RFID Tags: Decrease Order Cancellations and Improve Sales

From providing moisture control to keep products fresh to giving retailers inventory updates — smart packaging is revolutionizing the retail landscape. Active packaging and intelligent packaging has grown recently as more retailers recognize its value. According to research by the Freedonia Group, Inc. smart packaging is expected to grow by 8% annually as advances in digital printing and 3D printing makes smart packaging cheaper.

How Do RFID Tags Work?

One of the most popular forms of smart packaging, particularly with clothing companies is RFID packaging. RFID stands for Radio Frequency Identification. This technology works like a barcode and acts as a unique identifier for the object with that tag. When the tag is scanned by a RFID reader, it provides the reader with a host of information about the product from special offers to the store’s quantity of that product and its other locations.

How RFID Works

The Advantages of RFID Tags

RFID tags are growing in popularity. In fact, new retailers adopting RFID grew by 32% from 2015 to 2016 according to the 2016 State of RFID Adoption study. Here’s why you too should consider incorporating RFID technology into your packaging.

Inventory Accuracy: A pain point for consumers and retailers alike is inaccurate inventory readings. RFID can ensure inventory accuracy and give you a better gauge as to when you need to begin restocking products. It can also alert you to when you have a lot of old stock. Having an accurate inventory estimate can prevent canceled orders and in turn improve customer satisfaction and sales.

Omni-Channel Capabilities: As more shoppers shop online, and expect home delivery options, streamlining your company’s omnichannel capabilities is increasingly important. RFID tags can assist with this as the microchips let you track every step of the product’s journey. Being able to track items accurately has improved the success of athletic wear company Lululemon Athletica Inc.’s buy online, pickup in store and ship-to-store transactions tremendously. Currently, 80% of Lululemon stores have omnichannel capabilities, and the cancellation rate for orders those transactions varies from 1-4%, a figure much lower than the industry standard. “Retailers that do omnichannel without RFID have cancellation rates between 20 percent to 30 percent,” said Jonathan Aitken, Lululemon Athletica’s director IT, store technology operations and RFID program director in an interview with apparel.edgl.com

Accessibility/Ease of Use: Unlike traditional barcodes, objects with RFID tags can be scanned with ease even from a short distance away. In fact, some high-frequency scanners can scan objects from up to 20 feet away. Moreover, a scanner could scan multiple pairs of shoes or a whole grocery bag filled with food in one shot, saving time.

Promotional information: When a RFID tag is scanned the reader can provide details about the product such as its country of origin or special promotions available — these features can be a real value-add for customers.

RFID TAGSRFID packaging has a number of benefits; however, it isn’t without its faults. For example, if signals from two or more readers overlap then the tag will not scan properly. This is a common issue. To avoid this issue, it’s important that readers are spread out and carefully installed to prevent overlap. Another common issue is tag collision — a problem that occurs when there are too many tags confined in a small space. A solution to this is to test your reader to identify the maximum quantity of tags it can read in a session and then stay within that limit going forward.

Like all technology, RFID technology has its kinks, but its string of advantages makes it one of the fastest growing forms of smart packaging.