Why is the RFID tag project of footwear and clothing brands progressing so slowly?

Friends who are familiar with the RFID circle know that overseas fast-selling footwear and clothing brands basically have RFID tags, but domestic footwear and clothing brands rarely have RFID.

Why is there such a difference?

The first reason that many people may think of is that domestic footwear and clothing companies have no money, and the price and profit level is not as high as that of foreign countries. But according to our understanding, the reason why domestic footwear and clothing brands do not use RFID is not because they have no money.

First of all, looking at the price of the product, the representatives of domestic footwear and clothing brands are: Anta, Li Ning, Heilan Home, etc. The product prices of these brands are basically the same as those of Nike, Adidas and other brands, and they are even more expensive than brands such as Uniqlo and Decathlon.

Looking at the financial report performance, the gross profit margins of domestic brands such as Anta, Li Ning, and Heilan Home are maintained at around 50-60%, and the net profit margins are also maintained at around 15%-30%. This profit performance is better than most technology-based companies, and even companies with high-tech barriers such as chips rarely achieve this gross profit and net profit performance.

Since it is not because of lack of money, what is the reason?

That is the question of return on investment (ROI).

How to understand this point? Let me give you a simple example. If you have a sum of money (assuming it is 1 million), what would you do?

More stable people would choose to keep the money in the bank, because this way they can earn 2%-3% interest every year. Although the profit is not much, its income is stable and reliable.

More aggressive people would choose to use it for investment, such as buying stocks and futures, etc. This method may double your Assets or make you lose all your money.

Most people in life are of the first type, because this is human nature.

And this logic is also applicable to the topic of "Why are domestic footwear brands slow to adopt RFID" to be discussed in this article.

For footwear and clothing brand manufacturers, the RFID project means cost investment, such as investing 1 million. If you can tell it that the RFID system can bring far more than 1 million in revenue (mainly saving labor costs and losses), then I believe that many footwear and clothing brand owners are willing to try it.

Therefore, the most critical point of the RFID project for domestic footwear and clothing brands is to make manufacturers believe that investing in RFID solutions has certain benefits and clear ROI, rather than an uncontrollable "risk investment".

So how can these footwear and clothing brand manufacturers believe in the ROI that RFID solutions can bring? The answer is that there are a large number of successful cases that can be referenced.

At this time, a large number of overseas manufacturers are good reference cases, the most typical of which is Decathlon. Its product prices are relatively low, and its gross profit margin is also relatively low. However, because the company's high operating efficiency saves a lot of operating costs, the company's net profit margin performance is not low. Decathlon is a typical case of RFID solutions to reduce costs and increase efficiency.

During the research process of this year's "2024 China RFID Passive Internet of Things Industry White Paper", through exchanges with friends from all walks of life in the industry, we have come to a very clear trend: the signal of RFID tags on domestic footwear and clothing brands is very clear, and even the trend of RFID tags becoming the standard of footwear and clothing brands is gradually taking shape.

Why do you say this?

First, we have seen that the leading domestic footwear and apparel brands are using RFID. The leader of domestic footwear and apparel brands is Anta. Anta's sub-brand FILA has popularized the use of RFID tags a few years ago, and the parent brand's RFID project has started this year. It is expected that there will be large-scale applications by the end of the year, and Heilan Home has been popularizing it for many years.

Secondly, we learned that although there are not many large-scale RFID tag projects among the leading domestic footwear and apparel brands, at least half of the top 100 brands are actively preparing to use RFID tags. It is expected that in the next few years, we will see more and more domestic brands using RFID tags.

Finally, there is another point, that is, many of the e-commerce brands that have emerged in recent years have already used RFID tags. Although their single brand volume is not large, most of them are about a few million projects each year, but their progress in popularizing RFID tags is still ahead of offline Store brands, because online sales channels such as live streaming have a very high matching degree between the business logic of product supply chain management and the capabilities of RFID tags.