide, we’ll break down key profitability metrics, explain how to measure them, and explore the latest market trends that impact retail margins.

Table of contents

What is profitability in retail?

Profitability in retail measures how effectively a business turns revenue into profit after accounting for costs. There are three key types of profit margins that retailers use to evaluate their financial health: gross profit, operating profit, and net profit.

What is gross profit margin?

Gross profit margin shows how much revenue remains after covering the cost of goods sold (COGS). It’s calculated as:

\n $\"\"$ \n

For example, if a retailer sells $100,000 worth of goods and COGS is $60,000, the gross profit margin is 40%, meaning 40% of revenue is available to cover operating expenses and profit.

A retailer with a low gross profit margin might need to negotiate better supplier deals, adjust pricing, or introduce higher-margin products to improve profitability. So, a clothing store might start selling more in-house branded apparel instead of third-party brands to increase margins.

Note: While gross profit margin indicates how efficiently a retailer manages inventory and production costs, it doesn’t reflect the complete picture of profitability until considering operating and net margins.

What is operating profit margin?

Operating profit margin takes gross profit and subtracts expenses like rent, payroll, and marketing. The formula is:

\n $\"\"$ \n

This metric reflects how efficiently a retailer manages day-to-day operations. So, a business with high rent and labor costs may have a lower operating profit margin even with high gross profits.

For example, if a boutique in a prime shopping district sees rising rent costs, the owner might need to adjust pricing, renegotiate lease terms, or shift to an e-commerce model to maintain profitability.

What is net profit margin?

Net profit margin is the final measure of profitability, factoring in all expenses, including taxes and interest. It’s calculated as:

\n $\"\"$ \n

This number represents the actual percentage of revenue that turns into profit. Even if a retailer has a solid gross margin, high debt or rising operational costs can shrink the net margin.

For example, a retail chain expanding too quickly with multiple store openings may see strong sales but struggle with profitability if loan payments and operating expenses outpace revenue growth. In this case, slowing expansion or optimizing costs can help stabilize the bottom line.

Note: Net profit margins vary widely by industry. Apparel stores typically see net margins between 4-13%, while grocery stores often operate with net margins below 5% due to high volume and low pricing strategies.

Market shifts affecting retail profits

We gave some simple examples to show what profitability in retail is and how to calculate it, but the truth is it can get a lot more complicated than a simple equation for internal costs.

It’s also influenced by things like changing consumer expectations, technological advancements, and shifting business models. Three of the most significant factors impacting margins today are omnichannel shopping demand and third-party logistics (3PL) and “buy now, pay later” (BNPL) services.

Omnichannel expectations are driving up costs

While many retailers have achieved basic omnichannel capabilities, modern consumers expect more than just connected channels—they want truly seamless shopping experiences. This evolution is driving retailers to rethink their technology investments.

Traditional approaches often require multiple systems and complex integrations, leading to higher costs and operational complexity. However, Shopify takes a different approach as the only Commerce Operating System with natively unified ecommerce and POS solutions. According to research from a leading independent consulting firm, this architectural advantage delivers:

22% lower total cost of ownership
20% faster implementation times
Significant operational efficiencies through naturally connected retail operations

This unified approach enables retailers to deliver modern shopping experiences—like same-day pickup and personalized service—without the complexity and cost of maintaining multiple systems.

Shopify POS offers 22% lower TCO

See how Shopify POS reduces retail operating costs and increases revenue better than the competition, based on real data and research conducted by an independent consulting firm.

\nGet the report\n

The growing role of third-party logistics

Another factor affecting profitability is the increasing reliance on third-party logistics (3PL) providers. These services help retailers improve warehousing, fulfillment, and shipping—reducing the need for in-house storage and logistics teams.

While outsourcing logistics adds service fees, it also helps businesses scale faster, reach new markets, and improve delivery speed, which leads to higher customer satisfaction.

The adoption of buy now, pay later services

Similarly, buy now, pay later (BNPL) services like Shop Pay Installments and Afterpay offer flexible payment options that make purchasing more accessible to consumers. While retailers pay transaction fees, BNPL solutions often increase conversion rates, drive larger cart sizes, and attract customers who might otherwise abandon their purchase.

It’s also important to note that BNPL providers typically charge merchants fees ranging from 2-8% per transaction—often higher than standard credit card processing fees. Retailers should weigh these costs against the increase in average order value (AOV) and conversion rates to determine how BNPL is affecting profits.

Profitability metrics and KPIs

Now, let’s look at the key profitability metrics and KPIs that provide a clear picture of your retail store’s financial health. The top metrics to track include the following:

Foot traffic

Foot traffic measures the number of customers visiting your store—online and in person. Track it using in-store sensors, POS data, and online analytics tools like Google Analytics.

Nike is an excellent example of a retailer using in-store sensors to track and optimize foot traffic. At its flagship stores, Nike uses RFID and motion sensors to monitor customer movement, identifying which sections attract the most visitors and where shoppers spend the most time.

This data helps Nike adjust store layouts, place high-demand products in prime locations, and optimize staffing during peak hours. For example, if sensors show that customers frequently visit the running shoe section but don’t convert, Nike can adjust displays, add interactive product demos, or station employees nearby to assist shoppers.

Average Transaction Value (ATV)

ATV shows how much, on average, each customer spends per purchase. It’s calculated as:

\n $\"\"$ \n

A rising ATV indicates successful upselling and cross-selling strategies. Retailers can increase ATV by bundling products, offering incentives, or improving in-store, online, and smart merchandising.

Gross Margin Return on Investment (GMROI)

GMROI measures the profit a retailer makes for every dollar invested in inventory. You calculate GMROI like this:

\n $\"\"$ \n

A GMROI above 1 means you're selling inventory for more than its cost, while a lower number signals potential pricing or inventory management issues.

Customer Acquisition Costs (CAC)

CAC reveals how much a retailer spends to acquire a new customer. Here’s how to calculate CAC:

\n $\"\"$ \n

A low CAC means retailers don't have to spend much money to get new customers to buy from them. This helps stores make more profit since they're not wasting money on expensive marketing.

Customer Lifetime Value (CLV)

Customer lifetime value predicts how much revenue a retailer can expect from a customer over their entire relationship. It’s calculated as:

\n $\"\"$ \n

A high CLV means repeat customers are driving revenue, reducing the need for constant new customer acquisition. Loyalty programs and personalized marketing can help boost CLV.

Return Rate

Return rate measures the percentage of purchased items that customers send back. It’s calculated as:

\n $\"\"$ \n

A high return rate cuts into profits and may indicate quality issues, unclear product descriptions, or poor customer expectations. Reducing returns through better product visuals, detailed sizing charts, and clearer descriptions can help protect margins.

Tip: While that may seem like a lot of complicated math to track profitability metrics (and it kind of is, depending on how big your brand is and how many stores you have), there’s good news. With tools like Shopify Analytics and Shopify Reports, you don’t ever have to place your fingers on a calculator.

Shopify automatically tracks almost all of this data for you. You can access it by navigating to Analytics → Reports, where you’ll find key profitability insights.

Conduct a retail profitability check

We’ve covered the main profitability metrics you need to track, but none work in isolation. To get a clear picture of your bottom line, you need to analyze all revenue streams, costs, and losses together in a comprehensive profitability assessment. Here’s how to accomplish this:

SWOT Analysis 2.0

A SWOT (strengths, weaknesses, opportunities, and threats) analysis is a strategic tool for assessing business performance. A SWOT Analysis 2.0 takes it a step further. It’s a more modern, data-driven approach to the traditional framework.

Instead of relying on broad observations, SWOT 2.0 incorporates real-time business data—such as POS reports, online reviews, competitor pricing, and customer insights—to make more precise and actionable decisions.

By integrating sales trends, customer sentiment, and market intelligence, you can identify and respond proactively to emerging challenges and opportunities.

For example, instead of identifying “low foot traffic” as a weakness, you can analyze in-store data to determine peak hours, adjust marketing efforts, or optimize store layout to increase conversions.

Category and product-level profitability

Not all products contribute equally to your bottom line. This is where the 80/20 Rule (i.e., The Pareto Principle) comes into play. It states that 80% of a retailer’s revenue typically comes from 20% of its products. And identifying and prioritizing these high-performing items is key to growing your profits.

You can analyze category and product-level profitability by tracking gross margin, sell-through rate, and contribution margin for each item you sell. Products with high sales volume but low margins may require pricing adjustments, bundling strategies, or supplier negotiations, while slow-moving items may need promotions or discontinuation.

Sales channel analysis

While you may promote your products across all sales channels (to provide that cohesive omnichannel shopping experience), that doesn’t mean your sales numbers will be identical across TikTok, Facebook, your ecommerce site, and your store. In fact, they’ll vary widely.

This is where a sales channel analysis comes in handy. With the help of tools like Shopify Analytics, you can track profit metrics across various sales channels and compare them. Once you know which channels are performing best, you can decide where to invest more resources and which campaigns to cut loose.

The goal isn’t just to sell everywhere—it’s to sell strategically and where your customers spend the most with your brand. When you know which channels bring in the best customers at the highest margins, you can refine your strategy, optimize marketing spend, and grow your retail business efficiently.

Technology and retail profitability

If you’ve gotten this far, you may realize that tracking profitability isn’t a walk in the park—especially if left to your own devices.

Thankfully, with innovations in retail technology, you’re not on your own. The following tools make it easy to track all relevant metrics, capture the right data, and accurately understand what decisions you need to make to grow your business. Here are the top tools that will help you with your retail store profitability analysis and how they help:

Data analytics and AI

Predictive analytics, powered by AI, is an outstanding tool to help you manage your inventory. By looking at past sales, seasonal trends, and even things like weather or economic shifts, predictive AI helps you figure out exactly what you’ll need and when. This means you don’t have to worry about wasting money on overstocking or running out of your best sellers.

These tools also make pricing smarter. They pick up on patterns—how customers shop, what your competitors are doing, or when demand spikes—and adjust prices or promotions to keep your margins healthy. It’s like having a crystal ball for your business decisions, but it’s reliable.

POS and inventory management systems

Keeping track of inventory across multiple stores and online channels can get complicated fast. A real-time inventory system that syncs across all locations, provides advanced reporting, and integrates with multi-store operations makes it much easier to scale.

That’s where Shopify comes in. Unlike traditional POS systems that need multiple integrations to connect online and in-store sales, Shopify keeps everything in one place. Inventory tracking, staff management, and reporting all run on a single platform, so retailers can make faster, data-driven decisions without dealing with extra tools or workarounds.

Take Aviator Nation—a west coast apparel brand that previously struggled with disconnected systems for online and in-store operations. As the only platform with natively unified ecommerce and POS solutions, Shopify helped them transform their business operations and profitability.

“Adopting Shopify was a huge moment for Aviator Nation. If you look at our trajectory over the years, things really started to pick up after we migrated from disparate systems—Adobe Commerce and Lightspeed POS—to Shopify. With Shopify Plus, we have all the tools we need to provide a seamless omnichannel experience and serve more customers no matter where they shop with us,” says Curtis Ulrich, Director of Ecommerce.

Since unifying their operations with Shopify, the brand has seen 10% revenue growth, processes over 2,000 online orders monthly from retail store inventory, and provides improved customer service through unified purchase history and account information across all 18 locations.

Meet the point of sale for every sale

Only Shopify unifies your sales channels and gives you all the tools you need to manage your business, market to customers, and sell everywhere in one place — in store and online.

\nDiscover Shopify POS\n

Automation

Tracking profitability effectively means having real-time visibility into revenue, costs, and trends. Automation gives retailers this visibility and does it in a blink of an eye. Automated tracking reduces human error, surfaces key insights faster, and makes it easier to spot what’s working and not working.

Shopify Flow helps with this. This automation tool sets up workflows to track your profitability-related metrics without constant manual oversight.

For example, it can flag slow-moving inventory, trigger reorders for bestsellers before they run out, and tag high-value customers for personalized promotions. It can even detect unusual order activity to help prevent fraud and revenue loss.

The profitability paradox

The profitability paradox happens when trying to boost short-term profits ends up hurting long-term growth. Cutting costs or raising prices might improve margins for now, but if it leads to unhappy customers, lower retention, or operational struggles, it can actually make the business less profitable in the long run. Here are some examples of this in practice:

Customer experience vs. bottom line

Offering perks like free shipping, free returns, and same-day delivery makes customers happy, but they can eat into margins fast—especially for smaller retailers. Covering these costs without a plan can turn a profitable sale into a financial loss.

One way to recoup costs without killing customer experience is through subscription models or memberships. Retailers like Amazon Prime and Walmart+ offset free shipping and fast delivery costs by charging a recurring fee, turning convenience into a revenue stream.

Another option is offering premium tiers, where customers can pay for perks like faster shipping or hassle-free returns. Some brands also bake shipping costs into product pricing, making \"free\" shipping possible without cutting into profits.

Customer convenience

Consumers love convenience, but it doesn’t always have to be at the expense of you, the retailer. In fact, 77% of US consumers say convenience is a key factor when making purchasing decisions. And, some consumers are willing to pay up to 5% more, on average, for convenience, according to Michelle Weaver, Morgan Stanley’s U.S. Thematic Strategist.

That’s why some retailers charge modest fees for exclusive perks like curbside returns, home pickups, or expedited processing. These small charges help offset operational costs while still giving customers a VIP-like experience.

Another way to balance convenience with profitability is through buy now, pay later (BNPL) services. Retailers can negotiate better rates with BNPL providers based on sales volume or offset fees by offering BNPL only on higher-margin products. Some businesses also set a minimum purchase amount for BNPL to make sure it's driving profitable sales rather than eating into smaller transactions.

Dynamic pricing

Dynamic pricing—where product prices change based on demand, competitor pricing, or other factors—is a two-edged sword. While it helps retailers maximize margins and stay competitive, it can create customer trust issues if not handled carefully.

Shoppers today are savvy. If they see prices fluctuating too often or feel like they’re being charged more than others for the same product, they may lose confidence in the brand. This is especially true for essential goods or brands with loyal followings.

Retailers should test dynamic pricing in controlled scenarios—such as seasonal demand shifts or exclusive member pricing—to gauge customer response before widespread implementation.

Note: Some industries benefit more than others from dynamic pricing. For example, fashion, electronics, and travel commonly use dynamic pricing, but luxury and grocery brands often avoid frequent price changes to maintain brand consistency and customer trust.

Become a more profitable retailer with Shopify

Tracking and improving profitability doesn't have to be complicated. Unlike traditional retail systems that require complex integrations, Shopify's architectural advantage means all your data naturally flows through one system—giving you real-time insights into margins, sales trends, and performance metrics across your entire business.

Research from a leading independent consulting firm shows this approach helps retailers reduce total cost of ownership by 22% while enabling faster implementation and growth. Get started today with the only platform that natively unifies your retail operations.

The future of retail: why unified commerce is no longer optional

New research shows businesses using unified commerce platforms like Shopify POS see 22% better total cost of ownership and 20% faster implementation. Learn what this means for your retail strategy.

\nGet the report\n

\n\n

Retail store profitability analysis FAQ

How can we measure the profitability of a retail store?

Measure a retail store's profitability by tracking key financial metrics like gross profit margin, operating profit margin, and net profit margin. Use tools like Shopify Analytics or POS reports to monitor revenue, expenses, and inventory costs. Regularly reviewing these metrics helps retailers identify trends, optimize pricing, and improve overall profitability.

What is the profitability of a retail store?

Retail profitability refers to how much of a store’s revenue turns into profit after covering costs like inventory, rent, payroll, and marketing. It depends on factors like pricing strategy, product margins, and operational efficiency. Stores with high-margin products and controlled expenses tend to be more profitable.

What is a good profit margin for a retail store?

A good gross profit margin for retail typically falls between 30-50%, depending on the industry. Net profit margins are usually lower, ranging from 2-10%, with higher margins in luxury or specialty retail and lower margins in grocery and discount stores. A store’s business model, pricing strategy, and cost management play key roles in determining a healthy margin.

Is 40% a good profit margin?

A 40% gross profit margin is strong for most retail businesses, meaning the store keeps 40 cents of every dollar after covering inventory costs. However, true profitability depends on operating expenses and net margins. If overhead costs are high, even a 40% gross margin might not translate to strong net profits. Stores should track operating and net margins alongside gross margin to get a complete picture of profitability.

\n","Struggling with thin margins and rising costs? Learn how to conduct a retail profitability analysis to track key metrics, optimize pricing, and boost profits.","

Struggling with thin margins and rising costs? Learn how to conduct a retail profitability analysis to track key metrics, optimize pricing, and boost profits.

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The retail industry is at a technology crossroads. Some retailers continue to piece together disconnected systems and point solutions, while others are embracing unified commerce platforms that consolidate all retail operations into a single source of truth.

While maintaining separate systems might seem like the safe choice, research shows the opposite is true. According to a leading independent consulting firm, retailers who adopt unified commerce platforms—where POS and ecommerce share the same architecture and central data model—see significant improvements in operational efficiency, customer experience, and revenue growth.

As a leader in unified commerce, we keep a close eye on all retail technology trends. While Shopify focuses on providing a unified commerce foundation, many retailers also use complementary technologies to solve specific business needs.

From smart traffic analytics to IoT platforms, this guide explores the top retail solutions in 2025 that retailers are using to boost efficiency, reduce costs, and improve customer experience—starting with how a unified commerce foundation can maximize your technology investments.

Be ready for the future with Shopify

In the past few years, we’ve seen a wealth of ecommerce and retail software innovations. And while it seems challenging to keep up, here’s a secret: it’s not. That is, it’s not if you invest in the right tools.

Retail solutions like Shopify make it possible to adapt to change and drive growth that outpaces the competition. With Shopify’s unified platform, retailers don’t have to juggle fragmented solutions while trying to fill in the gaps. Instead, they can see all their customer data, inventory, and operations in one unified system.

The future of retail: why unified commerce is no longer optional

New research shows businesses using unified commerce platforms like Shopify POS see 22% better total cost of ownership and 20% faster implementation. Learn what this means for your retail strategy.

\nGet the report\n

Smart retail solutions FAQ

What is a smart retail system?

A smart retail system is a technology-driven platform integrating key retail functions into one unified solution. It combines tools like inventory management, point of sale (POS), customer relationship management (CRM), ecommerce, and analytics.

What does a retail solutions company do?

A retail solutions company provides technology and consulting services to help retailers improve operations, merchandising, and profitability. These companies offer smart retail technologies such as point-of-sale (POS) systems, inventory management software, CRM tools, and merchant analytics, which help reduce shrink loss and drive profit improvement.

How can smart retail solutions utilize sensor technology to improve the customer experience?

\nTracking foot traffic: Sensors monitor customer movement in stores, providing data that store supervisors and merchandisers use to optimize layouts and merchandising strategies.
\nPersonalized shopping: AI-powered retail sensors recognize loyal customers and trigger personalized offers, enhancing customer engagement.
\nInventory management: Sensors track stock levels, helping store teams prevent out-of-stock situations and reduce waste, which helps improve profits.
\nCheckout efficiency: Technologies like RFID tags and smart carts automate checkout processes, saving labor and reducing wait times.

","Discover the top 5 smart retail solutions for 2025. Learn how tools like Shopify’s unified platform can boost sales, streamline operations, and fuel growth.","

Discover the top 5 smart retail solutions for 2025. Learn how tools like Shopify’s unified platform can boost sales, streamline operations, and fuel growth.\n

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Learn about the top 10 card readers for small businesses, with pros, cons, and guidelines for choosing the best option.

When you’re out shopping and want to pay with your credit card—you insert, swipe, or tap your card on a small device. That piece of hardware is a credit card reader, which transmits your information to a payment processor and bank for approval.

While credit card readers may look similar at first glance, they can vary significantly in terms of functionality and cost. There are several considerations, including fees, features, connectivity, integrations, and compatibility, to take into account when deciding.

This article looks at the top 10 best card readers for small businesses, highlights which features credit card readers should have, and helps you pick the right one for your store.

The 10 best card readers for small businesses

\n\n\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n

Card Reader	Payment Processing Fees	Monthly Subscription	Hardware Costs
Shopify POS	2.7% + $0 (Basic plan) 2.4% + $0 (Advanced and Plus plans)	POS plans: From $5/month + processing fees Shopify monthly fee: From $32/month	Card reader hardware: From $49
Square	From 2.6% + 10¢ per transaction	None	Prices vary, starting at $59 to $799 Additional fees for add-on commerce services
Clover Flex	From 2.5% + 10¢ per transaction	Basic plan: $0 Premium plan upgrades: From $14.99/month	$649
PayPal Zettle	1.75% per transaction	None	One-time $29 hardware fee One-time $79 hardware fee for additional readers
Toast Go 2	From 2.49% + 15¢ per transaction	From $0	$494.10
Stripe Terminal	From 2.7% + 5¢ per transaction	None	From $59
Lightspeed	2.6% + 10¢ for card-present transactions 2.6% + 30¢ per keyed transaction	From $109/month	From $359
eHopper	Card present transactions: 2.5% + 10¢ per swipe, dip, or tap Online transactions: Interchange plus + 1% + 29¢ per transaction	Free basic plan; premium plans available	From $350
Aloha Cloud	Free plan: 2.95% processing + 15¢ per transaction Premium plan: 2.5% processing + 15¢ per transaction	Free plan: $0/month Premium: $170/month	Included in POS package
KORONA POS	No credit card processing agreements or fees—only flat fees	From $59/month per terminal	Hardware prices vary

\n\n
\n

Our methodology

We believe Shopify POS is the top choice for retailers due to its unified platform and robust features. But card readers aren’t one-size-fits-all, so we created this comparison to help you evaluate your options.

After reviewing various card readers based on features, pricing, payment methods, fees, integrations, and ease of use, we’ve compiled a list of the top 10 card readers that offer the most value, functionality, reliability, and versatility for retailers.

1. Shopify POS: Best for a unified retail experience

Shopify POS is more than one of the best small business credit and debit card readers on the market. It’s a fully integrated, customizable, omnichannel point-of-sale (POS) system that helps you manage transactions smoothly wherever you sell.

Shopify POS makes everything you need to run your retail business—no matter how big or small—easy to handle, from one place. When paired with a tablet, Shopify’s POS terminal lets merchants offer buyers a dedicated customer-facing display for checkouts in-store.

A portable Tap & Chip Card Reader is available for on-the-go selling, and supports major payment methods, including Visa, Mastercard, American Express, and digital wallets. Or, you can turn your smartphone into a card reader with Tap to Pay.

Shopify POS features

Omnichannel selling
Staff management
Unified customer profiles
Reporting and analytics
Smart inventory management
Unlimited products and variants
Shopify Payments
Built-in marketing tools
Intuitive and fast checkout
Various hardware choices\n

Pros

Reliable connectivity to support the completion of every transaction
Various card reader devices that accommodate every kind of small business
Fully integrated with Shopify’s online store for a unified commerce platform
Streamlined inventory management for every product across all stores
Strict security and full PCI compliance to protect cardholder data
24/7 support from Shopify’s team of dedicated retail specialists

Cons:

Features include robust ecommerce capabilities that brick-and-mortar-only retailers may not need

Pricing:

\nPOS plans start at $5/month + processing fees
\nCard reader hardware pricing starts at $49
\nShopify monthly fee required

2. Square

Square is a flexible and user-friendly platform that provides tailored product suites for restaurants, retail, and beauty.

It also offers simple solutions for selling anywhere and secure payment options: Square Reader for chip cards and contactless payments on the counter or on the go, and a reader for magstripe that comes in Type-C, Lightning, and 3.5 millimeter headset jack versions, depending on your device’s connection.

Square POS features

Flexible payments
Third-party integrations
Customer accounts
Inventory management
Offline payments
Reporting and insights
Multi-location management
Commerce tool add-ons (additional price)

Pros

Intuitive, user-friendly software
Multi-card reader for swipe, tap, and insert chip cards
Compatible with USB-C
Works with Windows, Mac, iOS, and Android
Quick and secure payment processing
Flexible hardware upgrades

Cons

Free card reader doesn’t accept contactless payments or chip cards
Must upgrade from the free reader to new hardware to scale
Additional commerce services aren’t included in the price

Pricing

Processing fees start at 2.6% + 10¢ per transaction
Hardware prices vary, starting at $10 per additional reader
Additional fees for add-on commerce services

3. Clover Flex

Clover Flex is a handheld wireless card reader with all the features of a full POS and flexible payment options. It’s a portable, sleek option for a mobile point-of-sale making it a nice choice for tableside transactions.

This small card reader is also suitable for those who sell in dynamic environments, including pop-up shops, farmers markets, and events. Clover also offers the Flex Pocket reader, which is lighter for portability and uses Type-C charging, but lacks a receipt printer.

Clover Flex POS features

100% wireless
6-inch LCD display
Flexible payments
Built-in receipt printer
Digital receipts
End-to-end encryption
1D/2D barcode scanner
WiFi & LTE connectivity

Pros

Small and portable for on-the-go transactions
Ready to go right out of the box
Accepts digital wallets

Cons

8-hour battery life
Only includes basic sales reports
Can’t create and categorize items on the basic plan

Pricing

Processing fees start at 2.6% + 10¢ per transaction
$40/month or $649 flat fee for hardware
Upgrades to premium plans available for additional fees
No monthly fee for the basic plan

4. PayPal Zettle

Zettle by PayPal offers two mobile card readers: the Zettle Payment Terminal and Zettle Card Reader 2. The payment terminal on-the-spot sales and seamless payments while the Zettle Card Reader 2 allows contactless payments by all major credit cards.

Both are portable and versatile, work for smaller business setups, and are quick and easy to set up. The biggest draws of Zettle are that it doesn’t require a contract and integrates with many POS systems.

Zettle features

Mobile card reader
Contactless payments
No monthly fee
Major cards accepted
Fast setup
PCI-certified security
Bluetooth connectivity
POS app integration
Secure payment processing

Pros

No contract needed
Contactless payments with Tap to Pay
Schedule transfers to your bank with no extra fee
Funds arrive within minutes of making a sale to your PayPal balance

Cons

Battery life is only 8 hours
No age-verification features
Only compatible with iOS and Android compatible
Simple card reader that doesn’t work well for larger retail operations

Pricing

Processing fees are 2.29% + 9¢
One-time $29 hardware fee
One-time $79 hardware fee for additional readers

5. Toast Go 2

Toast Go 2 is a card reader built specifically for restaurants. Its durability and functionality meet the demands of bustling restaurant environments, and it can be used for indoor payments, drive-throughs, and curbside services.

Toast supports contactless payments, including NFC and digital wallet transactions. It also integrates with other Toast commerce products and several essential restaurant industry tools.

Toast features

Mobile handheld POS
Contactless payments
Restaurant-grade durability
Fully integrated system
24-hour battery
Lightning-fast processing
Comfortable for long shifts
Multi-payment options
Unified platform integration

Pros

Free starter kit (1–2 terminals)
Long-lasting 24-hour battery life
Durable build, spill, dust, and drop-resistant
Easy-to-view touchscreen suitable for various lighting conditions
Free Toast Care support in all subscriptions 24/7/365 by phone or web messaging

Cons

Higher transaction fees
Only works for food services
Must upgrade to a paid plan for tools beyond basic credit card processing

Pricing

2.49% plus 15¢ per in-person transaction; 3.50% plus 15¢ per online transaction
Monthly fees start at $0

6. Stripe Terminal

Stripe Terminal is a mobile card reader built for Stripe online users who also want to accept payments in person. Stripe Terminal is highly customizable, but it’s also built with developers in mind. In other words, to get the full benefit of Stripe Terminal, you either need to know how to code or need to hire a developer.

Stripe Terminal features

Tap to Pay
Unified commerce
Customizable checkout
Customer personalization
Device-management tools
Multiple card reader options
Third-party integrations
API-integration
Stripe Payments and Connect integrations

Pros

Unified online and in-person payments for Stripe users
Supports contactless and NFC payments
Global scalability for business expansion
Compatible with multiple devices

Cons

Requires developer skills to access full benefits
Processing fees are higher than many of its competitors

Pricing

Hardware costs start at $59
Processing fees start at 2.7% + 5¢ per successful charge for domestic cards
No monthly fees for the Standard package
Additional fees for add-on services

7. Lightspeed

Lightspeed offers full POS hardware for retail, restaurants, and golf pro shops. Merchants can choose one of two credit card readers: a smart countertop reader that connects to Lightspeed Payments via the internet and Mobile Tap v2—a small, portable Bluetooth card reader, and one of the most compact on the market, at 40 grams.

Lightspeed features

Key-in card payments
Intelligent inventory management
Hardware integration
Loyalty programs
Flexible hardware
Ecommerce integrations
NuORDER integration

Pros

One-on-one onboarding
Dedicated account manager
Detailed inventory management tools
Battery can last a day of trading and support 800 NFC transactions and 1200 contact transactions on a single charge

Cons

Must upgrade to access advanced reporting
Deposits take two days after a sale
Hardware prices lack transparency

Pricing

Processing fees are 2.6% + 10¢ for card-present transactions
Processing fees are 2.6% + 30¢ per keyed transaction
POS plans start at $79 per month and $29 for each additional register
Hardware prices vary

8. eHopper

eHopper is well-suited for businesses looking to save on costly processing fees. It supports surcharging and cash discounting, which passes processing fees on to shoppers at checkout.

eHopper also offers a free, fully integrated Pax S300 payment terminal for processing in-store credit card payments and online orders. Grocers and retailers in specialty markets can benefit from eHopper as it offers features for managing and selling products by custom measurements and tracking perishable goods.

eHopper features

Large color touch screen and loudspeaker
Omnichannel capabilities
Surcharge and cash discount programs
Encryption security
Large memory capacity
EMV & PCI compliant

Pros

User-friendly interface
Allows selling products by custom weight
Can track perishable goods
Handles contactless, e-signature, magstripe, and EMV chip card transactions
Integrated payment processing

Cons

Free POS software and processing for US merchants only
Limited reporting and customization
Basic customer management functions
No iOS software compatibility

Pricing

Card present transactions: 2.5% + 10¢ per swipe, dip, or tap (processing fees should total at least $20 in a month)
Online transactions: Interchange plus + 1% + 29¢ per transaction
POS plans start at $14.99 per month per license
Hardware prices vary

9. Aloha Cloud

Aloha Cloud is an all-in-one cloud- and Android-based POS solution. It includes everything you need to accept and process payments securely via digital wallets, EMV cards, and more. It’s available as a monthly subscription that includes all software, hardware, services, and payments.

Aloha features

Fixed and handheld terminals
6-inch screen display
EMV and NFC technology to prevent fraud
Chargeback management
Reports, including deposits, ACH, chargebacks, and more
Built-in email marketing and loyalty tools

Pros

Next-day funding
Personalized onboarding
Accepts NFC and digital wallets
Handheld readers compatible with Verizon and T-Mobile SIM cards
Point-to-point encryption against data security threats

Cons

Android based
8- to 10-hour battery life
Subscription plans lock you into a three-year contract

Pricing

Free plan at $0 per month comes with a payment processing fee of 2.99% +15¢
Premium plan costs $170/month with a 2.5% + 15¢ processing fee

10. KORONA POS

KORONA POS is also a cloud-based solution that comes with EMV and contactless payment options and seamlessly integrates with various merchant services without disruption, so you can process transactions efficiently. It promises a 60-day money-back guarantee.

KORONA POS features

EMV and mobile payment solutions
Split and custom payments (for large transactions)
Cashier permissions and reports
Cash control to ensure everything is accounted for
Loyalty programs
Ecommerce integrations
Automatic inventory reordering
Cloud reporting and analytics with data backup for real-time access

Pros

Free trial available
Multi-location support
Accepts modern payment methods, like NFC with Android Pay and Apple Pay
Integrates with any payment processor of your choice
30-day money-back guarantee on hardware and 60-day money-back guarantee on software

Cons

No built-in payment processor
Hardware pricing isn’t transparent
Integrations offered as premium add-ons

Pricing

KORONA POS has no credit card processing agreements or fees, only flat fees.

Monthly subscriptions start at $59/month per terminal for the Core plan and $69/month for the Retail plan
Add-ons cost $10–$50 per month per terminal
Hardware prices vary

How to choose a card reader for your small business

As you research your business’s credit card processing needs, here is everything to consider.

1. Unified commerce functionality

The future of commerce is unified. According to a January 2025 report by an independent consulting firm, retailers using unified commerce platforms like Shopify POS achieve 22% lower total cost of ownership and 20% faster implementation time compared to other solutions.

That’s because Shopify integrates your front- and back-end operations in-store and online. That way, you can sell omnichannel and manage your inventory, customer data, sales, and payments in a single platform—no more relying on third-party APIs or software to sync your ecommerce platform and POS system.

When you run your business with Shopify POS’s unified system, you can:

Streamline your workflow
Boost operational efficiency and revenue
Get real-time data visibility for better decision-making
Make the customer shopping experience seamless and consistent across all touchpoints

Luxury clothing brand Derek Rose struggled with a fragmented payment and inventory system that caused stock errors, didn’t integrate with its ERP software, and lacked a unified customer view. This made it difficult for the brand to optimize the customer experience and marketing efforts.

“Prior to Shopify, the reality was there were very few native omnichannel solutions,” says Sacha Rose, CEO of Derek Rose. “We needed an approach that worked seamlessly between our online and offline channels, and Shopify was able to provide that.”

The retailer chose Shopify POS because of its ability to sync real-time data between its physical and online stores in a single platform. This allowed it to provide a smooth omnichannel shopping experience and streamline payments, inventory management, and customer experience across all channels.

Shopify POS’s intuitive interface and integrated payment processing improved the brand’s efficiency, reduced friction at checkout, and ensured a consistent experience for their customers.

2. Reliability and uptime

The last thing you want when a customer is in line ready to buy your products is for your credit card reader to stop working. A piece of hardware with an unreliable network, low battery life, or reputation for breaking can mean a loss of thousands of dollars in monthly sales.

When picking a card reader, choose one with high uptime percentages—ideally above 99%. Also, look for reviews, testimonials, and case studies about the hardware’s reliability.

3. Check security features

Eighty percent of consumers choose a credit card based on its security features. It’s a merchant’s duty to provide the same level of security and protection when reading and processing a credit card.

Opt for a card reader that adheres to the latest PCI DSS (Payment Card Industry Data Security Standard) requirements. Look for features like EMV compliance for chip cards, contactless payment encryption, and tokenization of payment data.

4. Evaluate pricing

Some card readers are free. Others cost thousands of dollars.

The first step in evaluating pricing is to examine your monthly revenue, count how many stores and employees will need a card reader, and determine what features you’ll need.

Once you have settled on these numbers, you can compare prices across card readers and providers. Look for:

\nContract requirements. Is there a long-term commitment or a more flexible month-to-month option? What will this cost you in the long run?
\nCard reader hardware fees. How many card readers do you need? What kind? Do you need to buy the hardware outright, or is there a rental option?
\nProcessing fees. Look at the cost per transaction, including the percentage and the additional fee for each transaction. These can vary widely.
\nMonthly fees. Is there a recurring charge for using the service or system? What does the monthly fee cover?
\nHidden fees. Are there any fees that you don’t know about? Will you need to pay extra cash for features you thought were included.

5. Review essential features

When picking a card reader for your small business, the most important questions to answer are: What can this card reader do? Does it have the essential features I need? And does it integrate well into my full business management tool suite?

To help you out with your research, here are the top features a credit card reader should have:

Tap to Pay for quick transactions.
Mobile integration to make sales from your smartphone.
Multi-payment support to accept different card types and payment methods.
User-friendly interface that’s easy for all your employees to navigate and use (including returns).
High uptime and reliable performance.
Durable hardware that’s resistant to wear and damage.
EMV compliance to ensure secure chip card processing.
NFC capability to process contactless transactions.
PCI compliance to adhere to industry data security standards.
Battery life with long-lasting power for continuous use.
Receipts that offer physical and digital transaction receipts.
Customizable options with tailorable features to fit business needs.
Warranty to get the most out of your equipment.

6. Integrations

For a seamless checkout experience, choose a card reader that integrates with your existing retail toolstack. Here are the recommended integrations the best card readers should have:

POS
Accounting software
Ecommerce platforms
Inventory management system
Employee management tools
Customer relationship management (CRM) tools
Payment gateways
Marketing tools
Data analytics and business intelligence software
Security software

7. Flexibility

If your business operates across various selling environments, consider a card reader with versatile features that seamlessly adapt to any location and meet diverse customer preferences.

Shopify POS offers unmatched flexibility by streamlining operations and enabling easy access to all features from a single platform. Its contactless payment technology, Tap to Pay, turns your smartphone into a card reader, so you can take payments anywhere in-store—without the need for a separate terminal or stationary checkout desk. Customers can tap their mobile phone against yours to pay for their purchases in-person using digital wallets like Apple Pay, Google Pay, and Samsung Pay.

8. Evaluate payment methods

Have you ever abandoned an online transaction because you couldn’t use your favorite one-click payment method? Or have you ever wanted to buy something at a brick-and-mortar location but only had your phone with you?

As a retailer, the best way to account for this is to pick a card reader that accepts all forms of payment. This includes cash, all major credit cards, and digital wallets like Apple Pay and Google Pay.

9. Hardware needs

What it means to be a small business varies widely. At one end of the scale, a small business could be a sole proprietorship run by one person. On the other, it could be a handful of retail stores with several employees in each store. As such, it makes sense that credit card reader hardware needs would vary widely from one business to another.

If you’re a large operation with multiple brick-and-mortar stores and a complementary ecommerce store, you’ll need a full POS system and a robust hardware setup. For example, you may look into POS Terminal Countertop Kits for your sales counters.

But if you only sell your products online and at your local market, a POS plus a small and portable credit card reader (like a pin-and-chip machine) would be a better—and more affordable—fit.

How much does a card reader cost?

We’ve looked at the top 10 card readers for small businesses and discussed what you should consider when picking one, but how much will it set you back?

Again, it depends on how big your business is, your monthly revenues, and what features you need. But here is where you can plan on spending your money when setting up payments at your business:

Hardware

Your POS hardware costs will depend on the number of stores you have and the number of people at each store who need a card reader. You can plan on spending anywhere from $0 for something like a Tap to Pay on iPhone card reader, to hundreds for more robust hardware like an EPOS.

POS software

Card readers aren’t typically standalone devices. The best readers integrate with POS software so you can manage your payments across multiple sales channels and stores. For fully integrated POS software, you’ll likely pay a monthly fee. At Shopify, POS fees start at $5.

Payment processing fees

You’ll pay a processing fee every time you complete a transaction with a card reader. These fees vary between credit card reader providers. At Shopify, processing fees start at 2.6% + 10¢ in person.

Find the best card reader for your small business

If you’re starting your first retail store, expanding your online store to brick-and-mortar locations, or looking for a better way to process transactions, you’ll need a new credit card reader.

No matter how big or small your credit card payment processing system needs are, Shopify has a card reader for you to process payments. The best part? Every Shopify card reader integrates with Shopify’s POS, so you can keep everything from your sales to your inventory organized in one system as you scale.

Meet the point of sale for every sale

Only Shopify unifies your sales channels and gives you all the tools you need to manage your business, market to customers, and sell everywhere in one place — in store and online.

\nDiscover Shopify POS\n

Best Card Reader FAQ

Which card reader is the best?

The best card reader is Shopify POS. The unified commerce solution helps retailers of any size manage their in-store and online operations—including inventory, sales, payments, and customer data—on a single platform. It integrates seamlessly with more than 8,000 tools, so you can tailor the platform to your specific business needs.

What is the best card reader for a small business?

Here are some of the best card readers for small businesses:

Shopify POS
Square
Clover Flex
PayPal Zettle
Toast
Stripe Terminal
Lightspeed
eHopper
Aloha Cloud
KORONA POS

What is the best smart card reader?

Shopify POS is the best smart card reader because it’s reliable, has an easy-to-use interface, integrates with Shopify’s ecommerce platform, and lets you manage online and offline operations in one place. Plus, it offers flexible payment options and supports major payment methods, making checkout seamless.

Is it worth getting a card reader?

A card reader is often needed to take tap, chip, swipe, and PIN payments for in-person transactions. However, newer options, like Shopify’s Tap to Pay, turn your smartphone into a card reader, allowing you to accept contactless payments anywhere without a separate terminal.

How do I choose a card reader?

Consider these factors when choosing a card reader:

Determine your business needs.
Review essential features.
Evaluate payment methods and integrations.
Assess ease of use, security, reliability, and uptime.
Analyze processing fees and subscription costs.
Look for unified commerce functionality.
Consider upgrade options and scalability.

","A detailed comparison of the best card readers for small businesses, ranked by their pros, cons, pricing, and best features.","

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There’s one tool retailers can’t live without: a POS system. Why? A POS (point of sale) allows you to accept payments, track sales, and manage inventory seamlessly—whether you’re selling online, in-store, or both.

Since every retail business has unique needs, it’s essential to choose a POS system that aligns with your specific operations. But there’s one thing that matters across the board: unified data.

We think that Shopify is the best retail POS system because it acts as one centralized home for your business’ data. Sales, order, inventory, and customer data come together inside Shopify, applying the omnichannel concept to your front and backend operations.

That said, it’s useful to compare different vendors to find the best one for your needs. This article will explore seven of the best retail POS systems to help you find the perfect fit for your business.

The 6 most popular retail POS systems

What separates the best POS from the rest

The best retail POS systems make the customer experience seamless, regardless of where they’re interacting with your brand. Unification makes this possible by centralizing online and offline data into one solution. This lets you:

Sell omnichannel
See real-time inventory reports
Reduce total cost of ownership
Accelerate speed to launch
Simplify extensibility—without extra costs and maintenance
Provide dedicated customer support using data you’ve already collected on them

The Future of Retail: Why Unified Commerce Is No Longer Optional

EY's latest research shows businesses using unified commerce platforms like Shopify POS see 22% better total cost of ownership and 20% faster implementation. Learn what this means for your retail strategy.

\nGet the report\n

Shopify POS: Best for retail businesses of all sizes

\n\n

Shopify POS is an all-in-one, scalable point-of-sale solution that’s perfect for any type and any size of brick-and-mortar or ecommerce store. As a unified commerce solution, retailers can manage all of their in-store and online operations—including sales, inventory, customer data, and payments—from a single platform.

With this 360-degree view of their business, it’s easy for retailers to capture and understand customer behavior and purchasing data, optimize inventory levels, and deliver personalized customer experiences that keep customers coming back.

This retail point-of-sale system also has an ecosystem of more than 8,000 integrations. Shopify POS seamlessly connects with any tech stack, making it easy to get started and tailor the platform to your specific business needs.

Whether you’re connecting accounting software, CRM tools, or inventory management systems, its flexibility helps you automate processes, reduce manual tasks, and create a unified, streamlined workflow that boosts operational efficiency. Shopify also offers POS UI extensions to customize your checkout flow and improve POS app performance.

Key features

\nOmnichannel sales: Sell your products on any channel, including in your brick-and-mortar stores, across social media, and on your website.
\nRetail analytics: Access detailed reports and real-time insights into your business performance, helping you make data-driven decisions.
\nStaff management: Manage employee roles, track performance, and control access to sensitive information with detailed permissions.
\nInventory management: Keep track of stock across all sales channels, receive low-stock alerts, and perform inventory counts from a single platform.
\nClienteling: Help your staff create personalized shopping experiences with tools to track customer profiles and preferences.
\nSecure hardware: Use Shopify’s secure and reliable POS hardware to process in-person payments.
\n24/7 support: Access dedicated customer service any time you need assistance.
\nShopify Payments: Accept payments with Shopify’s integrated payment gateway, supporting various payment methods.
\nRefunds and returns: Process returns and refunds while keeping inventory up to date.
\nGift cards: Issue and redeem both physical and digital gift cards.

Top industries served

Clothing & apparel
Jewelry
Sporting goods
Furniture
Home goods & supplies
Hobby & toy stores
Health & beauty

Third-party integrations

Shopify is unique in the sense that retailers have access to all the services and integrations needed from the first customer touchpoint all the way to post-purchase—but they don’t need to take them all at once. Or ever.

Instead, you can take what you need, when you need it, and swap out pieces when you no longer have use for them.

Marketing automation tools such as Yotpo and Klaviyo
Loyalty apps like Smile
Subscription services like Recharge
Warehouse management systems like ShipHero
Shipping tools like Shopify Shipping\n
Sales channels such as Facebook, Instagram, Amazon, and Etsy
Analytics tools like Google Analytics and Triple Whale
Finance and HR tools like Gousto and Quickbooks

Payments

Shopify Payments simplifies the payment process by integrating directly with Shopify POS. It eliminates the need for a separate payment provider. Once set up, you can accept all major payment methods (online and in-store) without incurring third-party transaction fees. For brick-and-mortar stores, you can split payments and accept tap, chip, or swipe.

Shopify POS also integrates with Shop Pay. It matches credit cards to customer profiles to give you instant visibility on your customer’s buyer information and purchase history for greater personalization at checkout. Customers also get more flexibility: they can pay for in-store purchases through interest-free payments using Shop Pay Installments.

Price

Payment processing fees: 2.6% + 10¢ USD.

Monthly fee: Shopify plans start at $5 per month.

Other retail point of sale systems to compare

2. Clover POS

Clover POS is a cloud-based point-of-sale system that supports payment processing, inventory management, employee management, and customer tracking. Clover POS is particularly popular amongst restaurants as it supports online ordering, table management, and customizable payment options. With Clover, you can also manage your menu, so you can easily make updates as your offerings change.

Key features

\nOnline ordering: Allows customers to place orders through a website or app.
\nTable management: Helps organize and track seating arrangements in a restaurant.
\nInventory tracking: Monitors stock levels in real time to avoid shortages or overstocking.
\nReal-time reporting: Provides instant insights into sales, performance, and operations.
\nEmployee management: Offers scheduling, time tracking, and task management tools.
\nÀ la carte apps: Offers a selection of apps to help you manage online orders, handle reservations, and implement loyalty programs.

Top industries served

Restaurants
Pop-up shops
Food trucks
Salons
Spas
Health and wellness

Third-party integrations

Gusto
Menufy
Time Clock
QuickBooks
Order Kiosk
Appointments Pro

Payments

Clover uses its own payment processing system, allowing businesses to accept payments through credit cards, debit cards, gift cards, and contactless options like Apple Pay. It also offers secure transactions, next-day deposits, and fraud protection.

Price

Payment processing fee: From 2.3% plus 10¢ per transaction.

Monthly fee: Starts at $14.95 per month.

3. Lightspeed

Lightspeed is a POS designed for businesses in various industries, including retail, restaurants, and golf courses. It offers inventory management, payment processing, and real-time reporting.

Key features

\nSelf-check-in kiosk: Allows customers to check in independently upon arrival.
\nTee sheet management: Organizes and schedules golf course bookings and tee times.
\nPro shop management: Manages inventory, sales, and operations in a golf pro shop.
\nMultilocation management: Centralizes operations and reporting across multiple locations.
\nFood and beverage operations: Streamlines ordering, payments, and inventory for food and drink services.
\nGolf booking and scheduling software: Enables online booking and scheduling for golf course tee times and events.

Top industries served

Golf
Toy
Pet
Vape
Jewelry
Restaurant

Lightspeed lacks important functionality for ecommerce businesses. Aviator Nation, for example, previously relied on Lightspeed POS and Adobe Commerce to sell online and in-person. This approach made it difficult to unify customer data and personalize the experience.

“Adopting Shopify was a huge moment for Aviator Nation,” said its director of ecommerce Curtis Ulrich. “If you look at our trajectory over the years, things really started to pick up after we migrated from disparate systems—Adobe Commerce and Lightspeed POS—to Shopify.

“With Shopify Plus, we have all the tools we need to provide a seamless omnichannel experience and serve more customers no matter where they shop with us.”

Third-party integrations

Shopify
Mailchimp
Golf Genius
QuickBooks
WooCommerce
Chronogolf by Lightspeed

Payments

Lightspeed Payments is a built-in payment processing system for businesses using the Lightspeed POS platform. It allows you to accept all major credit and debit cards and mobile payments.

Price

Payment processing fee: 2.6% + 10¢ per in-person transaction; 2.9% + 30¢ per online transaction.

Monthly fee: Starts at $89 per month.

4. Square

Square POS helps small and medium-sized businesses process payments, manage sales, and track inventory. Square also offers the Square Appointments POS, which is designed for businesses like beauty salons and tattoo parlors. It helps these businesses handle booking appointments to simplify scheduling.

Key features

\nOnline booking system: Lets clients schedule appointments online.
\nFree booking website: Provides a no-cost website for clients to book services.
\nClient loyalty programs: Encourages repeat business with rewards for loyal customers.
\nNo-show and cancellation fees: Charges clients for missed appointments or late cancellations.
\nAutomated appointment reminders: Sends reminders to clients to reduce no-shows.
\nMobile app for managing appointments: Allows businesses to manage appointments on the go.

Despite these features, Square POS falls flat on its inventory management capabilities. Mandalyn Renicker, owner of Offbeat Bikes, experienced this first-hand when integrating Square POS with its Squarespace website.

“I was piecing together a lot of software, and it wasn’t working out,” says Mandalyn. “I had to use a third-party software to sync inventories between the Squarespace website and Square POS, which was complicated to manage. Even then, I still had to manually count inventory levels because we kept running into errors on both systems.”

Since migrating to Shopify and adopting the unified commerce approach, Mandalyn’s retail team have saved over four hours every month on inventory management.

Industries served

Tattoo shops
Beauty salons
Restaurants
Fitness and wellness
Professional services

Third-party integrations

SquareGo for appointment-booking
Wix
Shopify
JotForm
Homebase
QuickBooks
WooCommerce

Payments

Square Payments allows businesses to accept contactless, mobile, and online payments across various channels. It works with Square’s hardware and software and offers tools for security, fraud protection, and dispute management.

Price

Payment processing fee: 2.6% + 10¢ per transaction (in-person).

Monthly fee: Starts at $0 for the basic plan.

📚Compare:Shopify vs. Square

5. Toast

Toast is a cloud-based point-of-sale (POS) system built specifically for restaurants. If you have a smaller operation, you may want to look into Toast as a viable alternative to Clover. It’s great for small vendors and food trucks because it provides a mobile, offline-capable system that can handle payments, orders, and inventory from anywhere.

Key features

\n24/7 support: Provides round-the-clock customer assistance.
\nMobile payments: Allows customers to pay using mobile devices.
\nOrder management: Streamlines the process of taking and tracking orders.
\nCustomizable reports: Generates tailored reports for business insights.
\nInventory management: Tracks and manages stock levels in real time.
\nRestaurant-grade hardware: Durable hardware designed specifically for restaurant environments.

Industries served

Bars
Cafés
Bakeries
Breweries
Food trucks
Restaurants

Third-party integrations

Opsi
NEON
Butter
Klaviyo
Loyalist
Drink Exchange

Payments

Toast Payment Processing is a payment solution for restaurants that accept both in-person and online payments. It includes fraud prevention, PCI compliance, and offline payment processing.

Price

Payment processing fee: 2.49% + 15¢ per transaction (if you pay for hardware upfront).

Monthly fee: The Starter Kit plan starts at $0, and the Point of Sale plan starts at $69.

6. Heartland Retail

Heartland Retail POS is ideal for general merchandise and department stores because it integrates real-time inventory management, automatic reorders, and multichannel sales into one platform. It helps stores manage diverse product lines and maintain consistent operations across sales channels.

Key features

\n24/7 support: Offers continuous customer service assistance.
\nInventory tracking: Manages and tracks the receipt of inventory from suppliers.
\nReporting and analytics: Provides data insights on sales, inventory, and performance.
\nInventory management: Tracks stock levels, orders, and product movements.
\nFlexible payment processing: Accepts a variety of payment methods with customizable options.
\nCustomer relationship management (CRM): Manages customer data and interactions to enhance relationships and retention.

Industries served

Apparel
Footwear
Museums
Sporting goods
Health and beauty
Home and lifestyle

Third-party integrations

99 Minds
Mailchimp
QuickBooks
Blacks Retail
BigCommerce
Ready Set Retail

Payments

Heartland Payment Processing is a platform for managing various payment methods, including credit and debit cards, digital wallets, and ACH transactions. It provides secure payment solutions to meet the needs of businesses of all sizes.

Price

Payment processing fee: 2.6% + 10¢ per in-person transaction.

Monthly fee: $89 per month for POS and Payroll+ services.

How to choose a retail POS system

Not all retail businesses and POS systems are the same. Multi-store retailers have a much more complex and diverse use case than those specializing in temporary pop-ups. The trick is finding the POS system that perfectly matches your company’s needs.

Here are five factors to consider to find the perfect match for your business.

Type of business

The first things to consider when picking a POS are your business type and growth goals. Here’s a closer look at the POS features different businesses would require:

Brick-and-mortar stores

Physical stores need a POS that integrates with a wide range of hardware and software. You’ll likely need a cash register, receipt printer, barcode scanner, and customer-facing display. You’ll also want software like inventory management to track stock across your stores. Also, consider a POS focused on customer experience (CX), with features that support loyalty programs.

Pop-up shops

For pop-up businesses, simplicity and mobility are key. You’ll need a portable setup like a tablet or smartphone with a card reader. Look for a POS that offers easy setup, mobile payment options, and offline functionality in case you’re in an area with limited internet access.

Ecommerce and retail

If you run both online and physical stores, you need a POS system that seamlessly integrates with your ecommerce platform. This ensures that your inventory is updated in real time across all channels. Look for software with unified customer databases, cross-channel sales tracking, and flexible payment options like gift cards and split payments (ahem … Shopify POS).

Restaurants

For restaurants, your POS should support order management, kitchen display systems, and table tracking. Hardware might include tablets for servers, kitchen printers, and receipt printers. You’ll also want features like tipping, split bills, and customer loyalty programs.

Multi-location retailers

Large retail operations need a POS that offers centralized control with synced data across locations. You’ll want hardware for each store and software that tracks inventory, sales, and employees in real time across all sites.

Hardware and software needs

Next, look at the hardware and software required to operate your business efficiently. Here’s a quick overview of the typical types of hardware and software.

Hardware:

\nRegister or tablet: For processing sales and managing customer transactions.
\nCard reader: To accept payments, including chip, swipe, and contactless methods.
\nBarcode scanner: Speeds up checkout and helps with inventory management.
\nReceipt printer: Essential for businesses that provide printed receipts.
\nCash drawer: Important for businesses that handle cash transactions.
\nCustomer-facing display: Enhances transparency by showing customers their transaction details.

Software:

\nInventory management: Real-time tracking, low-stock alerts, and multi-location syncing.
\nPayment processing: Support for multiple payment methods, mobile payments, and gift cards.
\nEmployee management: Features like time tracking, shift scheduling, and sales performance reporting.
\nCustomer relationship management (CRM): Track customer purchases, manage loyalty programs, and send targeted promotions.
\nSales reporting and analytics: Generate detailed reports on sales trends, top-selling products, and overall business performance.

Essential POS features

Regardless of your company’s size, there are some POS features every platform should offer at an affordable price, including:

\nSales tracking: Record and manage transactions in real time.
\nInventory management: Automatically track stock and get low-stock alerts.
\nPayment processing: Accept multiple payment methods, including cards and mobile wallets.
\nCustomer management: Store customer info and purchase history for better service.
\nReporting and analytics: Access sales reports and performance metrics quickly.
\nEmployee management: Track hours and sales performance for each staff member.
\nReceipt options: Offer both digital and printed receipts.
\nSecurity features: Protect data with encryption and PCI compliance.
\nOffline functionality: Process sales without an internet connection.
\nEase of use: Simple interface that’s easy to navigate for staff.
\nIntegrations: Sync with other software like accounting or ecommerce platforms.
\nCustomizable settings: Adjust features to match your business needs.

Costs

POS pricing can vary widely depending on the features, hardware, and software you need. Some systems charge a flat monthly fee, while others take a percentage of each sale.

Additionally, the cost of hardware (like tablets, scanners, and card readers) can add up quickly. It’s smart to weigh the upfront costs versus the POS system’s long-term value.

Integrations

POS solutions previously distinguished themselves on the variety of integrations available. The issue is: most of these integrations are customer-centric. The backend system is an afterthought. Is opening five different tabs to answer a single question really the most efficient way of working?

What’s unique about Shopify is that these integrations funnel data back to one unified backend. The Shopify admin merges customer data into unified profiles, no matter where this data comes from: your POS system, an email marketing app, or a marketplace.

Get started with the best retail POS system

By now, you have the information you need to decide on the best POS for your business.

Remember, every retailer has different POS needs. Consider which features you want, what fits your budget, and what will help you scale most efficiently as you grow your business. Start by checking out Shopify POS.

Instant demo: See Shopify POS in action

Discover how Shopify POS helps you manage in-store and online sales from one powerful platform.

\nWatch now\n

Retail POS FAQ

What POS system is best for retail?

The best POS to support your retail operations is the Shopify POS system. It provides an easy-to-use interface, integrates with Shopify’s ecommerce platform, and includes features like inventory management, sales reporting, and various payment options. It’s perfect for businesses of any size in any industry.

What is the average cost of a retail POS system?

Prices for retail POS systems vary widely, but they typically range from $50 to $150 per month. Some systems may also have additional setup fees or hardware charges.

Which company POS machine is best?

The best POS machine is the Shopify POS Terminal. It offers a reliable, integrated system with flexible hardware options, including countertop and mobile solutions. The Shopify POS Terminal ensures smooth transactions with features like customer-facing displays and connectivity over Wi-Fi and Ethernet.

What POS system is the cheapest?

It’s hard to pinpoint the cheapest POS system because costs depend on factors like setup fees, monthly fees, and payment processing charges. It also varies based on transaction volume and types. However, a good starting price for a basic POS system is typically around $50 per month.

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Ecommerce. DTC. Omnichannel sales. B2B…

There are several terms to keep track of in the retail world—especially in an industry prone to lightning-fast innovation and new trends.

It can be challenging to keep up. The good news is you only have to understand concepts that will improve your retail business and help you make more money.

For this article, let’s focus on understanding one of those money-making terms—digital retail. You'll learn everything you need to know about moving into digital retail and the tools you need to succeed.

Table of contents

What is digital retail?

Digital retail encompasses all aspects of a business’s digital presence—including online and offline integration. It focuses on creating a seamless shopping experience across all potential digital channels.

So, it’s ecommerce, right? Well, yes and no. Ecommerce is the part of digital retail that focuses on selling products over the internet. But digital retail is more expansive as it also includes things like mobile apps, online and in-store digital technologies, and augmented reality (AR).

Take Rebecca Minkoff, for example. The company has an ecommerce branch where customers can buy products online. But Rebecca Minkoff is also a digital retailer because people can interact with digital sales tools (online and in-person) like its smart mirrors in fitting rooms.

Sephora’s mirror uses real-time 3D technology to simulate makeup on a user's face, showing them how different products would look without physically applying them.

Benefits of digital retail

Why would a retailer want to extend their services beyond ecommerce capabilities? Here are the main benefits of adopting a digital retail strategy:

\nEnhanced customer experience. Digital retail integrates various channels, providing a more personalized shopping experience. For example, Nike has interactive touchscreens (i.e., “Nike Fit”) that scan customers’ feet and recommend the best shoe size and style.
\nIncreased sales opportunities. Digital tools like augmented reality and personalized recommendations help retailers expand their sales force and drive more sales. North Face's \"XPS\" uses IBM Watson to offer AI-powered personal online shoppers that provide personalized recommendations to customers.
\nData-driven insights. Digital retail tools collect data across different touchpoints. This data helps retailers optimize inventory management, improve the shopping experience, and customize marketing efforts. Kroger Edge is a good example. It uses real-time data to update pricing, promotions, and nutritional information displayed on Kroger’s digital shelves.
\nBroader market reach. Using multiple digital platforms allows retailers to collect helpful customer data and reach a wider audience. Take the customer service robot, LoweBot. It collects data on customer inquiries and movements within the store, giving Lowe’s information about frequently asked questions, popular product locations, customer needs, and more.
\nImproved brand visibility. A strong digital presence across various channels and stores keeps the brand top-of-mind for consumers. Consider H&M's use of digital signage in its window displays and within its stores. The digital signs showcase promotions, introduce new products with holograms, attract attention, and encourage more foot traffic.

8 ways to implement digital retailing into your business

You may be convinced that expanding your ecommerce business into the world of digital retailing is your next step. But how do you start with the retail digital transformation?

Here are eight ways to implement digital retailing into your business model:

1. Smart sensors for real-time food monitoring

Retailers in the food business should consider using smart sensors as part of their digital transformation. These sensors provide real-time data on food temperatures and quality.

Implementing these smart sensors in the supply chain helps food retailers monitor perishable items, reduce spoilage, and maintain outstanding quality from production to store shelves.

Walmart uses Internet of Things (IoT) technology to monitor the temperature of perishable goods as they travel through the supply chain. This helps Walmart ensure its products are fresh and safe for consumption.

2. Cloud-based ERP system integrated with ecommerce

Retailers looking to stay organized as they move into digital retailing should consider adopting a cloud-based ERP system. ERP systems streamline business processes by integrating various functions like inventory, order management, and finance.

Zara is a good example of a retailer that uses a cloud-based ERP system to manage its inventory and order processing. Its system allows for real-time tracking of products across all its global retail locations and rapid restocking.

3. Big data analytics

Big data analytics involves analyzing large sets of data to uncover patterns and trends in customer behavior. Retailers like Amazon use these insights to analyze customer purchase history, browsing behavior, and preferences.

With these analytics, Amazon can offer personalized recommendations, target marketing campaigns, and optimize inventory management so that popular items are always in stock.

4. Artificial intelligence (AI)

Retailers can implement AI on their websites and mobile apps to improve anything from SEO and website content to providing better product recommendations and customer service.

Shopify Magic helps with this. It uses AI to generate SEO-friendly product descriptions, simplify your email marketing efforts, and turn live chats into sales opportunities.

5. Automation and robotics in manufacturing

Automation and robotics eliminate human error. These technologies automate repetitive tasks like assembly and quality control. The result? Speedy production and reduced labor costs.

Amazon is a prime example of a retailer using automation and robotics to enhance its fulfillment operations. Its Kiva robots transport shelves of products directly to human workers. This innovation reduces the time employees spend walking around the warehouse and boosts picking efficiency.

6. Mobile apps

Retailers can develop mobile apps that let customers scan barcodes for product details, access relevant product information, and even earn customer loyalty points for purchases.

Starbucks is a digital retailer famous for its mobile app. With a click of a button, customers can find drink recipes, look up nutritional information, see recommendations, and find fun promotions.

What’s more, Starbucks goes above and beyond to reward customers with stars for using the app to place orders in-store or on-the-go. Customers can redeem these stars for free drinks, food, and other perks.

7. Smart packaging with QR codes

QR codes have come a long way in recent years to help retailers retain relevance in the digital world. By adding smart packaging with QR codes, retailers can drive customers to a landing page with product information or promotional content.

Coca-Cola does this. Customers can buy a Coke and scan the QR code on the can. The code will take them to an interactive landing page with more info about Coke and its new promotions.

8. Augmented or virtual reality

Augmented and virtual reality are fun, new ways for retailers to create immersive brand experiences and product tours.

We’ve already discussed Sephora’s mirror, which offers an AR experience to help customers try on products without physically touching them. But other retailers use this, too. Crate and Barrel's AR scans physical spaces to show customers what products (like tables and chairs) would look like in their space.

Using AR or VR is the perfect way to showcase your products to customers who use devices regularly.

3 examples of digital retailers

1. Ruggable

Ruggable is the perfect example of a digital retailer because of its innovative use of augmented reality.

By integrating AR into its shopping experience, Ruggable allows customers to visualize how different rugs will look in their own spaces. Ruggable achieves this by uploading 3D files to Shopify, which are rendered on the product page and can launch an AR experience.

Customers can see the rug placed virtually under their furniture, enhancing their decision-making and ensuring they choose the perfect product for their home. This immersive experience improves customer satisfaction and reduces return rates, as customers are more confident in their purchases.

2. Pepper Palace

Pepper Palace is another example of a digital retailer example due to its strategic implementation of Shopify POS. By centralizing its operations under Shopify, Pepper Palace unified its sales channels, inventory, payments, and data into one seamless system.

This integration helped the brand to scale from 40 to over 100 store locations and grow its customer database by 900%.

Shopify POS enhanced Pepper Palace’s efficiency, providing faster transactions and improved data capture at checkout. Now, Pepper Palace offers a cohesive and engaging customer journey both in-store and online.

3. Slam Jam

Slam Jam stands out as another successful retail digital transformation story. By integrating Shopify POS, Slam Jam successfully unified its online and in-store experiences, creating a seamless omnichannel strategy.

This integration enables Slam Jam to provide in-store kiosks, pick-up in-store, click-and-collect, and ship-from-store options. With the help of Shopify POS, Slam Jam was able to personalize shopping experiences, improve inventory management, and capture valuable customer data directly in their stores.

Since this implementation, Slam Jam has seen a 15% increase in average daily orders and a 122% compounded average growth rate.

Top digital retail tools

1. Shopify Point of Sale (POS)

Shopify POS is a versatile point-of-sale system that integrates with Shopify's ecommerce platform. This system unifies online and offline sales channels, allowing retailers to manage in-store and online inventory from a single dashboard and enhance operational efficiency.

Shopify POS allows target customers to purchase products online, buy online and then pick up in-store (BOPIS), or buy products in physical locations. What’s more, Shopify POS integrates sales data from all channels into one unified system.

2. Customer Relationship Management (CRM) Systems

A CRM, or customer relationship managent,system is essential for managing a retailer’s interactions with current and potential customers. It consolidates customer information, tracks sales interactions, and automates marketing efforts, making it easier to deliver personalized service and targeted marketing campaigns.

By analyzing customer data, CRM systems help retailers understand purchasing behaviors (whether online or in stores), consumer behaviors, identify sales trends, and improve customer retention strategies.

The integration of CRM software with other digital retail tools ensures a seamless flow of information, enhancing the ability to provide a consistent and personalized shopping experience both online and offline.

3. Augmented Reality

Augmented reality tools allow customers to visualize products in their own environment using their smartphones or tablets, making it easier to see how items like furniture, clothing, or accessories will look and fit.

AR enhances the online shopping experience by bridging the gap between digital and physical shopping, reducing the uncertainty that often accompanies online purchases.

Retailers using AR tools can differentiate themselves from competitors, attract tech-savvy consumers, and boost overall sales by offering an innovative in-store and online shopping experience.

Become a digital retailer today

If you’ve been seeing high sales in your brick-and-mortar stores or crushing your ecommerce sales goals, now might be a perfect time to explore expanding your operations.

There are several tools (including Shopify POS) to help you grow your retail business, keep your processes and inventory organized, and connect with your audience—whether they are online, in your store, or both.

Unify your sales channels with Shopify

Only Shopify unifies your sales channels and gives you all the tools you need to manage your business, market to customers, and sell everywhere in one place.

\nDiscover Shopify POS\n

Digital retail FAQ

What can you do with a digital retailing degree?

With a digital retailing degree, you can pursue careers in digital commerce management, digital marketing, data analytics, and retail technology. Graduates often work as ecommerce managers, digital fashion strategists, data analysts, or user experience (UX) designers.

What is digital retail strategy?

It involves using technology to enhance the customer experience and shopping experience for your online and brick-and-mortar stores. It includes adopting ecommerce platforms, digital marketing, data analytics, and omnichannel approaches to integrate online and offline customer interactions.

What is a digital retail tool?

A digital retail tool is technology or software that helps retailers manage and enhance their operations and customer experiences. Examples include ecommerce platforms, customer relationship management (CRM) systems, mobile apps, augmented reality (AR) tools, and inventory management systems.

Why is digitization important in retail?

Digitization is important in retail because it enhances operational efficiency, improves customer experiences, and drives sales growth. It allows retailers to improve operations, use data analytics for better decision-making, and engage customers through personalized marketing and omnichannel experiences.

","Learn how to add digital retail to your mix of sales channels with this guide.","

Learn how to add digital retail to your mix of sales channels with this guide.

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Building a successful company hinges on finding the best avenues to ensure quality, keep costs affordable, and make sure the supply chain works without a hitch.

For some companies (like Nike and Gap), that means outsourcing part of the supply chain to other organizations. Others (like Zara and Apple) are more successful when they own parts, or all, of the supply chain management.

In economic terms, companies that outsource the supply chain are not vertically integrated. And organizations that keep two or more parts of the supply chain in-house are vertically integrated.

This article will cover everything you need to know about vertical integration, including the three types of vertical integration, the pros and cons, and expert tips when making the transition.

Table of contents:

What is vertical integration?

Vertical integration is a business strategy where a company owns two or more stages of its supply chain, such as manufacturing and distribution.

Integrating vertically minimizes reliance on external companies, reduces costs, and offers the flexibility to respond faster to customer demands and market trends.

How vertical integration works

Say a retail fashion brand handles the design and marketing of its clothing but is outsourcing the manufacturing of fabrics, the assembly of garments, and the distribution to retail stores.

If the fashion brand were working toward full vertical integration, it would stop outsourcing to other companies and take direct ownership of fabric manufacturing, assembly, and distribution.

To illustrate, here’s a step-by-step of how this fashion brand’s vertical integration might work:

\nIdentify integration points. The company would first conduct an analysis to determine how much they are spending by outsourcing manufacturing, assembly, and distribution. They’d need to consider other factors that affect business, such as sustainability and ethical business practices. Then, they’d determine how to cut costs and improve business by bringing operations internally.
\nEvaluate acquisition or establishment. The fashion brand would decide whether it makes more sense to acquire a company they’re already working with (e.g., buying the logistics company they rely on now), or if they need to establish a new branch of their company (e.g., build logistics internally).
\nIntegrate and streamline operations. Once this retail brand controls the new stages of the supply chain, it must integrate it into its existing operations. This means aligning operational practices, IT systems, and more. It also includes streamlining operations to reduce inefficiencies or produce higher-quality products.
\nCoordinate and adjust. Vertical integration done right will allow this brand full control of its supply chain. Now, they can manage inventory, synchronize supply with demand, and adjust production schedules to respond to market changes—all at a reduced price.

Types of vertical integration

There are three main types of vertical integration: backward, forward, and balanced integration. To learn the difference between the three, it’s essential to first review the basics of the supply chain and the river metaphor.

The \"supply chain river\" encompasses all elements involved in the production and delivery of a product. It starts with sourcing raw materials and the early stages of production (upstream) and progresses through tasks such as distribution, retail, and the final sale of the product to the consumer (downstream).

But, there are more than one type of vertical integration.

Backward integration

Backward integration is when a company expands its ownership of operations upstream in the supply chain. In other words, the company will either acquire businesses that were once its raw material suppliers, or move sourcing and production of its products in-house.

For example, say you own a clothing store, and you source materials and have clothing assembled in a factory in Vietnam. If you wanted to adopt backward integration, you’d halt operations in Vietnam and make sourcing materials and clothing assembly part of your company umbrella.

As you can imagine, backward integration is capital-intensive. But, in the long run, it may end up cutting costs. It also gives you control over your material quality, sustainability, and labor and manufacturing practices.

Forward integration

Forward integration is when a company moves further downstream of the supply chain (toward the final sale of a finished product to a customer). In forward integration, a company would own distribution and/or retail to gain greater control over how consumers acquire products.

Say you own a small jewelry store and typically sell your products on multiple channels like Etsy or Amazon. You’re leaving a portion of your profits on the table in exchange for access to the Etsy or Amazon marketplace.

Forward integration of your business would involve setting up your own ecommerce store on a platform like Shopify and taking ownership of the sales, distribution, and marketing of your products.

The advantages of forward vertical integration include control over the customer experience, smooth shipping, and higher profit margins.

Balanced integration

Balanced integration is when a company practices both forward and backward integration. In other words, the company owns the full supply chain, from sourcing materials and design to its retail stores and distribution.

Imagine you own a mid-sized coffee company, which you currently sell through third-party retailers and distributors. To adopt balanced vertical integration, you both source your coffee beans directly by owning or partnering with coffee farms (backward integration) and develop your own chain of coffee shops to sell your product directly to consumers (forward integration).

Balanced vertical integration is less common than forward and backward vertical integration and requires strategic planning and robust capital investment. The advantage is you control everything from your materials to sales processes.

Real examples of vertical integration

1. Backward vertical integration example: Zara

Zara is an example of backward vertical integration. The fashion brand owns a large portion of its production process and has its own manufacturing plants in Spain. With its own backward vertically integrated operation, Zara controls its quality and speed of production. This translates into higher quality products at lower prices for customers.

2. Forward vertical integration example: Amazon + Whole Foods

Amazon's acquisition of Whole Foods is a prime example of forward vertical integration. By purchasing the grocery chain, Amazon extended its reach into the physical retail space.

This move allowed Amazon to integrate its extensive e-commerce logistics with Whole Foods' brick-and-mortar stores, enhancing its distribution capabilities and providing a seamless online-to-offline shopping experience for customers.

3. Balanced vertical integration example: Apple

Apple is a famous example of balanced vertical integration. It designs its own hardware and software, manufactures key components, and sells its products through its own retail stores. This ensures a seamless customer experience and control over the entire supply chain.

Pros and cons of vertical integration

Is vertical integration the right next move for your business? The answer: it depends. Here are the pros and cons of adopting vertical integration to help you understand if you’re ready and if it’s a lucrative way to grow your company.

Pros of vertical integration

\nIncreased control. Greater oversight over your entire supply chain ensures quality and consistency.
\nCost savings. Eliminates the middleman, reducing costs associated with third-party suppliers.
\nImproved coordination. Streamlines processes and reduces delays by integrating operations.
\nCompetitive advantage. Unique control over the supply chain can lead to a stronger market position.
\nBetter customer experience. Direct control over distribution channels can lead to improved service and satisfaction.

Cons of vertical integration

\nHigh initial investment. Significant capital is required to acquire or develop new stages of the supply chain.
\nComplex management. Increased complexity in managing a broader range of operations.
\nReduced flexibility. Tied to in-house processes and resources, making it harder to adapt to market changes.
\nPotential for inefficiency. Lack of specialization can lead to inefficiencies in areas outside core competencies.
\nRegulatory risks. Greater scrutiny from regulators concerned about anti-competitive practices.

Vertical vs. horizontal integration

Quick review: Vertical integration is when a company acquires or merges with other companies at different stages of its supply chain within a vertical market. The aim of vertical integration is to control more aspects of the production process, improve coordination, reduce costs, and ensure consistent quality.

So, what is horizontal integration?

Horizontal integration is where a company acquires or merges with other companies at the same stage of the supply chain. The aim of horizontal integration is to increase market share, reduce competition, and achieve economies of scale.

Meta’s journey is an example of horizontal integration. Facebook, Instagram, and WhatsApp all operate within the social media and communication sector. Facebook acquired Instagram and WhatsApp to grow Meta, offer more features, and become a dominant social media company.

Tips for implementing a vertical integration strategy

Who better to help you with successful vertical integration than supply chain experts writing about vertical integration? Here are the top tips for successful vertical integration.

1. Conduct a thorough cost-benefit analysis

In a 2023 NetSuite article, Abby Jenkins, a product marketing manager for supply chain products, explains a critical first step in successful vertical integration: cost-benefit analysis.

She says that a detailed cost-benefit analysis helps businesses determine the financial feasibility of vertical integration.

A cost-benefit analysis involves evaluating both direct and indirect costs, tangible and intangible benefits, and potential long-term impacts. When you understand all of these factors, you can make informed decisions about your investment.

2. Develop a clear strategic vision

Moving forward with vertical integration without a clear strategic vision is a recipe for disaster.

In a 2023 Retailisation article, founder, supply chain simplifier, and change agent Jasper Zeelenberg explains how a clear strategic vision is crucial for successful vertical integration.

Zeelenberg explains the vision for vertical integration should align with the company's long-term goals and provide a roadmap for integrating new supply chain stages. A clear vision helps with setting measurable objectives and guiding decision-making processes.

3. Build strong relationships with suppliers

Zeelenberg offers additional insight into the topic in the same Retailisation article. He provides the perfect example of how building strong relationships with suppliers is integral to success.

He says H&M is in a unique position because it doesn’t fully own its supply chain processes like Zara. Instead, H&M outsources its supply processes to around 850 independent suppliers.

As such, H&M maintains strong control and oversight through close, collaborative relationships with these suppliers (supported by real-time data exchange and digitization).

Positive relationships and close collaboration help H&M maintain flexibility, control quality, and respond quickly to market demands.

4. Invest in technology and infrastructure

Insight from McKinsey on successful vertical integration doesn’t disappoint. In the article, “The tech transformation imperative in retail,” McKinsey advises investing in modern tech and infrastructure to support vertical integration.

This includes adopting advanced IT systems for real-time data management, automating processes, and integrating e-commerce with retail operations.

5. Implement comprehensive risk management

In the same analysis, McKinsey offers another critical tip in guiding a smooth vertical integration transition—implementing a comprehensive risk management strategy.

Risk management starts with identifying and documenting potential risks across the entire supply chain—from suppliers to distribution nodes. It also includes planning for adverse scenarios, conducting stress tests, and establishing governance structures for continuous risk monitoring.

Use vertical integration to grow your ecommerce business

The most common examples of vertical integration come from huge companies with complex operations. But, the truth is, a company of any size can integrate vertically. For example, say you own a small, but growing, brick-and-mortar retail store.

You may rely on your local farmers market and foot traffic to your boutique for local sales and marketplaces like Amazon, Etsy, and Depop for ecommerce sales.

But, here’s the thing. Those marketplaces take a cut of every ecommerce sale you make. If you want to boost efficiency, reduce costs, and own your own ecommerce operations, you can vertically integrate and create your own ecommerce website with Shopify.

Manage inventory from one back office

Shopify POS comes with tools to help you manage warehouse and store inventory in one place. Forecast demand, set low stock alerts, create purchase orders, know which items are selling or sitting on shelves, count inventory, and more.

\nDiscover Shopify POS\n

Vertical integration FAQ

What is vertical integration, and an example?

Vertical integration is a business strategy where a company takes control of multiple stages of the production and distribution process of its products. For example, Apple is vertically integrated, designing its hardware and software and selling products directly to consumers through its own retail stores. This allows Apple to control quality, costs, and the overall customer experience more effectively.

What is vertical integration vs. horizontal integration?

Horizontal and vertical integration are different. Vertical integration involves a company expanding control over different stages of production and distribution within the same industry, such as a manufacturer acquiring its supplier. Horizontal integration, on the other hand, occurs when a company acquires or merges with other companies at the same level in the industry, like a car manufacturer buying another car manufacturer.

What are the 4 stages of vertical integration?

The four stages of vertical integration are:

\nIdentification. Determining which parts of the supply chain to control, from raw materials to customer interactions.
\nAcquisition or development. Purchasing existing businesses or building new facilities to control more of the supply chain.
\nIntegration. Merging acquired or newly developed operations with existing business processes for seamless functionality.
\nOptimization. Streamlining integrated operations to enhance efficiency, reduce costs, and improve overall performance.

What is an example of the vertical integration of Disney?

Disney has full control over its entertainment production and distribution chain, making it the perfect example of a vertically integrated company. Disney produces its films and TV shows and also distributes them through its own networks like ABC and streaming platforms such as Disney+. What’s more, Disney also owns its theme parks and retail stores.

","Learn how to implement a vertical integration strategy for your business, with tips and examples from brands doing it right.","

Learn how to implement a vertical integration strategy for your business, with tips and examples from brands doing it right.

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What is retail optimization?

The retail optimization framework

Unified data foundation

Technology infrastructure

Channel optimization

Operational excellence

Retail optimization examples

Venus Et Fleur

BYLT Basics

Allbirds

Mizzen+Main

Retail optimization tools

1. Shopify POS

2. Stocky

3. Daasity

4. Auror

5. Revionics

Optimize your retail store operations with Shopify

Retail optimization FAQ

What is store optimization?

What is retail price optimization?

What is an example of optimization in the retail business process?

What is profitability in retail?

What is gross profit margin?

What is operating profit margin?

What is net profit margin?

Market shifts affecting retail profits

Omnichannel expectations are driving up costs

The growing role of third-party logistics

The adoption of buy now, pay later services

Profitability metrics and KPIs

Foot traffic

Average Transaction Value (ATV)

Gross Margin Return on Investment (GMROI)

Customer Acquisition Costs (CAC)

Customer Lifetime Value (CLV)

Return Rate

Conduct a retail profitability check

SWOT Analysis 2.0

Category and product-level profitability

Sales channel analysis

Technology and retail profitability

Data analytics and AI

POS and inventory management systems

Automation

The profitability paradox

Customer experience vs. bottom line

Customer convenience

Dynamic pricing

Become a more profitable retailer with Shopify

Retail store profitability analysis FAQ

How can we measure the profitability of a retail store?

What is the profitability of a retail store?

What is a good profit margin for a retail store?

Is 40% a good profit margin?

Top smart retail solutions for 2025

1. Shopify

Shopify’s key features

Shopify sets retailers up to thrive in the future

2. VionVision Smart Traffic Analytics

VionVision’s key features

3. Samsung Connected Retail

Samsung’s key features

4. Netguru IoT Integration Platform

Netguru's key features

5. Sensormatic

Sensormatic’s key features

Be ready for the future with Shopify

Smart retail solutions FAQ

What is a smart retail system?

What does a retail solutions company do?

How can smart retail solutions utilize sensor technology to improve the customer experience?

The 10 best card readers for small businesses

Our methodology

1. Shopify POS: Best for a unified retail experience

Shopify POS features

Pros

Cons:

Pricing:

2. Square