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A First Look at Sam's Club RFID Compliance Solutions

The latest Sam's Club supplier RFID tagging requirements has spawned a new round of product and service developments intended to help companies comply. This article outlines what is available and the general climate suppliers face.
Feb 27, 2008This article was originally published by RFID Update.

February 27, 2008—The RFID tagging requirements that Sam's Club communicated to suppliers last month may appear more challenging than previous programs -- the Wal-Mart subsidiary called for tagging to go beyond pallets to the sellable-unit level, and instituted fees of up to $3 per item for non-compliance. But many feel compliance will be easier than it was for the original RFID tagging requirements Wal-Mart issued in 2004. The key difference is: this time there are off-the-shelf compliance solutions available quickly. RFID Update received announcements about five such solutions within two weeks of the new Sam's Club requirements becoming public.

The solutions typically include a supply of unencoded Gen2 smart labels, an RFID printer/encoder, and software for formatting and designing compliant labels. The specifics vary, especially in how solutions are delivered. Offerings include standard hardware/software bundles, a hosted application, even a label preparation service that requires users to install no equipment. The solution provider will take the customer's product and Sam's Club order information, print, encode, and test compliant labels, and ship them overnight for the customer to apply to outgoing shipments.

With help like this available, it may take suppliers less time, effort, and investment than ever before to meet RFID labeling requirements. Ironically, there are fewer solution providers focused on compliance systems than there have been in past years, when RFID program announcements by Wal-Mart, the US Department of Defense, Best Buy, METRO Group, and other organizations triggered a gold rush mentality that brought RFID firms, printing and labeling specialists, electronic commerce companies, and others into the market.

"When the first RFID requirements came out, everyone who could spell 'RFID' put a shingle out to help suppliers," Dean Frew, CEO of Dallas-based Xterprise, told RFID Update. Xterprise was one of the first companies to create comprehensive compliance solutions and has remained focused on the market throughout its ups and downs. The company is believed to hold the leading market share for RFID implementations among consumer goods manufacturers. "There are fewer providers now than there were two years ago. Companies focused on 'slap-and-ship' compliance would have a hard time scaling and adjusting to meeting higher volumes and changing needs."

"We've not seen an uptick in RFID marketing [for compliance solutions]. Public automatic data capture companies did not mention Sam's Club driving sales or creating opportunities in their latest round of earnings reports," said Steve Banker of Dedham, Massachusetts-based consulting firm ARC Advisory Group. "Most WMS vendors have said their RFID business has been dead for about a year. They're not emphasizing their RFID capabilities."

Still, the new Sam's Club requirements -- which are only about a month old, after all -- could well revive interest in the compliance segment.

This time, while there may be fewer competitors pursuing the market, winning sales may be more challenging. Companies today tend to want more complete solutions and are better prepared to contrast and evaluate different offerings than they were a few years ago, several vendors told RFID Update.

Compliance solutions sales may also be less profitable. Another big difference users will see in preparing for compliance today compared to 2004-2005 is significantly lower RFID hardware and label costs.

"The price of hardware is starting to come down tremendously. It could be around 50 percent of what it was in 2004. We can see the economies of scale starting to hit," said Mike Beedles of RFID printer/encoder manufacturer SATO America, which offers a compliance kit.

While no vendors RFID Update spoke with would go on record with specific prices, several said smart labels suitable for compliance tagging are available for between 15 and 20 cents a piece today, compared to between 40 and 70 cents when the first round of compliance requirements came out.

"I don't hear as much from customers about the cost to comply as I hear 'We just don't have the time to add it to our already-full IT to-do list,'" said Beedles. "If you can send someone out to the customer to set the compliance system up, that's what people are interested in. If you're going to send out equipment and a big manual on how to figure it out, no one's interested in that."

The new solutions available to assist with Sam's Club compliance range from equipment and supplies to high-touch implementation and labeling services. Soon RFID Update will publish a listing of recently-released solutions.

For more background on the latest Sam's Club RFID requirements announcement and reaction to it, see:
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