Jan. 25, 2008 – Part One of insightful comments by Janet Schijns is President of The JS Group, the leading consultants to the technology channel partner business. Janet’s specialty is helping channel increase their sales and success. We look forward to regular contributions by Janet’s group in the new RFID Trade Mart launching next month.

Could you tell me what kind of channel partners or VARs you have found to be the most interested in selling RFID products?

Schijns:. We find in general the resellers that are most interested in it come in three different categories. The first category is those that are always looking at profitable new businesses. They may today be dealing in almost any technology that they have noticed and seen through the publicity, in government, retail, from the supply chain logistics or for any of the advertising that went on about RFID.

They realize that this could potentially be a high profit, although high risk business for them. They invest in it because they see it as a growth strategy for the future that allows them margin stretch that they don’t have in the industry they are currently in.

The second kind are those with customers that have come to them seeking RFID solutions because they supply to a firm or government that needs their goods to be marked or because they have heard that they will need to do this.
 
And the third kind are actually the visionaries who, because they have seen the technology, have enabled themselves to write a software or put a unique bundle or even solution together that they believe to solve a business problem.  
 
Is there any way you can characterize the ones who have had an easier time and found success more quickly than some others?
 
Schijns: Interestingly, it’s the ones that went into it for the money.

Now you would think it’s the ones that go into it for the customers, where the customers called them and said ‘I think I need to be RFID compliant’ or ‘I believe I need to RFID all my products.’ You would think they would be most successful because they have a customer who is saying, ‘Hey, I am here and I am ready to buy.’ 

But, the reality is, they began to design the specific solutions, and every one of them was different and it was very expensive. The customer really didn’t know what they wanted, just what they thought they wanted and it became expensive and then they couldn’t replicate it. So, what happened is they had 90 percent customization for every single engagement – expensive to supply, expensive to do, and you don’t make any money off of it.
 
Do you think there was this function of the sellers being new to it and figuring it out themselves?
 
Schijns: Yes. And the customer is new as well, so it is a bad equation on both sides. The customer is figuring out what they want, so there’s a lot of what we like to call ‘scope free’ and the retailer is figuring out what they need to supply and not necessarily able to, to use an old-fashioned term ‘go to the rolodex,’ to actually supply it. So, that is one type that wasn’t successful, certainly not at first.

Now you would think that the second type, ‘the technology guys,’ would have done well in designing their own solution, excited by the technology and investing in it. One example comes to mind: this company has an RFID lab; they have RFID training, an entire decked out warehouse. They could show you how RFID works. Again, they built something and they thought, ‘if you build it big enough, they will come.’ And they didn’t come.
 
The third type is the people who said, ‘it looks like there is money in this;’ They did some research and figured out where the money was. But, more importantly, they figured out what kind of solutions they could supply that only required a 20 to 30 percent customization. And they figured out who the customers were that would buy it.

They looked to research showing that RFID was not purchased for ROI, but for a different reason. They saw what those reasons were – generally the quality, the opportunity to test the technology. They saw that if they did the beta test, then 75 percent of the time they would get the real test. And they built a profit model around RFID narrowed and focused repeatable solution, repeatable engagement, marketed it and they are beginning to see the fruits of their work.

Will the other two types see the fruits of their work in the long term?  Time will tell, but they will never see as much money as the ones who went in it for the money.