The New York Times reported that the RFID rollout at Walmart has slowed down. Actually, the first deployment of RFID at Walmart is only at the pallet level, not at the product level, so all Walmart will track initially is how pallets of products move through their distribution system. Eventually, when RFID tags are produced in enough volume to knock down their prices, Walmart would like to tag every product so it can check you out quickly and keep track of what you buy.

I have this vision that stealthy black vans will start showing up at Walmart parking lots, at first in the back near the loading docks and then, as RFID goes product-level, in the front near the doors. These black vans will have sophisticated instrumentation to track RFID tags on the sly.

RFID tags will have as profound an impact on retail as the Internet. For one, RFID-enabled sales channels will achieve higher efficiencies and allow even lower pricing making it harder and harder initially for non-RFID-enabled low-volume channels to compete with high volume RFID-enabled channels. However, as RFID prices drop and RFID penetrates, the cost of RFID-infrastructures will drop and the cost-benefit equation for deployment of RFID in low volume channels should turn positive. Then there is the possibility of new businesses starting that provide the RFID infrastructures to low-volume channels in return for data rights. This business probably looks similar to the Sitemeter that I currently have enabled on this site, tracking traffic flow and providing detailed analysis of the traffic flow for a price.

For now, though, rest easy. The economics say RFID is inevitable, but even the Internet took a few years to really take hold.