RFID Arena


RFID: Key to successful Web sales

Until now, small retailers have had a tough time selling online: when you’re too small to have a dedicated DC, you have to fill orders from stores. This article by Carl Michener describes how small retailers turn to RFID for Web shop capability.

Author: Carl Michener

Small retail chains turn to RFID, boosting inventory accuracy from 70% to 90%

RFID is not just the darling of big retailers. Growth in RFID for retail is not just coming from the American Apparels and the Gerry Webers of the world-single stores and small chains are now finding great value in RFID solutions as well.

RFID Journal reports that small stores in Norway are jumping on the bandwagon, with 40+ retailers implementing low cost RFID systems since 2012. Front Systems, the systems integrator responsible for the implementation, promotes Nordic ID Morphic UHF RFID Cross Dipole handheld readers as the tool of choice for inventory counts and locating items around the store. For reading at POS and orders entering the storeroom, they favour Nordic ID Sampo S1 fixed RFID readers.

Initial findings have shown a rise in inventory accuracy among Front Systems customers from about 70% to 99%. Of the many functions that their new RFID systems fulfil, retailers place the greatest value on the ability to quickly perform a store-wide inventory count to help keep all goods for sale, in all sizes, on shelves.

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Move to online retail driving RFID adoption

Hielke van Oostrum, Sales Director at Nordic ID, finds that the story is much the same in the Benelux countries: bigger retailers are generally reluctant to implement a new solution, while the smaller ones are adopting.

"In these uncertain economic times, it's the smaller chains that are moving forward," says van Oostrum. "In particular, it's those that want to move into online retail." van Oostrum has found that forward-thinking retailers are shoring up sales by challenging major online retailers head-to-head with a web presence of their own. He has further pinpointed the demographic: "It's the family-owned stores that are more likely to be influenced by an ROI proposition," he concludes. "It's logical, since they have an equity stake in the business and stand to gain the most."

Online is a fantastic sales channel with potential global reach, but it's not without logistical challenges. Chief of these is inventory-related. With no distribution centre, smaller stores have no choice but to fulfil from shop inventory.

"For online retail to work, each store must know exactly what is in the shop at any given time," observes van Oostrum. "None of these retailers have the manpower to do a manual stock take every second day." The only practical way to obtain the inventory confidence required for in-store online order fulfilment is with RFID. At 15 to 25 minutes per location, a complete inventory count can easily be performed at the end of each day.

Costs no longer a barrier

Big shops can afford big, expensive systems. Smaller retailers need to keep costs low, but with the RFID systems of today that's entirely possible. Many systems integrators provide the complete package, including a cloud-based inventory system that's affordable, scalable and breaks down inventory by store.

Ulbe Keegstra, Managing Partner at Trackwise (a part of EasyLogic) based in Moordrecht, Netherlands, is finding that cost is not as much of a barrier as it once was. "An RFID system will pay for itself by reducing instances of in-store stock-outs in about 12 months," he says. "We have found that RFID systems also reduce shrinkage losses from 4% or 5% to less than 1%."

Keegstra's figures assume that storeowners opt for disposable RFID tags that are attached when goods are received in-store. When reusable tags are selected, the payback is half again as long-16 to18 months-but after that initial period, ongoing costs remain lower. Tags are in fact the most expensive part of a modern RFID implementation.

How small retail RFID works

The way that small retail RFID setups work is really simple. Handheld RFID readers connect with a fully cloud-based RFID database over the Internet via a 3G SIM card or, more often, WiFi. Tags are paired with SKUs in the back room when items enter the shop, entering RFID and POS systems simultaneously. Changes to the RFID database are reflected in the POS system so that employees can see when an item is sold in real time. At point of sale, tags are detached and either thrown away in the case of disposable tags or put aside in the case of reusable ones.

"The modern RFID system has become an elegant machine that doesn't entail major infrastructure investments," says Keegstra. One thing that the integrator has noted recently is the rising popularity of dual-function tags combining UHF RFID reading and anti-theft.  "It was one of the most notable trends at the EuroShop show this spring in Düsseldorf," he notes. "Mount a discreet RFID reader at the entrance, and it will create an alert if a tagged item leaves your store."

If there's a lesson here, it's this: technology always gets better and less expensive. When it reaches a certain point, it is within everyone's financial means. The democratisation of RFID is happening right now in retail. Watch out, big retailers! With RFID system costs at an all time low, smaller retailers can acquire the same sophistication and meet you on your own terms. 

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5 comments on “RFID: Key to successful Web sales”

  1. Posted 26 October 2014 at 17:13:27

    Online selling is the 'in thing' today. Don't know why small retailers are shying away from this fact which is going to hit them hard whether they like it or not, in the next few years if they are not prepared for it. It's high time we realize this and secure our inventory and sales with a feasible & economical solution.
    It would have been more effective if an indicative implementation cost was included in the post.

  2. Gravatar of Jeff Jeff
    Posted 27 October 2014 at 04:36:52

    Sometimes it's the most obvious solutions that take the longest to be adopted. Combining the security tag and the RFID inventory tag seems like a no brainier to me , should have been done long ago.

  3. Gravatar of Rafael FrancoRafael Franco
    Posted 29 October 2014 at 10:37:29

    Here in Brazil most retailers doens't have joint operations between stores and warehouses just because they cannot control the inventory and simultaneos logistics operations. RFID is a great market out here but entrepreneurs are still very reluctant.

  4. Gravatar of Suvi DalénSuvi Dalén
    Posted 10 November 2014 at 11:15:03

    Hello S.S. Afsar, Jeff and Rafael, thank you for your comments!

  5. Posted 22 February 2018 at 12:24:54

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