Suppliers looking to get their products on Walmart’s shelves would be wise to familiarize themselves with RFID tags and tracking technology. The leading retail giant is expanding their reliance on RFID technology at the item level.
And considering that RFID technology can increase inventory read rates to 95%, it stands to reason that Walmart will continue to grow its reliance on RFID technology in its retail stores and distribution centers.
This article will help you understand Walmart’s RFID mandate, why they chose RFID technology and what action wholesalers should take.
What Is the Walmart RFID Mandate?
As of September 2, 2022, all Walmart suppliers that provide toys, home goods, electronics, and sporting goods must outfit each item with a UHF RFID tag. This is an expansion of their earlier RFID mandate launched in 2020, requiring products in apparel, jewelry and a few other departments, such as tires, to be tagged with an RFID chip.
The success of Walmart’s 2020 apparel RFID mandate is the guiding force behind its decision to expand RFID tags into other departments.
|RFID is for more than just Walmart. Read about its other uses in our blog:|
Why Is RFID Useful to Walmart?
Each day, Walmart stores and distribution centers handle enormous volumes of product inventory and even slight errors in inventory accuracy can quickly add up to thousands of dollars in loss. In 2013, Walmart saw a loss of $3 billion in sales, which many believe was partly due to ineffective inventory management processes at the time.
Incorporating RFID technology at the item level gives Walmart a solution to combat inventory errors, improve inventory management processes, and get more products into customers’ hands more quickly.
How Does Walmart Use RFID Technology?
Walmart uses RFID tags at the item level. This means every item within a product category mandated to have an RFID tag has an RFID label somewhere on the item or its packaging.
For instance, all apparel items in Walmart stores have been outfitted with RFID tags since 2020. Anyone purchasing a piece of clothing from Walmart, such as a ladies’ blouse or pack of socks, may have noticed an RFID label embedded on the price tag or affixed near the bar code.
While relatively meaningless to the customer, the Radio Frequency Identification (RFID) tag serves several logistic purposes for Walmart and its workers. These include:
- An RFID tag can store product information such as item description and price and provide real-time location in the supply chain.
- RFID tags can be scanned up to 40 feet from a reader without a direct line of sight, allowing items to be found quickly.
- Several RFID tags can be scanned simultaneously, substantially decreasing receiving, sorting and fulfillment times.
- RFID solutions allow managers to track inventory changes in real time and alert them when inventory items are low or need replenishing.
Benefits of RFID for Walmart and Retailers
For Walmart, and other retailers, the chief benefits of using RFID technology at the item level include the following:
- Create a better shopping experience. RFID tags for retail allow salespeople to easily locate inventory items for their customers and restock inventory more accurately.
- Improved shipping accuracy. RFID tags increase sorting and packing accuracy, decrease fulfillment times, and track items while en route to the customer.
- Increased replenishment efficiency. Retailers can better understand the best time to reorder regular stock items, preventing a backlog of outdated stock and refilling out-of-stock items faster.
A Brief History of the RFID Tags and Walmart
2020 wasn’t the first time Walmart tested RFID in-store labels and tags to manage inventory better. Back in 2005, Walmart implemented a comprehensive RFID tags program requiring all suppliers to incorporate RFID tags on all products in every department.
That original initiative didn’t go far and was dropped in early 2007. Its lack of success was likely due to constraints resulting from RFID technology being a young, costly, and inconsistent industry at the time.
However, the RFID industry continued to move forward and evolve, overcoming several limitations, including industry standardizations and lower price points for tags.
Today, RFID solutions are more cost-effective, easier to implement and have increased line of sight capabilities compared to their 2005 counterparts.
These improvements have led to RFID technology being an increasingly valuable asset to Walmart, and other retailers, for tracking inventory accurately, increasing their loss prevention efforts and serving customers more efficiently.
What Does the Walmart RFID Mandate Mean to Suppliers?
The Walmart RFID mandate means suppliers shouldn’t waste time determining how to implement a robust RFID system that will comply with Walmart’s standards.
General Merchandise Categories That Must Comply
By February 1, 2024, the following merchandise categories must be in full compliance with the new guidelines.
|Media & Gaming||D5|
|Cameras & Supplies||D6|
|Lawn & Garden||D16|
|Apparel||Dept. 7, 9, 10 (tires & batteries), 14, 17, 20, 22, 71, 72, 74, and 87|
|FY24||Dept. 3, 5, 6, 10, 11, 12, 16, 19, 21|
Special Buys, Non-Basic, and seasonal allocation merchandise will be in scope and need to follow the same guidelines as any other department item.
At this time, D18 – Seasonal, D56 – Horticulture, and D67 – Celebration (e.g., holiday décor, greeting cards) as well as third party (3P) WFS items , are not required to follow the new mandate.Items that DSV suppliers ship directly to customers are also exempt from the RFID program..
Suppliers of 1P and 3P merchandise are encouraged to also tag 3P merchandise to enable the item(s) to be sold in stores.
Continue reading to see what these new mandates are.
Approved Walmart RFID Tags are Required
Simply put, if you provide Walmart with a product that falls under their list of items requiring an RFID tag, you must have a way to place an approved RFID inlay, or tag, on each item before shipping it to Walmart.
A Path to RFID Tags for New Suppliers
For instance, let’s say an electronics manufacturer has recently won a contract to supply wireless headphones to several Walmart outlets in the Southwest. They learn that the wireless headphones fall within the Walmart RFID mandate and require RFID tags.
They must outfit each headphone with an approved RFID tag before shipping their headphones to Walmart. To do this, the electronics supplier must:
- Learn what type of RFID inlay is approved for use on their headphones
- Source the RFID tags
- Source readers, equipment and software solution to encode the tags properly
- Attach the RFID tags to each set of headphones
The headphone supplier can easily do this by leveraging an RFID consultant and solutions provider. The RFID experts will help to ensure they meet the Walmart RFID mandate requirements quickly with little disruption to their internal processes.
Consult Lowry Solutions for RFID Tag and Walmart Mandate Support
As Walmart and the retail industry grow more reliant on RFID technology for inventory tracking, wholesalers should be prepared to adopt RFID technology.
Not only will early adoption help your business become more attractive to Walmart and other leading retailers, but you can also experience the numerous benefits of RFID technology in all areas of your organization.
Lowry Solutions is a leader in track and trace solutions for wholesalers, retailers and any business looking to enhance productivity.
Contact us today to learn how we can support you with your RFID Submission to the Auburn Lab.