Components Expert

How RFID has an impact on the retail industry

There are many hot new technologies at the forefront of online and offline retail, including machine learning, the Internet of Things (IoT), and blockchain. The Internet of Things—especially in radio frequency identification (RFID)—also has great potential to transform any retail business.

RFID has existed for many years and has been adopted by a series of retailers including Wal-Mart, Macy’s and Amazon. Its working method is very simple, each product has a radio frequency ID tag, which has its own unique magnetic signature. The signature is read by the receiver or “RFID reader”, which not only records the unique ID, but also the location of the marked product.

RFID technology is also the same technology you see on the new “plug and play” credit card.

Since the tag is read by magnetic means, it is a more effective system than a typical visual scanning system because the tag and reader do not need to communicate on the site line. Therefore, the direct benefit of an RFID-based system is that a typical retailer can reduce the time required for a typical physical inventory by approximately 90%. In other words, if it takes 3 days to perform an inventory using barcode scanning, it would take 45 minutes to perform the same inventory using RFID.

RFID also greatly improves accuracy. Usually, the actual inventory scanned manually has an inaccuracy rate of 4%. This number is compounded throughout the year, so cycle counts performed throughout the fiscal year may reach an accuracy of more than 60% during the holiday sales season.

On the contrary, the inaccuracy rate of RFID is usually less than 0.5%, which means that the inventory accuracy for the whole year is much higher.

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