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Japanese Publisher Sees RFID as a Cure for Overstocks
Shogakukan is applying EPC Gen 2 RFID tags to its home medical dictionaries to reduce overordering by book retailers, and to expedite returns.
Jan 05, 2009—Japanese publisher Shogakukan is employing RFID technology to help encourage its retailers to limit their book orders to the quantities they can realistically sell, thereby reducing the number of books those companies return to the publisher due to overstocking their stores.
The system, provided by Japanese software consulting firm Suuri-Keikaku using UPM Raflatac UHF EPC Gen 2 Crab RFID inlays, helps the publishing house keep closer tabs on its books if they are returned, as well as reduce costs related to those returned, unsold volumes. At present, the return rate of books from retail sellers in Japan is approximately 43 percent, which costs publishers in both the shipping and overproduction of those titles. In some cases, publishers may also refuse a retailer's orders because they are unwilling to print extra quantities when there is a high risk of returns.
Shogakukan began deploying the system with its recently published Home Medical Dictionary. The publisher, under its parent company, Hitotsubashi Group, has produced learning magazines for elementary school children since 1922, but has recently been expanding to general magazines, and now publishes books such as dictionaries and encyclopedias.
Bookstores that sell Shogakukan titles can choose between one of two options when ordering. In the traditional scenario, the stores order books on consignment, and can then return unsold items to Shogakukan without incurring an expense. In this case, bookstores may tend to order more than they require, since need not pay for the books until they sell them, and since there is no penalty for failing to sell the entire order—they can simply return any items that do not sell. Shogakukan not only must pay extra to ship larger-than-needed book orders to the retailers, it also ends up printing more copies than the stores can actually sell.
The second option is a non-consignment arrangement in which a store purchases the books outright from the publisher. In this scenario, the retailer receives a higher profit margin for each copy it sells, though since it has already purchased the books, it must seek a refund for each one returned, making the return process less desirable (since it requires additional time and paperwork for stores) and giving the retailers more incentive to order a realistic number of books. This option may not always be a preferable choice for a store when ordering a title that might be considered "high-risk" (that is, one the retailer is unsure will sell). In such a case, the consignment choice would be more beneficial.
For a non-consignment order, each book returned must be manually checked by Shogakukan employees for damage before refunds can be issued to the bookstore. Without an RFID system, the staff would need to either scan a bar-coded stock-keeping unit (SKU) number on each book, or key in the item's ISBN number to check the company's back-end system for records indicating whether the store had purchased such a title. All of this is a labor-intensive process.
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