An RFID tag is a small label or device containing a microchip and an antenna that stores a unique identification code. When an RFID reader sends a radio signal, the tag responds with that code, allowing the item it is attached to be identified without scanning it by sight.
Tags come in two broad types. Passive tags have no battery and draw power from the reader's signal, which makes them cheap, light and long lasting, so they suit most retail items. Active tags have their own power source and transmit over longer distances, but they are larger and costlier, and are used for assets, vehicles or containers rather than clothing. Retail tags are commonly printed as adhesive labels, hang tags or woven into garment care labels.
Retailers encode each tag with a unique identifier that links to a product record in the system. Tags may be applied at the factory by the supplier, which is called source tagging, or by the retailer at the distribution centre or store. Hard tags can also combine RFID with security features for higher-risk goods.
Things to consider include tag type for the product material, since metal, liquids and some packaging affect read performance, and where the tag sits on the item. Poor placement or damage lowers read rates. Encoding accuracy matters too: a wrongly written tag means the wrong product shows up in your counts. Plan for how tags are removed or deactivated if needed, especially for returns.
RFID tags matter because they are the foundation of item-level visibility. The quality and consistency of tagging largely determine how accurate the whole system will be.