Sam's Club Tells Suppliers to Tag or Pay

By Beth Bacheldor

Jan. 11, 2008—Companies supplying goods to Sam's Club will soon pay a price if they don't meet the warehouse retailer's RFID tagging requirements by month's end.

Sam's Club, owned and operated by Wal-Mart, sent letters dated Jan. 7, 2008, to all of its suppliers, stating that by Jan. 31, every full single-item pallet shipped to its distribution center in DeSoto, Texas, or directly to one of its stores served by that DC, must bear an EPC Gen 2 RFID tag. Any supplier failing to comply will be charged a service fee, starting at $2 per untagged pallet on Feb. 1, and capping at $3 per pallet on Jan. 1, 2009. The fee will cover Sam's Club cost in having to tag the pallet itself.

Last fall, Wal-Mart reported plans to more aggressively pursue RFID tagging, particularly at its Sam's Club operations. In fact, the company had already begun asking 700 suppliers to attach an EPC Gen 2 RFID tag to each pallet of goods headed for the DeSoto Sam's Club DC (see Wal-Mart, Sam's Club Push RFID Further Along).

The decision to charge a service fee surprised some in the industry, including Dean Frew, president and CEO of Xterprise, an RFID solutions provider and systems integrator based in Carrollton, Texas. Xterprise has worked with numerous companies tasked with meeting RFID mandates, and unveiled a service this week that is specifically designed to help Sam's Club suppliers meet the tagging requirements.

"Sam's Club is going to tag the product whether suppliers do it or not, and they'll charge the supplier to do that tagging," says Frew, who has seen a copy of the letter sent to suppliers. "We knew something was coming," he states, adding that he sees the service charge as an incentive. "The value proposition [of RFID] to the retailers is so strong. While the approach Sam's Club has taken is a surprise, I think it is quite innovative."