Is RFID our best bad idea for in-store fulfillment?

          Laura Heller

The role of the store is changing in the new omnichannel order, but the technology needed to fuel it is still underutilized. Case in point, RFID and in-store fulfillment for online orders.

There's a scene in the movie "Argo," where the characters played by Ben Affleck and Bryan Cranston are explaining their plan to rescue six U.S. diplomats from Iran as the hostage crisis played out. The plan is ridiculous—to pose as a movie crew looking for exotic locations to film a sci-fi flick—while Affleck's CIA agent Tony Mendez spirits away the group hiding at the Canadian ambassador's home.

There were a few other plans, one involving bicycles through the mountains, in winter. But the movie crew was the one being pushed. And the conversation went like this:

"There are only bad options. It's about finding the best one."

"You don't have a better bad idea than this?"

"This is the best bad idea, sir. By far."

I was reminded of this exchange after spending a couple days with retail supply chain executives and vendors, where the main topic of conversation was how to handle online orders fulfilled at, or returned to, physical stores.

It's the most popular feature being made available for online orders, and the most perplexing for retailers.

Retailers today are offering several variations of this option, and calling it different things. But for our purposes, buy-online-fulfill-at-store (BOFS) will have to do.

Retailers implementing BOFS are still trying to figure out the best ways to do so, and the complications and potential disruptions are many.

Imagine the scenarios. A shopper accesses item availability in the store's inventory through the digital tool. She places the order, effectively reserving the item, and heads out to the store to pick it up. But before it can be picked and packed, another shopper buys it. Maybe it was even in a shopping cart in the checkout line at the time she clicked "buy."

Or maybe there was an internal system error, or the item was lost to shrink. And what happens if the item is reserved by two people online, and the orders get crossed?

And what about the staffing? How does a store allocate labor to pick and pack orders? Who gets credit for the sale, and who gets dinged for the return? What kind of company-wide reforms need to be put into place to realign rewards around the new omnichannel order where BOFS rules? And what kind of systems need to be in place to support this?

There are many solutions being tested and in some cases implemented, but one solution keeps coming up: RFID.

We've been talking about the potential of RFID since the early 2000s, but that potential has never been realized. The benefits never really outweighed the costs of chain-wide implementation paired with vendor compliance. But the needs of BOFS may finally tip that equation in RFID's favor.

RFID tags and readers will make finding an item ordered online easier, reducing store labor. The accuracy will reduce the risk of dissatisfied customers, and the replenishment options reduce out-of-stocks, overburdened systems and human error.

One thing is for sure: BOFS is here to stay. Using stores as fulfillment centers makes sense and is offering retailers a way to utilize existing resources to capture incremental sales. Whether it's RFID or some new solution, RFID may well be our best bad idea. -Laura

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