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Reading Books Reduces Out-of-Stocks

BGN, Holland's largest bookseller, plans to roll out RFID at its 42 stores throughout 2007 and 2008.
By Jonathan Collins
Oct 23, 2006Many companies are struggling with the decision of whether to deploy (or even try) radio frequency identification. For Dutch bookseller Boekhandels Groep Nederland (BGN), rolling out RFID across its entire inventory in a new store was a simple decision.

"We were told by one group of consultants that we had to build a business case first, but we just said 'Let's do it,' because we know the business case by reason of argument," says Matthijs van der Lely, CEO at BGN. "It's really not that difficult."

BGN is the largest bookseller in Holland, with 42 stores and 750 employees. The company believes RFID-tagging the books at its stores could result in savings from faster and more accurate stock receiving, as well as better stock-keeping and inventory management. It could also enable more accurate invoice payments from BGN's centralized accounting operations.

"The real benefits come from reduced out-of-stocks and improving re-ordering, because you really know what you have and what you have sold," says van der Lely. "Reducing out-of-stocks alone should increase sales by 5 percent."

After some initial RFID testing in November 2005, BGN decided in December to tag and trace every book in a new store set to open in Almere, just outside of Amsterdam, the following April. BGN says the store was not a test project, but rather the first step in a plan to roll out RFID at all of its existing 42 stores throughout 2007 and 2008. The company is now in the process of bringing its different-branded stores and related Web sites under a single brand, which is calls Selexyz. The Almere store and another new location in Maastricht, set to open in November, will provide the RFID experience needed to pave the way for the other stores' deployments.

BGN admits its confidence in RFID stems from the advantages it has gained over some other retailers looking into the potential of streamlining their business with RFID. Books are RF-friendly and relatively easy to ensure reliable tag reads. They also have a high enough value—around €17 ($21.55) each—and profit margin to defray the cost of item-level tagging. In addition, BGN's entire inventory, aside from newspapers and magazines, comes from a single supplier, the Centraal Boekhuis, the sole distributor for most books sold in Holland. The more than 150-year-old Centraal Boekhuis is a not-for-profit organization owned equally by Holland's book publishers and booksellers. With Centraal Boekhuis already involved in tagging some of its books for delivery to libraries, the organization was keen to work with BGN on its RFID project to start investigating its own potential benefits from RFID-tagging commercial sales.

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