How much do Electronic Shelf Labels (ESLs) cost? - Part 1
With major retailers in Australia, like Woolworths, Aldi and Dan Murphy’s rolling out electronic label technology; demand for electronic price tags is at an all-time high.
Most business owners are aware, that this solution will help overcome many of the challenges retailers are facing, such as, staffing issues and increased volatility in pricing levels from suppliers. The most common question we get asked is “how much does electronic label technology cost?”
The answer… it depends on the retailers’ requirements. Sorry!
If you were thinking that this is a cheap solution, that will cost under $5 a label, then it probably isn’t for you. You may be able to find cheap alternatives, but a professional electronic label system, should be seen as a capital investment, that will serve your business in the long term. The battery life on any top-of-the-line labels is 10+years, therefore this is a solution designed to improve operations in both the short and long term.
Installing a cheaper solution will cause more harm than good in the long term. If the project seems too expensive, I would recommend that you stick with your current paper solution, rather than invest in an unproven electronic solution, filled with inherent risk.
Electronic pricing is not a solution where you simply, buy the hardware and then the seller of the hardware wishes you the best of luck and never speaks with you again!
It requires alignment of the correct type of hardware to meet your specific needs, as well as, ‘software as a service’, which needs to be carefully integrated with your current systems (POS, ERP etc..), to create an outcome which will benefit your company in the long term.
Here we will explore the main elements of an ESL project, that influence the cost. Starting in this first part of the series, with the most important element – the Electronic Shelf Labels themselves.
Part 2 will look at other hardware & software requirements for a successful ESL project.
1. How many labels are required?
The bulk of the investment is the cost per Electronic Shelf Label. Each label is an advanced piece of technology, with an e-ink screen, various receptors and transmitters, LED lights, NFC technology and a high-end battery inside. Considering this the price per label is very reasonable, but as you can imagine it’s not free!
It’s important to work out how many ESLs you will need. Please keep in mind, that often the number of labels in the POS/ERP system is far higher, than the amount of labels required on the shop floor. In some cases, we’ve seen the number of SKUs in the system, has been more than double the actual requirement for implementation.
Another point to note is that, in some circumstances the entire shop does not require electronic tags. Some categories may hardly ever change price or go on promotion, so in order to save money, you could leave these sections with paper price tickets, and implement electronic tickets for the rest of your products. At least as a phase one.
2. Size of the opportunity? Head office involvement.
Like with most things, the more labels you acquire, the cheaper the price per label. If you are purchasing more than 5,000 labels, you should be in a position, to begin to negotiate a lower cost per label. Keep in mind however, that the average supermarket has 20,000 labels; so in this industry a large order is considered to be 100,000+ labels.
If you are a smaller company which is part of a franchise, we recommend involving head office as this can help bring the price down for your store, as it is now part of a larger opportunity for the supplier.
If you are after less than 100 labels for your store, then electronic shelf labels might not be the right fit for your business. This is because, the setup costs will be similar to a project involving over 1,000 labels, making the cost per label disproportionately high, compared to the benefits you receive.
3. Freight
All market leading electronic shelf label technology is produced in Asia. You should ensure that the business you are dealing with is based in Australia, as this will streamline support, but the hardware itself is coming from overseas.
As the hardware is coming from overseas, freight will have to be charged to bring in both, the electronic labels and the shelf attachments and accessories.
With freight prices increasing, freight will be a significant proportion of the overall cost. Some electronic pricing suppliers will include freight in the cost of their digital tags, others will split it out. All that matters in the end is the total.
If you are ordering over 10,000 labels together with shelf strips longer than 1 metre in length, it is worth asking for a quote to deliver the labels by sea, assuming of course that you are not trying to meet any tight deadlines. Sea freight will add about 5 weeks to the delivery of your electronic labels but give you a significant saving.
4. What type of label is required?
Generally speaking, the smaller the label the more cost effective the solution. We recommend you choose the smallest label that meets your requirements. However, please note the smallest label size (SMALL) is really only for products with a very small product facing, it is a similar price to the MEDIUM size, and has a shorter battery life due to the size restrictions. See here for examples >
A good exercise, is to think of the type of information your business requires on the electronic price label screen. For this, you’ll look at your existing paper tickets, both standard and promotional layouts, and talk to marketing about any new design strategies they had in mind.
From this you can work out, how big the screen needs to be, to display the desired information. If any information is not necessary, such as your brand logo (your customers are already in the shop, they should know where they are!), then we recommend to leave it out. If it is not adding any value, then it is not worth the extra cost.
Another example of how to save space is by not showing a QR code on the label. Due to Covid, customers are now aware that they can scan a QR code and access information on their phones. However, this will soon be a thing of the past, as all electronic tags come with NFC technology, which allows customers to access information, by simply hovering their phone over the electronic labels themselves. This is a much simpler and more usable solution, that will very quickly become the norm.
Part 2
Read Part 2 to find out the cost implications of the hardware and software required for an ESL project.
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