RFID in Omni-channel Retailers

​The common theme with ecommerce retailers and their distribution systems is that their delivery time windows are ever tightening. To suffice the delivery promises made by the retailer many strategies are being put into place to move products faster. Whether this means that products will be coming from the store shelves, distribution centers, or warehouses in stock, one variable does not change. That is, inventory must be visible. The article that we found talks about the advantages and disadvantages of using Radio Frequency Identification (RFID) to keep track of where inventory is located. Then we correlate it back as to why it holds a significance to Omni-channel retailers with ecommerce platforms.

​The main down side to using RFID is the cost. Although the cost per unit has been dropping in recent years, it is still about 10 cents per tag on lower estimates not including the RFID reader. The cost of the tag is then absorbed into the cost of the product. Both cost and security are the main drawbacks to using RFID. The drawback involving security concerns is that hackers could potentially steal the data by scanning tagged items. This could lead to theft and other inaccuracies because of a breech in security. Using RFID therefore also requires both strong software protocols and contingency plans. These drawbacks to RFID ultimately have an end cost. The return on investment to implementing RFID must outweigh the costs for a company to be tempted to use this technology.

​The ultimate goal of using RFID technology is to eliminate the inaccuracies that come with using a bar code alternative. In the early years of RFID, the technology did not accomplish this goal because the data was “buggy”. Improving technologies have made the accuracy of inventory data far more reliable. Another benefit to using the technology is that a variety of products can be consolidated into one shipment between locations without confusion. RFID on individual products allow unique items to be easily identified.

​For an Omni-channel retailer with an ecommerce platform this technology has greater push to be implemented. As we talked about earlier, delivery time promises are more frequently being cut. Which is why inventory accuracy plays such an important roll. Even if we disregard a short delivery time promise,  inventory accuracy can be extremely important to the business, especially if they share that inventory visibility with the customer. If a customer reaches out through a company’s website and finds that they can have their product that day by picking it up in the store, that might be an appealing option. Imagine that same customer’s dismay although if they go all the way to the store to learn that the inventory data was inaccurate. That product was not at the store after going out of their way to find the item that day. The disgruntled customer will be unhappy, potentially avoid giving them their business again, and does not complete the sale. If RFID can make the inventory data accurately visible to their customers it may save the sale, give the customer a high level of satisfaction, and win back their future business.
 
Ames, Ben. “Has RFID found a home?” DC Velocity, Strategic Insight, 10 Sept. 2015, ​www.dcvelocity.com/articles/20150910-has-rfid-found-a-home/.