The higher the labor cost, the higher the RFID penetration rate

What are the main considerations for users to use RFID solutions? In summary, there are mainly the following aspects: management effect (after the visualization of inventory and supply chain, it is easier to manage), anti-counterfeiting traceability and brand protection, and economic benefits.

This article focuses on the economic benefits that RFID solutions can bring to customers. Before discussing, we can first look at several cases in the industry that are being applied.

The first is MINISO. MINISO currently uses RFID tags on a large scale in the US market, but in the Chinese market, as the company's base, it does not use RFID tags.

The second is Cainiao logistics. Cainiao currently uses single-item RFID tags for express parcels sent to Europe, but it does not use them in the domestic market.

The reason why we choose these cases is that these brands are all Chinese companies, and their business base is in China. However, they only used RFID tags in developed countries in Europe and America, but not in China. Using Chinese brands as examples can better illustrate the point we want to explain today - that is, the use of RFID tags. The most critical consideration is labor cost. In simple terms, the use of RFID tags in countries and regions with high labor costs can better reflect its economic benefits.

The economic benefits brought by RFID solutions can basically be converted into labor costs, for example:

First, reduce the use of labor, such as improving inventory efficiency and reducing the use of labor in the inventory counting process. For example, in the cashier process, the previous Stores needed to arrange special personnel to cashier, but after using RFID Library-self-service-borrowing-and-returning-machine-source-manufacturer-UHF-touch-screen-borrowing-and-returning-machine.html target='_blank'>self-service settlement, such personnel are no longer needed. These are the most direct reflections of labor costs.

Second, reduce the loss cost. In scenarios such as retail fast-moving consumer goods and express logistics, it is inevitable that there will be certain losses due to various reasons. For example, the items are still in the warehouse but difficult to find, or they are not recorded in time after leaving the warehouse. This problem is essentially a management problem. If the company wants to achieve an accuracy rate close to 100%, it must invest a lot of manpower to manage. In fact, RFID cannot solve this problem 100%. It is just that after using RFID, a lot of personnel management costs will be reduced.

Third, save time costs. Time is efficiency. This is also easy to convert into labor costs for calculation. Such scenarios are also very common in RFID solutions, such as looking for a certain model of product in the warehouse, or going to another store to find items when goods need to be transferred.

Of course, these are only considered from the perspective of merchants to save manpower and time costs. After using RFID solutions, it can also help consumers save a certain amount of time costs. For example, in the checkout process, you used to have to queue up in a long line, but now it can also save consumers' time costs. Therefore, from the perspective of investment-output ratio, if a customer or an industry can afford the RFID solution, it means that the economic benefits brought by the RFID solution are greater than the investment cost of the RFID solution.

To better promote the implementation of the RFID solution, efforts need to be made on both ends. On the one hand, it is to reduce the cost of the RFID solution. This aspect has been effective in recent years. The price of the RFID solution has been rolled to a lower profit margin level. Although there will be room for optimization in the future, it will not be so radical. On the other hand, it is to find industries with high labor costs to break through. Obviously, the labor costs in developed countries such as Europe and the United States are very expensive, so the economic benefits of RFID applications in these countries are more obvious;

In addition, if the industry is an employee-intensive enterprise, the effect will be more obvious. For example, industries such as express logistics and retail stores are naturally suitable for RFID. Back to the Chinese market, we have discussed with many companies when the Chinese RFID market will explode. At present, in the fast-moving consumer goods market of footwear and clothing, the proportion of RFID use by leading brands is already high, but in the larger domestic express logistics market, progress is slow.

At present, China's labor costs have been gradually increasing. It is not a very cheap labor cost market. According to our understanding, if express logistics companies use RFID solutions, their input-output ratio can basically be calculated, but after all, it is not as obvious as markets like Europe and the United States. Therefore, to break through this market, changes in market conditions are needed to stimulate it (such as direct policy stimulation, or changes in market conditions that further increase labor costs, etc.).

Of course, this is only considered from the perspective of economic benefits, and RFID has many reused functions and values that are gradually being valued. For example, brand manufacturers use it for anti-counterfeiting and traceability to ensure authenticity, etc., which can ultimately bring about an increase in economic value, but its algorithm is not as direct as labor costs.