RFID not Quite the Thing for Small Businesses

Filed in archive RFID Basics on August 26, 2004

Entrepreneur Magazine says that small businesses will be reading a lot about RFID in 2005, but not actually adopting it until a few years following that.

I'd say that pretty much sums up the picture for most small businesses -- they will not be customers for RFID anytime soon. RFID is one of those technologies that will be adopted first in the largest companies and slowly trickle down market.

Right now the average small manufacturer or retailer can't justify the business case for adopting RFID in its internal processes or supply chain. The cost of implementation is still too high. It's not just the tag price, it is the cost of the entire implementation that adds up: tags, readers, testing and evaluation, worker training, data systems re-work, etc. Also, the smaller the business, the less it has to gain in supply chain efficiencies and reduced costs through RFID tracking. So until the cost drops, RFID doesn't make sense for the average small business.

And then you have the normal small-business behavior when it comes to any new technology. I've written about this many times over at my Small Business Trends blog. Aside from the early adopters, most small businesses wait to implement new technologies until they are mistake-proof, with near plug-and-play ease to install, and after prices approach mass-market levels. In other words, most of the risk has to be driven out first. Small businesses can't afford to take technology risks.

Of course, there are some notable exceptions. For instance, some small-to-midsize suppliers may be snared in the net of Wal-Mart and DOD mandates, and have no choice but to implement RFID sooner.

RFID in animal tracking is another area of interest right now to small businesses. RFID-enabled systems are being actively marketed to small livestock producers and veterinarians.

But on the shop floor, in the warehouse and in the showroom of the average small business, RFID is still rare and will remain so for the next few years. However, savvy small business executives will be educating themselves today for the future.