Evan Schuman's StorefrontBacktalk

A comment from a reader on an E-Commerce Web site caught my eye. Forget about improving POS terminals for mobile, he said. It should work like this: I see something I want to buy. I scan the tag with my phone. I type in my PIN. Bang—it’s mine. That sounds like the perfect merger of in-store and M-Commerce—no more lines at the cash wrap for the retailer, instant gratification for the customer. There’s just one nagging problem. OK, there are lots of problems, but consider this one: When everyone is walking out the door with their items in hand, how do you tell what’s been bought and what’s being stolen?

Clearly it can be done—Apple Stores let roving associates complete transactions and so does Home Depot for some transactions. But doing it on a large scale with easy-to-shoplift items? The obvious answer is to use technology—and it’s possible to do with currently available technology. Unfortunately, there’s a tradeoff between privacy and loss prevention that customers may not be ready to make just yet.

First, what won’t work? Barcodes. They’re convenient, they’re cheap, and any phone with a camera can scan them easily. Making the sale is easy. Confirming the sale is easy, too—just use a receipt instantly E-mailed to the customer’s phone. But loss prevention (LP)? Using barcodes just means replacing the line at the cash wrap with a line at the door as associates check cell-phone screens against whatever customers are carrying.

(And that’s assuming the customer hasn’t carried anything into the store from another retailer. Where did that sweater or package of boxer shorts come from? Time to check multiple paper and cell-phone receipts—and say goodbye to a lot of irritated customers.)

What works better? Unit-level RFID tags with individual serial numbers. When the customer scans the tag and buys the item, the LP database marks the item sold. When the customer gets to the door, RFID scanners ping every tag for a serial number and check the LP database to confirm that each item has been paid for. A customer walking out with items in hand or in a bag but with no RFID tags registering? That’s suspicious.

Of course, this system works better still if all retailers get on the serialized-RFID-tag bandwagon. That way, if an item walks out the door with an RFID tag whose serial number isn’t in your store’s inventory you don’t care—it’s in someone else’s system, so it’s not being stolen from you.

And that, in turn, depends on retailers (or more likely manufacturers) making sure that every item really does have a unique serial number. If each retailer uses its own set of serial numbers, they’ll undoubtedly overlap—and really confuse LP, when a customer is walking out with a jacket purchased in a store down the mall while inventory says the suspect tag is attached to a big-screen TV.

(Yet another difficulty with any system that lets customers self-checkout on the spot: snatch-and-grab thieves.)