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RFID for Reverse Logistics

A startup plans to use RFID to turn the problem of returns into an opportunity to generate new revenue.
Dec 27, 2002Dec. 30, 2002 - Companies are very good at getting their products to customers. But most are not set up to deal efficiently with returns. Intellareturn, a startup based in New York, wants to use RFID technology not just to solve the problem of reverse logistics, but also to give companies a way to provide value-added services.

The idea of using RFID to manage returns came to Intellareturn CEO Elliot Klein in 1999 when he lost his appointment book on a business trip. While zipping through an E-ZPass toll lane in New York, he had a figured out a way lost items might be recovered and returned to their owners. "I put two and two together and realized that there was an opportunity to use E-ZPass-type technology to reinvent lost and found and create new business solutions," Klein says.

Klein spent the next three years building a business model and software applications needed to make the recovery of lost goods and the return of products simple and painless. None of the parcel service companies have launched a pilot yet because the price of tags and readers remains too high and standards still haven't matured to the point where companies have the confidence to invest millions in new equipment.

But Klein is confident that that is about to change. "I would expect at least one or two active pilots by the second quarter, based on discussions I've had with these companies," he says.

The parcel companies are needed to make the system work, but Klein is targeting companies that need to manage returns, particularly consumer electronics manufacturers. Sony might, for example, embed an Intellareturn RFID tag in a MiniDisc Walkman. If a customer agrees to buy an extended warranty, Sony could offer to automatically pick up the product if it needs to be serviced or have it returned for free if it is lost and turned in.

Here’s how it might work. The customer goes online to register and enters personal information. That activates the Intellareturn process. If the Walkman is lost in an airport, lost and found could identify it by its tag and have it returned via one of the major parcel carriers. Sony would pay the shipping. Or, if the product needs to be repaired, the customer could go online, enter information at the Sony Web site, and Sony would have a parcel service pick it up.

The consumer doesn't need to fill out a shipping label. When the driver arrives, he scans the tag and uses the ID number to retrieve all the information he needs from the Intellareturn Smart Return Service database, including payment instructions. Sony offers an additional service that customers may be willing to pay for, and the parcel companies generate extra business from handling the returns.

Intellareturn is working with FedEx to prove the concept. The system could be used to track and return airline baggage, briefcases, laptops and other items that business people tend to lose on trips. For the business model to work, the parcel service companies, airports, retailers and others will need to buy and install readers that work on a global standard.

Klein believes that it's only a matter of time. One reason is that applications like Intellareturn help offset the cost of installing RFID networks. "RFID creates efficiencies that are unprecedented," Klein says. "At the same time, it creates new customer service benefits and the opportunity to increase revenue by enabling companies create new applications that they potentially can charge extra for."

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