200 Million Item-Level RFID Chips To Be Sold This Year

Written by Evan Schuman
June 7th, 2006

This year, some 1.3 billion RFID tags will be sold, a number that will top 2.2 billion next year, according to figures released Wednesday by European market analyst firm IDTechEx. Those figures are noteworthy in the sense that they show particularly steep growth in the immediate future.

But the most interesting detail in the new figures is an estimate that 200 million of those tags to be sold this year will be used for item-level tagging, which is the same problem the firm is projecting will be sold this year for contactless smart cards. Let’s put those figures into startling context: the 400 million for item-level and smart cards is merely 20 percent less than the 500 million IDTechEx expects to be purchased for the traditional pallets and cases of supply chain drudgery.

Granted, the number purchased certainly does not equate to the number used so the installed base of RFID in the supply chain still reigns very supreme. But it’s interesting that in mid-2006, the non-traditional-supply-chain uses is even approaching pallets and cases.

As we’ve noted with our profile of Procter & Gamble’s RFID experiments, companies are starting to seriously explore how far they should extend the supply chain. Should it stop at retailer’s distribution center? The store’s backroom? The store’s floor? When it’s placed on a shelf? When it’s removed from a shelf into a smartcart? When it passes through a POS? Heck, there are those who want to explore tracking it through to the customer’s home and beyond.

There is no right answer to where today’s supply chain should end. But these new figures certainly suggest a lot of retailers and manufacturers are seriously trying to ask those questions.


One Comment | Read 200 Million Item-Level RFID Chips To Be Sold This Year

  1. Paula Rosenblum Says:

    Item level tagging has a lot of promise for high value merchandise in the relatively short term.

    Think about being able to track the provenance of “grey market” goods – otherwise known as diverted product. This is of great interest to brand managers making $150 sneakers or shoes or cosmetics.

    Longer term, if it could be made feasible, retailers would rejoice at eliminating their annual “tithe” to RGIS and other physical inventory providers. Just like locator system-based cycle counts freed up distribution centers from annual inventories, so too, RFID could free up stores from semi-annual inventories, while upping accuracy.

    I’m much more jazzed about long-term value of RFID at an item level than I am about seeing it embedded in corrugated. Makes much more retail sense.


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