RFID needs to get real

Blue and Purple RFID Tag (midnightcomm via Flickr)RFID World 2008. Several days of discussion panels, demonstrations and hands-on workshops. One thing that is painfully apparent is that the technology is still heavily viewed as a solution for supply chain management. Nearly every vendor present is hawking hardware or touting extremely sophisticated solutions that solve a wide variety of B2B and internal inventory management problems. And, no question that this is an important aspect of the technology.

That being said, I am disappointed at the scarcity of consumer focused solutions. Though solving supply chain woes are today’s “killer app” for RFID Systems, I am surprised that there seems to be no coherent focus on demand chain applications. Moving inventory off the shelves is equally important as getting it there in the first place.

In fact, it can be argued that there are finite cost benefits to supply chain management through RFID. At some point the expense of adding more technology will reap diminished returns as there are only so many touchpoints in a supply chain that can appreciably benefit from automation.

Where some of the most significant benefits of the technology can be seen is where it has been used in branded, consumer oriented solutions. Though ironically, the consumer is generally unaware that it is RFID technology under the hood. Some notable examples are:

  • E-ZPass – Toll Payment System. Deployed several years ago in the Northeast US the E-ZPass provides commuters with a RFID tagged object to place in their vehicle. The system employs RFID readers in toll lanes which read the unique tag as the vehicle passes through. The toll is registered and charged to the driver’s account. The institution of the system has allowed for increased throughput while radically reducing traffic congestion at toll points throughout the Northeast, benefiting the drivers, the environment, and the state coffers.

  • ExxonMobil’s SpeedPass – Contactless Payment System. Provides consumers with an RFID tagged keyfob. Readers in-store and on the fuel pumps allow a commuter to pay for gas and convenience items with a quick pass of the keyfob. Purchases are registered to the consumer’s account. ExxonMobil further incentivizes the consumer by offering discounts for using the system. Again, benefiting the retailer by allowing for faster transactions while providing a positive brand experience for the consumer by making those transactions quick and easy.

  • Mastercard’s PayPass – Contactless Payment System. Similar to SpeedPass, the conventional-looking Mastercards are issued with an embedded unique RFID tag. Consumers can simply ‘tap’ their card against a reader (generally placed in front of the checkout register) to pay for merchandise and food at thousands of participating locations. The PayPass can also take the form of a keyfob or PayPass-enabled cellphone. Results? Shorter lines, faster payments, higher sales productivity, and of course, a satisfying brand experience.

In addition to these few mentioned, there are dozens of other unique solutions deployed in various countries around the world that are driving consumer engagement and brand uplift. However, with few exceptions, they are home-grown and proprietary.

So the question becomes: Why are there so few RFID integrators providing off-the-shelf consumer-based solutions? The features of the technology clearly support the promise of a tremendously rich consumer experience, yet lie nearly untapped. Perhaps it’s the perceived cost of implementation. Perhaps Brand Owners are apprehensive about driving the technology into their businesses when there is such a dearth of refined solutions and supportive marketing data. Or perhaps the technology just suffers from it’s own branding problem. If you look at the successful deployments, there is little mention of RFID in their marketing message.

For whatever reason, the technology is experiencing slow adoption. And as a result, there are relatively few players in the consumer-based solution market.

Ah, but all is not lost. There are projects currently underway that should significantly change the general perception about the usefulness of the technology as a consumer engagement tool.

One of which is underway at American Apparel, who has often been a pioneer in the digital space, (Anyone out there still using Second Life?). The clothing company will be rolling out an in-store marketing strategy next month that utilizes RFID. According to Zander Livingston, who is the Director of RFID Technology at American Apparel, the solution is primary an in-store inventory control system but will double as a tool to drive consumer engagement. Though it is unclear exactly what form this engagement will take, I have faith that it will be more than just price-checking kiosks.

Unfortunately, for the moment marketers and retailers will still need to look hard for turn-key solutions they can deploy to drive consumer interaction. The bright-side is that the tech is becoming more affordable, and easier to implement. This will hopefully spark a wave of creative solutions by smaller, more nimble companies that see the value proposition. Create the apps and they will come…