In-Store Mobile Sounds Great, But Who's Watching Out For Thieves?

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.)(Yet another difficulty with any system that lets customers self-checkout on the spot: snatch-and-grab thieves who wait for customers to buy big-ticket items, then grab them and run. Once the item has been scanned and checked off in the LP inventory, it's almost impossible to track down the serial number to catch the thief at the door. Then again, thieves and pickpockets already walk away with purses and wallets all the time.)

There's another problem with using RFID tags for LP: Privacy advocates hate the idea. For customers to be able to walk out of a store and have their items confirmed as purchased, the RFID tags can't be deactivated or removed. Remember the uproar when Wal-Mart first began RFID-tagging underwear? It really does put customers in the position of being uniquely identifiable by the tags on their clothes. That seems like a minimal risk today—but then, having a thief steal payment-card numbers with a cheap RFID scanner or personal information from wireless or mobile-phone data transmissions seemed pretty unlikely just a few years ago, too.

Could RFID tags be made to self-destruct as soon as they leave the store? Or the first time clothing is washed? Or just to decay over time? Sure—but we're talking about current technology here. And before you start spending on types of RFID tags that haven't been invented yet, first you'll need inventory systems that are fast enough to catch the signal that an item has been sold, then check every tag a customer is carrying in real time as that customer is striding out the door. That's a lot of very fast technology. It exists, but you probably don't want to pay for it this year.

Oh, and all that technology probably won't reduce the number of cash wraps and LP associates you need. The cash wraps may be less busy, but it'll be a long time before everyone is using their phones to buy items on the spot. And LP will still be necessary for all those suspicious cases of items with no tags registering.

What you will get is much tighter inventory control. You'll know exactly what has sold and, if you scan the aisles every night, exactly what got past your LP people at the door or walked out with sticky-fingered employees.

And you'll make at least a few customers happy with the ability to avoid cash-wrap lines and own items instantly. You're just not likely to make those people happy anytime soon.