How NFC Plus Location Is Changing Product Distribution, Retailing

NEWS ANALYSIS: Here is how a bottle of high-end whiskey reveals the way near-field communication and smartphones are changing product distribution and retailing.

NFC Retailing 2

An innovative Norwegian company you probably never heard of will demonstrate at next week's Mobile World Congress the smartest bottle of whiskey ever.

The company is Thinfilm. And the whiskey is a $200 bottle of Johnnie Walker Blue Label whisky.

Thinfilm will demonstrate a label it created using its new OpenSense near-field communication (NFC) technology, which it developed for use in an extremely wide range of products, including pharmaceuticals, cosmetics, health and beauty care, and automotive.

Before we discuss the details of that bottle, let's talk first about NFC and why it's so powerful and useful.

The "near" part is important. One way to look at wireless technologies is the distance they can send data, with mobile broadband, WiFi, Bluetooth and NFC each covering a shorter distance than the last.

While Bluetooth, for example, usually can't function beyond 30 feet, NFC won't work beyond a distance of a few inches. That short range provides both specificity and security.

But the most powerful aspect of NFC is the fact that because it uses electromagnetic induction to transmit data, one of the objects in this conversation can be "passive"—in other words, something that doesn't have a power source. That's why it can be used for objects that themselves are not battery-powered electronic devices—objects like the labels on whiskey bottles.

Thinfilm's special label system solves a dizzying array of problems that have long plagued manufacturers, distributors, retailers and customers. The secret sauce is the use of smartphone-readable NFC, plus the ability of these tags to provide information based on context.

Let's go through some examples with that bottle of Johnnie Walker Blue Label.

A case of the stuff arrives at a high-end wine and spirits retailer. As the bottles are placed on the shelf, an employee taps each bottle with a smartphone to make the NFC connection.

When the employee taps each bottle, a purpose-made smartphone app confirms that the bottles are both authentic and have not been opened. The OpenSense branding is a reference to the fact that Thinfilm's tag can tell if a product seal has been broken.

Because tag memory is coded at the factory, the data cannot be electrically modified or copied. If the label says it's authentic, it's authentic.

The tapping process also takes inventory and establishes the location of each bottle (on the shelf, rather than in a box in the back of the store).

The store owner can now verify that each bottle was checked for integrity and validity as well as the location of each bottle in the store using a cloud-based application. The proprietor can also create NFC-based promotions—say, two for the price of one.