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RFID Could be a Chargeback Killer for Apparel Brands, New Research Finds

Tired of handing over your hard-earned profits to settle chargeback fees from your retail partners?

RFID technology implemented at the item level could be the answer fashion brands are looking for, according to new research conducted jointly by the Auburn University RFID Lab and GS1.

The study, dubbed “Project Zipper,” comprised more than 1 million items, most of which were apparel products, from eight brands and five retailers, and confirmed RFID’s role in helping retailers improve inventory accuracy and reduce stock-outs—and thereby maximize sales, sniff out shrink, and process returns more quickly.

But, just as important, apparel brands also stand to gain from deploying RFID at the point of manufacture so as to improve operations and accuracy in their distribution centers. The accuracy gap between RFID-enabled products and those without is startling, the study found. The majority of orders shipped from brands to retailers without RFID contained some sort of data error, according to the research.

“These errors were revealed in picking, shipping and receiving, resulting in inventory inaccuracies and costly chargebacks from the retailers to the brand owners,” the groups said.

With little recourse at the moment they encounter an inaccurate shipment, both the brands and retailers not using RFID typically employ some sort of workaround to make do. While it might seem like a good idea, it actually compounds the situation by creating even more errors and driving up costs.

What are some of the most common causes of chargebacks? Often, they stem from an advance shipping notice (ASN) that’s late, missing or incomplete or product tickets that are defective, missing, inaccurate or not readable by a scanner.

Michelle Covey, vice president of retail apparel and general merchandise at GS1 US, reiterated the importance of right product, right place, right time, and item-level RFID’s role in making that scenario a reality.

“Deploying item-level RFID improves the efficiency, precision and reliability of the entire retail supply chain, helping brands and retailers exceed consumer expectations and build loyalty,” she added.

Auburn and GS1 undertook the project, which is phase 1 of a longer-term study, from June 2017 through June 2018. With completion expected by the middle of 2019, the next phase seeks to understand what causes RFID system errors.