EAS Tagging Cost Comparison

The chart above compares estimated per unit tag acquisition and usage costs among three EAS tagging methods- Tag Recirculation, Disposable and Tag In-Store. For the sake of clarity, let’s define each method:

Tag Recirculation:
Apparel manufacturer agrees to pay a pre-determined usage fee for a conventional plastic EAS tag.

The manufacturer pays freight applicable taxes and duties (on the first purchase only). The tags are affixed at the factory and shipped to the retailer. Presumably, the cost of the tags and tagging labor is added to the cost of the apparel.

This is negotiable between the retailer and the apparel manufacturer. Tags are removed at the point of sale; collected, and picked up for recirculation. A cash rebate is paid for tag returns. Tags are continually recirculated.

The retailer may use any type of EAS tag – including existing tag inventory. Per unit pricing depends upon the type of tag required.


Disposable:
Apparel manufacturer buys disposable plastic tags from an EAS tag manufacturer at a pre-negotiated price. The manufacturer pays any applicable freight, duties and taxes. The apparel manufacturer affixes the tags and ships garments to the retailer tagged and floor ready. Presumably, the cost of the tags and tagging labor is added to the cost of the apparel.

This is negotiable between the retailer and the apparel manufacturer. Tags are removed at the point of sale, and either discarded in the trash, or collected and sold to a plastics recycler.

As the name implies, disposable tags are used only a single time. So, the security characteristics (plastic thickness, quality of the locking mechanism, etc.) are not of a similar standard to a conventional reusable EAS tag.

In-Store:
Retailer buys EAS tags at “retail” from a tag manufacturer or middleman, and pays applicable taxes, freight, financing costs and an opportunity cost. Tags are affixed either in a distribution center; a store receiving room; or on the selling floor. Tags are removed at the point of sale; collected within the system for re-use.

Tag Acquisition Costs:

Historically, retailers have spent money to buy tags, and even more money to use them. Tag acquisition costs include the price of the tag, itself; applicable taxes; freight charges; the cost of obtaining capital to make the purchase; and the opportunity cost associated with forgoing another investment.

The manufacturing cost of the tags is directly affected by the cost of the raw materials used to make them. During the late 90s and early into the new millennium, the cost of ABS plastic, copper, stainless steel and aluminum was dropping. Since 9/11, however, the world has experience the end of downward slope of commodity cost curve. Commodity prices are rising precipitously. For example, in 2004, the cost of ABS plastic (the primary component of EAS tags) in China was about $850 per ton. In August 2007, the cost has risen to about $2,350 – an astronomical increase!

Tag Usage Costs:

The primary usage cost is the labor required to affix and remove tags. As in the case of commodities, labor costs are rising. According to salary.com, the median total compensation (salary plus benefits) of a full time retail stock clerk in the U.S. is almost $30,000 per year, or about $14.70 per hour. Labor rates in distribution centers are higher – particularly in a unionized environment. Time and motion studies confirm that about 125 EAS tags can be affixed in one hour, and about 300 can be removed in the same time frame. At that tagging rate, with a wage rate of $14.70, it costs about 12 cents to tag a garment (median), and about 5 cents to remove a tag at the point-of-sale.