Check out the video here (In German):

In our previous post in our “barcode vs. NFC” blog series, we talked about the prohibitive cost of NFC tags as replacements for barcodes on consumer products. In today’s post, we’ll discuss the number “two” reason why we believe that NFC tags won’t replace barcodes any time soon on product packaging: the need to redesign packaging for millions of different products.

Ideally, NFC tags could simply be attached to existing product packaging. In reality, these tags only work reliably when placed in free space or on radio-frequency-friendly materials such as paper or cardboard packaging. An ordinary NFC tag placed close to a metal cannot be read. Dielectrics such as various liquids also affect the readability of NFC tags and reduce the read range. As a result, consumer goods manufacturers would need to find custom technical solutions for many individual products to guarantee the readability of the NFC tag attached. For a manufacturer with thousands of different products in different form factors, this ends up being a very costly design exercise.

Integrating the NFC tag attachment process into the packaging process is no piece of cake either. Consumer goods manufacturers have optimized their packaging process to deliver maximum throughput for minimal cost. Barcodes are ideal in this sense because they can just be printed onto the product packaging–just like the text on the rest of the product packaging. The reliable attachment of NFC tags, which are comprised of a copper coil and a microchip, would need a completely new process step operating at the high throughput steps of a production line–a costly undertaking with uncertain outcome.

We don’t see why consumer goods manufacturers would be willing to commit the extensive resources necessary to such an NFC tagging effort. In our next post, we’ll address another important reason why NFC will not replace the barcode on consumer goods product any time soon: the lack of NFC enabled reading devices.

An NFC tag is a miniature radio module. It comprises a small microchip, a coil and no battery – the microchip and coil are packaged into a label that is attached to the product. To communicate with an NFC tag, an NFC reader generates a time-varying magnetic field which induces a voltage across the coil of the NFC tag. The microchip of the NFC tag powers up after rectifying the voltage across the coil and starts communicating its unique ID to the NFC reader.

The different components of an NFC tag make it significantly more expensive than a barcode. The cost of the NFC microchip is driven by the area of the silicon in the microchip. The typical size of a NFC microchip is ~0.5 mm squared which means that the silicon microchip could become available in very large quantities for below 5 cents. When you add cost for the copper coil, the cost of attaching coil to the microchip, the cost of the label and the integration into the label, it becomes obvious that even in large volumes an NFC tag is unlikely to be available for under 10 US cents.

For a brand owner like Procter & Gamble, this means that replacing barcodes on the product packaging with NFC tags is an expensive exercise. Procter & Gamble sells 40 billion products a year with net sales of ~80 billion USD. An NFC tag on every product would thus cost Procter & Gamble 4 billion USD (!!!) - roughly 5% of its net sales. The barcode is a much cheaper solution: It is printed onto the product packaging during the packaging and it has thus no significant cost associated with it.

In the long-term the cost of NFC tags is unlikely to decrease significantly below the numbers listed above, which are already below the current cost of NFC tags. Polymer NFC tags, where the entire tag is printed with conductive inks, are unlikely to meet the performance requirements set in the NFC specs – they would thus be incompatible with NFC smartphones. Printed Silicon NFC tags are capable of meeting the NFC protocol requirements but they still require a separate coil and chip assembly and such NFC tags are unlikely to cost less than a couple of cents.

There are more reasons why NFC tags will not replace barcodes on product packaging any time soon. In the next post in our “barcode vs. NFC” series, we’ll investigate the impact on the design of product packaging.

QThru realized that through combining their mobile shopping platform with a barcode-based mobile self-checkout system they could provide consumers a greatly evolved shopping experience. To reach this goal QThru had to provide its customers with the best user experience possible when it came to must-have features such as barcode scanning, which ultimately let them to the Scandit SDK. The combination of accuracy with lightning-fast performance provides the ease-of-use necessary for our scanner to satisfy QThru’s customers.

The integration of our best-in-class barcode scanning software with QThru’s innovative platform puts the point-of-sale directly into the hands of consumers. By scanning as they shop, consumers save time and become engaged with deals and product information they access directly through the app. The virtual extension of product labeling combined with deals and barcode scanning results in an all-around improved shopping experience. Our case study takes an in-depth look at all this and more!

For a closer look at QThru’s innovative shopping process watch their video and check out these awesome screenshots:

Step 1 - Locate a QThru enabled store

Step 2 - Scan a product at a QThru enabled store

Step 3 - View items in your cart

Step 4 -Scan Credit Card for Use

Step 5 - Check out using your PIN

Be sure to check out our other case studies which showcase our work with Comparis and LivingSocial, and keep an eye out for some upcoming studies featuring companies such as CodeCheck and Coop!

Brick-and-mortar Shopping

Believe or not people still shop in brick-and-mortar stores, though retailers have to work harder to market their products to a knowledgeable consumer base. In fact, over 90% of all revenues are still generated by brick-and-mortar retailers (see Figure 1 below). Nevertheless, US retail e-commerce sales are growing at more than double the rate of brick-and-mortar sales. Check out the full report from the US department of commerce here. The trend is obvious—e-commerce is continually eating up a larger and larger portion of the retail market:

Figure 1: e-commerce vs. total retail sales (source: US Department of Commerce)

Why is online shopping growing at such a strong rate? Before the Internet, finding reliable product information was very difficult, with consumers being limited to a product’s packaging and a merchant’s knowledge. Nowadays, consumers are much more informed about the products they shop for since they have access to a wealth of online resources. The Internet has empowered consumers by providing  access to price comparison tools, product reviews, and a variety of deals. The resulting environment requires that merchants augment the physical shopping experience with digital adjuncts, such as online deals, promotions, advertisements with QR codes, and the creation of virtual stores. For example, companies like Best Buy and Target now let consumers shop on their websites and then pick up the ordered products in-store and Walmart.com just announced that their customers can now order online and then pick up and pay in cash in a nearby Walmart store. By embracing the convergence of physical and digital commerce these retailers are working to ensure their viability in the long term.

Online Shopping

Many people these days also shop online through their personal computers. As the previous graph suggested, e-commerce sales are on the rise at just about 6% of the overall retail market in the US. Online shopping has disrupted the traditional value chain by giving stakeholders such as manufacturers and brand owners a direct access to potential customers. In today’s environment people can shop directly from the brands they’re loyal to, removing the middle man of the retailer. This also gives brands the ability to control their own merchandising, which traditionally was strongly controlled by the merchant.  In order to remain competitive, retailers will need to engage in e-commerce solutions that speak to the needs of the 21^st-century consumer.

The ever-changing online landscape has provided consumers with an evolving portal of useful product information. Online shoppers can compare prices through services like Nextag, access user reviews through large virtual stores such as Amazon, and find a variety of deals through sites like LivingSocial. These online resources have transformed the image of the consumer by educating and empowering them, enhancing buyer power in the long term. Fueling online shopping further, a new generation of online payment solutions (such as Dwolla or Stripe) not only make it easier for developers to incorporate payment in their web sites but they also make it more convenient and cheaper for online consumers to complete an online transaction.

Mobile Shopping

The mobile revolution is officially sweeping the land, with recent analyst figures suggesting that some 212 billion dollars of the 1.5 trillion dollar mobile market (2012 estimates) will come from apps, music, video steaming, games and mobile web browsing.  With the worldwide base of mobile subscribers sitting at around 6 billion, and almost 70% of new phones being sold in the US being smartphones, the stage is being set for a future where mobile devices become the primary means of online access. So how does mobile shopping differ from its personal computer predecessor?

Mobile devices are truly bridging physical and digital commerce by acting as compliment to the traditional brick-and-mortar shopping experience. Recent analyst research suggests that over a third of smartphone owners use their devices in-store to research products. Through mobile devices shoppers are now bringing the Internet into the store, rather than having to sit at home doing their research on their PC.  Online price comparison tools have evolved into mobile apps like Scandit, which eliminate manual search by enabling barcode scanning to compare prices. One thing that’s certain is that there are a variety of ways consumers use their smartphones to assist in their purchasing decisions, check out these recent stats:

Figure 2: Mobile shopping activities of US smartphone users (source: Leo J. Shapiro and Associates)

Retailers should recognize that there is an immense opportunity to drive customer engagement and increase their addressable market through embracing mobile technology. Recent trends suggest that 62% of shoppers search for deals digitally for at least half of their shopping trips. These digital deals are major source of discovery, helping your customers find you. Brick-and-mortar retailers and brands should devote resources to developing and curating online content and mobile applications to drive customers to their stores and incent consumers to try their products. An interesting route to consider here is working with startups such as shopkick or CheckPoints, which help retailers and brands drive foot traffic to phyiscal stores, drive consumers down individual store aisles and offer rewards for interacting with specific products.

As another example, Coop, the major Swiss retailer, has headed in this direction by developing a mobile app that leverages barcode scanning to enable mobile shopping from virtual storefronts. Coop@home users can simply scan products as they’re shopping in the physical store and have them delivered right to their doorstep. Retailers that neglect these trends will suffer as they become increasingly disconnected from their customers.

By now we’ve all been exposed to QR codes, the lovely squares which are decorating everything from subway posters to graves these days. Today we’re going to share how you can make your own weird and wacky personalized QR codes by inserting a logo or an image into the center! Let’s take a look at both do-it-yourself methods and online tools that’ll help make this happen:

Do it Yourself

While allowing for more flexibility, the do-it-yourself approach is certainly the trickier way to go about creating personalized QR codes, and you’ll need at least some basic computer skills working with images. Certain parts of a QR code can be edited without affecting its ability to be scanned, while others must always be visible. Here’s the basic process:

1) Choose your content – Typically a URL, phone number, SMS, or text

2) Use an online tool to make your code – Tools like MobileFish make it simple to attach your content and generate codes. We recommend you set the error correction level to “H,” as this will allow you to personalize up to 30% of the code.Keep an eye out for an upcoming post that will explain QR code error correction in detail.

3) Save your code – Just right click on the image and use “save as” to save the image as in bitmap format.

4) Open your code – You’ll have to use a graphics program such as Adobe Photoshop, Microsoft Paint, or GIMP to work with the image.

5) Note the “Do-Not-Change” zones – Only the grey areas in the following image can be modified:

Diagram 1: Structure of a QR Code (source: Wikimedia)

6) Insert your logo into the center of the image –With your error correction level set to highest level of redundancy “H”, you can now modify up to 30% of the code. The simplest thing to do is to estimate this percentage, paste your logo into the center of the image and try to scan the code. If the scan doesn’t work the first time, simply make the logo smaller and try again. It shouldn’t take long to find the appropriate size.

7) Save your code – Simply save the image in your preferred format and start using your personalized code across the web or in your sales collateral.

Here are some personalized codes we created using this method:

   

Use an online tool

To get your feet wet right away and make custom codes in the next 5 minutes we recommend you use an online service like QRHacker. Here’s how to do it:

1) Choose your content – Using QRHacker you can attach a URL, phone number, VCard, WiFi Access, or text to a QR Code with ease. For our example we attached a URL simply by copying it into the required field.

2) Hit the generate button – This will generate your QR code in the center of the screen.

3) Upload a logo or a photo – On the customization panel select “Add my logo/photo.” You then have the option to browse to the file or to upload via URL.

4) Customize your code – QRHacker comes with all sorts of great options to customize your code through the customization panel. You can change pixel roundness, coloration, and even modify the code pixel by pixel if you wish.

5) Save your code – You can save your code as an image file or a PDF file. It’s that simple!

For the vast majority of purposes, using a tool like QRHacker is both simpler and faster than creating personalized codes from scratch. You can make customized codes in less than 30 seconds with some practice. However, if you are looking for something more special than what tools like QRHacker provide out-of-the-box, you’ll have get your hands dirty and play with the pixels yourself.

Go ahead and scan this personalized QR code we created using our Scandit QR Scanner:

The first research into automatically interacting with products was undertaken  by Bernard Silver and Norman Woodland beginning in the late 1940’s. Over the next decade Silver and Woodland worked on a solution that resulted in the patenting of the first barcode in the late 1950’s (see Figure 1 below).  It then wasn’t until 1966 when the barcode was first used commercially, though its widespread use didn’t come until IBM’s George J. Laurer invented the UPC code in 1973—standardizing the barcode used in much of the world today.

Figure 1 - The first barcode patent

Figure 2 - Early Electronic Cash Register from McDonalds

Figure 3 - Michael Aldrich invents online shopping

In our next post we’ll take a look at the present changes the world of shopping is undergoing, as brick-and-mortar retailers adapt to the new environment by creating virtual extensions of their physical stores, and mobile devices serve as access points to the digital marketplace. Stay tuned!

Today we’re excited to release a brand new blog series that will take an in-depth look at why NFC will never replace the barcode on product packaging. NFC has been the talk of the mobile payment world for the past two years now, ever since companies like Google and Isis—the joint venture between AT&T, T-Mobile and Verizon—created NFC-based mobile wallets. In this context, many people also promote the use of NFC for mobile interaction with consumer products and as a replacement for barcodes on product packaging.

We’re sorry to have to burst their bubble, but we wanted to enlighten those riding the NFC bandwagon by sharing 5 reasons why NFC will never replace the barcode:

1.       NFC tags are too expensive

One good reason NFC will never replace the barcode is that NFC tags are just too expensive. Consumer goods manufacturers would need to put NFC tags  in all their product packaging. We’ll be taking an in-depth look at the numbers in a post early next week and illustrate why placing an NFC tag on every product is not feasible from a cost perspective!  

2.       Millions of products would need re-design

Placing an NFC tag on consumer packages in such a way that it can be read by an NFC-enabled smartphone is no trivial task. Because metal surfaces, liquids and other dielectric materials impede the easy identification of NFC tags, many products will require custom tagging solutions.  We argue that developing custom product packaging solutions for millions of products is a time-consuming and expensive process and nothing like that will happen overnight.

3.       Lack of NFC-capable devices

To motivate consumer goods manufacturers to place NFC tags on their products, most smartphones would have to come with NFC support. But mobile operators will only start paying extra for smartphones with built-in NFC readers once consumers request NFC support. We’ll argue that even with a projected 200 million NFC capable devices hitting the market by the end of 2012 that a lack of NFC-capable devices is still standing in the way of having NFC replace the barcode on product packaging. This will inevitably slow down the adoption of NFC, even when used only for mobile payment for quite some time.  

4.       NFC doesn’t have any B2B benefits

Another factor that affects the future of NFC is that NFC tags on product packaging have no or little benefit from a B2B perspective. The short read range of an NFC tag makes it useless from a supply chain perspective – supply chain applications would require the identification range of proper RFID systems with several meters range. In this post we’ll argue that the B2B services will not be a driver of NFC adoption.

5.        NFC will have to be accepted by users

Lastly, we’d like to make the point that shopping using NFC isn’t necessarily more convenient than shopping with barcode-based systems. Why switch to a system that doesn’t improve our lives? We’ve decided that the best way to investigate this is to hold a race and share it with the world. We’ll be producing a video that captures the ultimate point-of-sale showdown between barcode and NFC! Be sure to stay tuned for this exciting post.

While the above reasons will prevent NFC from replacing the good old barcode on product packaging, NFC may still be used as a complement to the barcode, specifically in the  much-hyped mobile payments space. Here, barcodes will continue to play their key role as product identification technology before and at the point of sale (POS), while NFC-based payment technology may eventually become more widespread—as NFC-based phones become more prevalent, as merchants start getting real value from NFC-based POS systems and if ISIS or a similar standard will be embraced as such. To sum it all up: While NFC may prove to be a feasible mobile payment solution, barcodes will remain crucial for labeling consumer products for many years to come.  Be sure to stay tuned for an in-depth look at why this is!

The amount of time that can be saved by turning your home into a virtual extension of the marketplace is extreme. No more waiting in traffic or checkout lines. If you’re in Switzerland, go ahead and try it out! You can scan the barcode right off the screen and get pasta sauce delivered to your home. It’s really that simple.

The Past

It’s been 60 years since Woodland and Silver patented the first barcode symbology in 1952, introducing a concept that would lead to the disruption of the world’s shopping paradigm through enabling seamless interaction with products and the creation of modern point-of-sale solutions. Some thirty years later, the Internet gave birth to the online marketplace, and so began the age of digital transactions. In our next post, we’ll look at relevant innovations in the past and shed light on how the past evolution of the marketplace can serve us in understanding where we might be headed next.

The Present

We currently live in a world where mobile devices serve as “extended packaging” for every product in the marketplace. People are no longer limited to information they can access on a package since a wealth of merchant and user created content is at their fingertips. Users now use the web or mobile apps to aid their purchasing decisions, and can make purchases directly from their mobile devices. Advances in software have enabled every mobile device to become a barcode scanner, a deal finder or a discovery tool. The possibilities are only limited to our own creativity and willingness to adapt.

The Future

Though ever elusive, there are indications we can find in the past and present that aid us in predicting where we might be headed next. One major trend to look at is mobile payment, where digital wallets, NFC and P2P services are battling for the win. Another interesting trend we’ll examine is personalized and contextual content delivery. Sounds sexy doesn’t it? Well it’s clear that merchants are beginning to target potential customers based on their location, and if brick-and-mortar retailers are to survive they will have to adapt and embrace the idea of delivering relevant digital content to people nearby.  Beyond these evident trends we’ll look at some of the more questionable technologies such as augmented reality and image recognition. Will we live to see the potential of this technology actualized? Stay tuned for our thoughts.