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An Opportunity for RFID Companies

Offer a simple, cost-efficient solution that delivers value, and you'll have a customer for life.
Posted By Mark Roberti, 03.14.2016

After I wrote about the marketing challenges RFID startups face (see A Question of Life or Death for RFID Companies and More on the Question of Life or Death), I received an e-mail from an entrepreneur who suggested that my column and blog were not very encouraging. I said that by no means did I intend to discourage RFID startups. In fact, I believe the RFID market has never been better for startups.

First, there is more business to be had. And second, even the larger RFID companies have not established their brands in the minds of buyers (see Brand Problems for RFID Vendors). So the field is wide open for a startup that has both good products and strong marketing.

My correspondent suggested that perhaps RFID Journal could offer free advertisements in exchange for a percentage of the resulting business. I had considered this approach briefly, but had concluded that it would put RFID Journal in a position that could be perceived as compromising our objectivity. I've also thought about working with RFID technology providers to sell starter solutions, which I know some end users are seeking. We tried this a few years ago, but the solutions were too costly (approximately $10,000).

I think companies would do well to sell a simple RFID solution that would include tags, readers and basic software for conducting inventory counts, for roughly $3,000. I believe we could sell these and take a percentage, and the RFID company would have a customer that would likely expand on the solution over time.

Sadly, most RFID providers don't want to get leads this way, because they would have to do some handholding for the company that purchased the starter kit. They don't want to make the investment in time, in the hope that the user will see the value of RFID and go for something much larger over the long term.

I believe that getting the technology in the hands of more companies is exactly the way to sell RFID. Any end user that tries a simple solution which delivers a lot of value will want to expand to a more robust solution later on. I seem to be alone on this, though, even though I am willing to put skin in the game.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.

USER COMMENTS

Valentin Voinescu 2016-03-16 09:59:39 AM
Producing "basic software" that conducts inventory counts will cost a few months of developer work and providing support to a customer like this will cost a few months of support as well. Unless you are going to have at least 30 customers like this in a period of 6 months, I do not see how you break even at least, let alone make any profit.
Ralph Jarmain 2016-03-17 06:10:54 PM
Personally I think we need to draw a comparison between the different technologies and what ‘inventory count’ may mean. For passive RFID then any form of reader providing a reasonable range (at $1000 plus for fixed and $1500 plus for mobile) plus an application ‘which needs to be developed’ each time will likely cost more than $3000. If though the application is kept flexible enough (and the tag only has an ID and not multiple other fields of data written to it) then there is no reason why a basic application would need to be developed more than once. For example we provide an application that allows any asset with any attributes to be defined (by the end customer, not by a developer) and that sells for $2000 (for up to 10 Nodes / readers) and whilst we focus primarily on active RFID there is no reason why this could not be adapted for passive RFID. The challenge with the various passive technologies is the ‘inventory type’ (most passive tags are generally asset specific and readers are country-specific) and this makes it difficult to propose off-the-shelf solutions, especially if you are trying to save costs by not having to visit the prospect and carry out a proof of concept each time. Regards Ralph Jarmain, SecuriCode Ltd (http://www.securicode.co.uk)
Naresh Mittal 2016-03-18 04:59:45 PM
As mentioned earlier by two of the readers, there is no way a system can be provided at even the cost of $5000. There is another solution for customers who don't want to spend too much on RFID solutions to start with. And the solution is - leasing the system for initial trial period, let's say 3 months. A nominal non-refundable fee can be charged for hardware, software and setup. Tags had to be bought outright as these are non-returnable assets. This way, the customer gets a fully functional system with many advanced features. If the customer is happy with the trial, a functional system can be bought a amount paid during the trial period can be offset against the total amount. TrackSeal does offer leasing services for trial periods. Please do get in touch with us on - info@trackseal.com Best Regards, Naresh MIttal TrackSeal Pty Ltd (www.trackseal.com)
Jeffrey Dungen 2016-04-03 08:41:14 PM
Mark, we too believe that getting the technology in the hands of more companies is exactly the way to sell RFID. We support both business models the previous posters suggest: 1) outright purchase (our starter kits start at $150) 2) platform-as-a-service (under $100/month/sensor) While these accessible price-points, which are well under the proposed $3k threshold, have increased adoption, we would still argue that the RFID market (in our case Active RFID & BLE) remains tough for startups and established businesses alike. Customers are typically looking to buy solutions, not starter kits, and the former requires a significant investment in development and support. Jeffrey Dungen, reelyActive (reelyactive.com)
Jasper Pons 2016-04-04 01:41:03 PM
You are looking at it the wrong way, rfid is just another data collection method along with keyboard data capture, barcodes, Excel, and ERP systems. You need to offer the customer a solution, and not just technology. If you take this approach then it is possible to offer an rfid solution for under $3000 (for asset management using a USB rfid scanner connected to a laptop ). The costs can be reduced if you offer a hybrid solution, where rfid is only used on key assets, e. G. Computers, and barcodes are used on other "slow moving" assets eg furniture. I don't think that a wms rfid system could come in under $3k because the handheld rfid scanner costs about 3k on its own. Our asset management system www.scanman.info, supports data capture from many sources including excel, barcodes and some rfid scanners , and more importantly, the processing and destination of the captured data is customisable by changing the database. It costs $50 per user per month, and there is a once off setup fee of $2000 which we do remotely. That leaves you some cash to buy a laptop and USB scanner. Good news is our software also doubles as a WMS so you can save on user licences if you want to manage assets and a warehouse.
Martin Parsons 2017-03-30 04:54:21 AM
In my limited exposure to system sales, we are a tagging company not a system seller , i've picked up some views from clients and suppliers. It seems to me that more harm has been done than good by 'cheap' RFID systems already. Failed systems have created an anti-RFID segment of the potential market, and we all know that a bad experience spreads far quicker than a good one. The smart move, from my perspective, would be to build much better systems which can be scaled up through a clients business'. We are working with system builders now who have developed solutions far more effective / impressive than i've previously seen. I have no doubt that the system(s) i speak of will cost considerably more than a few thousand bucks, and so they should. My thinking is that successful implementation of these systems will have a much greater chance of repairing / improving / enhancing the image of RFID than a part solution built on a budget. I've got to agree with Jasper Pons also, 'rfid is just another data collection method', indeed it is. Other than libraries, where the data is still handled by an LMS and RFID is just a conduit, most other applications require a robust RFID process and an equally robust data collection and management solution. A glorified access database isn't really going to cut it. Sadly some systems are pretty much that, which will serve only to hurt the overall view of RFID as a technology, incorrectly of course. The danger with a 'budget' system is that it ultimately would do little to enhance the image of RFID, more likely the opposite. Aim for outstanding is my view. Cheers Martin A Parsons www.thetaggingteam.com

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