For many consumer goods vendors, the Wal-Mart story is a dream come true. Industry reports say that Wal-Mart is responsible for about 17 percent of the world's retail sales. So the volume of goods that Wal-Mart sells could very easily make any small vendor a big-time player. But the small vendors are not the only ones that Wal-Mart could make big. It could also make technology products and solutions big.
One such technology is RFID, or Radio Frequency Identification. It recently got a very strong boost from the world's No. 1 retailer. Last year, Wal-Mart told its top 100 vendors that they must start using RFID tags on their pallets and cartons by January 1, 2005. Many experts have put the impact of this mandate to be in the neighborhood of $2 billion. With a mandate like this, Wal-Mart is showing that not only can it affect the local economy of any region where it sets up a store but also that it can impact the economy of many other things.
One estimate says that Wal-Mart receives about 8 billion cartons a day. So just imagine what the total cost of tagging and maintaining all those shipments would be. According to an AMR Research calculation, a typical consumer packaged goods (CPG) manufacturer ships 50 million cases per year. The cost of attaching RFID tags to those cases and installing tag-readers would be $5 to $10 million. The
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