RFID in 2006: A Story of Extremes
As we enter 2007, many RFID suppliers are licking their wounds, while for others, RFID business is booming. As IDTechEx interview solution providers and users across the RFID industry for the new report “RFID Forecasts, Players & Opportunities 2007-2017” to be released in January, Raghu Das, CEO, summarizes some of the findings.
The volumes that never came
At the beginning of 2006, there was much optimism in the retail mandate sector. RFID tag production capacities had been put in place and Gen 2 was delivering superior performance than previous versions. However, arguably the pallet/case market for RFID tags became the nearest thing to a black hole in the RFID universe in 2006, thanks to reluctant mandated customers, technical problems and pricing for volumes that never came despite retailers reporting excellent paybacks.
Speaking to many consumer goods manufacturers IDTechEx has found considerable foot dragging resulting in pallet/case tag purchases being as little as 250-300 million tags in 2006 at the heavily loss making price of around 10 to 15 cents each. Readers are also being sold at a heavy loss. Some participants have seen benefits. Procter and Gamble found that tagging display cases for Wal-Mart with shared information led to a sales increase 19% of Fusion blades caused by more timely arrival at shelf. Hanna Candle Company found 90 pallets worth $12.6M went missing but were found with the RFID reducing a knock on effect for ordering. However, these benefits are not necessarily paybacks and companies are not saying they are sustainable.
These sums of money are among the smallest of any RFID sector, less than esoteric niches like one company tagging random samples of mail to assess performance or one company earns from tagging cows. The point is that the mail tags are ten dollars or more and the cow tags are two dollars. Both of those companies have around $50 million of probably profitable sales. One could go on and on with examples like this.