Shopify, one of the leading providers of online storefronts and payment processing solutions for retailers, last week introduced its own iPad-based  point-of-sale (POS) system for merchants. The company views this new POS system, complete with a card-reader, a receipt printer and a cash register, as something that will enable merchants to manage their online and offline storefronts using a single software platform. Shopify currently has 65,000+ online storefront customers, and its key competitors include Magento (acquired by eBay) and BigCommerce.

A number of Shopify’s customers probably also have a physical presence, so it seems like a natural extension for Shopify to offer a POS with integrated inventory management and transaction processing to its customers. However, the story might not be that simple. Shopify’s selling proposition to customers so far has been its ease of deployment and lower price points compared to competitors – suggesting that its clientele might comprise mostly of small businesses (as opposed to medium or large). One could argue that the greatest need in this segment is the kind of easy-to-use, mobile-friendly card reader pioneered by Square; a bundled POS system (see image) with integrated inventory management, cash registers, receipt printers etc. could be useful, but will probably push Shopify to sell into more the medium/large business segment. In that segment, it might end up in a whole new ballgame, competing with established players like Verifone and NCR. At the same time, Shopify now will need to worry about hardware supply chains, increased customer support needs, and lower margins. Too many dimensions of unfamiliarity for a startup to deal with…

A simpler approach for Shopify might have been to add just the card reader to its product suite, and that too only to defend its turf around payments and storefronts. With the likes of Square, Intuit, Paypal, Groupon and others in the transaction ecosystem, Shopify already has its hands full with tough competitors, and it really did not need to add POS terminals like NCR and Verifone to that list. So, we will see – let’s hope now that fortune favors this brave start-up!