At some point as you launch your product business, you’re likely to face the decision, “Do I need barcodes?” For something so small and plain, barcodes can provide a lot of information.
The choice to use barcodes or not is a big decision for your business. Barcodes have several advantages, but they might not be the right choice for every product business.
To make matters more complicated, there are different ways to purchase barcodes, each with their own pros and cons.
Read on to find out everything you need to know about barcodes—what they are, whether you need them, and how to determine which method of purchase is right for you.
What Exactly IS a Barcode?
Before we dive into the pros, cons, and processes for getting barcodes, let’s make sure we understand exactly what they’re used for. Barcodes go far beyond just something cashiers scan at the store!
Barcodes each contain a long number called a UPC (universal product code). This number identifies the manufacturer ID number, the item number, and the check digit.
What do each of those numbers mean? The manufacturer ID number doesn’t change from product to product. For example, every General Mills product has a manufacturer ID number of 016000. This makes it easy for stores to determine the manufacturer; each of their products contains that number, and every product with that number belongs to them.
The product number, however, does change for each unique product you have. The check digit number is a number to help maintain data integrity. Business owners assign individual numbers to each product.
This helps manufacturers, retailers, and business owners keep track of their inventory and stock. It also helps identify products being purchased and simplify the checkout process. By using barcodes, retailers can program their POS systems to instantly pull up the correct pricing and details for the products in their stores.
Barcodes also help manufacturers and retailers keep track of sales, analyze products, and determine which ones are profitable. Grocery stores and large retailers use that data to determine what items they will repurchase.
The History of the Barcode
We’ve covered what barcodes are…but when did we start using them, and why did we need them in the first place? Before barcodes were invented, cashiers had to enter prices by hand at the register. Unsurprisingly, this resulted in long lines, inefficient use of labor, and plenty of unsatisfied and impatient customers.
As early as the 1940s, inventors started to plan ways to tackle this problem. Norman Joseph Woodland and Bernard Silver envisioned the first barcode. But at the time, technology wasn’t quite ready to provide the solution.
Two decades later, that vision came to life in the form of the traditional linear barcode we know and use today. The Uniform Product Code Council, which would later become GS1, started to distribute numbers to be used in barcodes and began regulating their use.
Since then, not too much has changed about the barcodes themselves—they look the same and GS1 is responsible for official barcode distribution.
Some things, however, have changed. Originally, barcodes were just for the grocery industry. Now, almost all retail industries rely on them.
Additionally, Along the way, companies and entrepreneurs began buying barcodes in bulk to sell secondhand to business owners later. That means more choice for product businesses to acquire barcodes!
But before you decide how to purchase your barcodes, you need to decide whether you need them at all.
Does My Product Business Need Barcodes?
Barcodes take money, time, and effort to incorporate. As you launch your product business, you might wonder if it’s worth the expense and hassle to get barcodes. Sometimes, the answer is no.
However, if you plan to sell your products on Amazon, you’ll have to have barcodes on them. Likewise, if you plan to wholesale to larger retailers, such as Target or the Vitamin Shoppe, instead of small boutiques, you’ll likely be required to have barcodes.
Those retailers have products from hundreds, if not thousands, of manufacturers. They use barcodes to keep track of sales and make decisions on which products to continue to stock in the future.
If you plan to sell only to small boutiques and retailers, you might not need barcodes at all. Or you might decide to put off acquiring barcodes until you grow and scale. To figure out if you want to use them, you’ll need to weigh out the pros and cons.
It Opens Doors to Larger Retailers
Even if you don’t plan to wholesale to larger retailers, it’s a good idea to be prepared. As your business grows and scales, you might change your mind. If you already have barcodes on your products, then you’re in for a much easier transition if you decide to use larger retailers.
Your Product is Ready
Retailers will appreciate that your products are already ready to go with barcodes. This makes it faster and easier for them to integrate your products into their system and start stocking and selling. That means you’ll both start making revenue faster!
It Helps You Stay Organized
Regardless of whether you choose to use barcodes on your products, you’ll want some kind of system to keep track of your inventory. Barcodes make it easy to keep track of your products. Even if you think you can keep track of everything simply now, you might expand your product offerings in the future.
While barcodes can help you stay organized and prepare for future growth, there are some drawbacks.
When you’re just starting out in your business, barcodes can seem like a big expense. Depending on which purchase method you choose and how many products you sell, you could end up paying thousands of dollars for your initial barcode purchase.
If you already designed your products’ labels without planning for barcodes, you might discover that the barcodes don’t fit. In that case, you’ll likely need to redesign your labels to accommodate the barcodes.
How Do I Get Barcodes?
If you decide that you do want to use barcodes on your products, the first step is to decide if you want to purchase official barcodes through GS1 or from a reseller. There are advantages to both options depending on your business goals and situation.
Purchasing Through a Reseller
If you’ve already searched online for where to buy barcodes, chances are you have come across resellers—companies who have purchased bulk barcodes and sell them at a cheaper rate.
Saving Money: The primary advantage to purchasing barcodes through a reseller is that you’re able to get them significantly cheaper. Instead of shelling out hundreds of dollars, you can purchase barcodes for as little as $0.14 each.
Bulk Benefits: On top of an already low cost, most resellers offer discounts for bulk barcode purchases. If money is a concern but you need plenty of barcodes, this might be worth considering.
Not all Resellers are Reputable
When you’re dealing with resellers, you have to be careful—not all of them are legitimate and reliable. You’ll need to make sure you use a reputable company. Nationwide Barcode and Quick UPC are well-known resellers with good reputations.
Major Retailers Might Reject Them
Most major retailers won’t allow products with resold barcodes. If you plan to sell your products through large chain stores, you’ll have to provide official barcodes. This makes it easier for them to keep track of sales and analyze which products are making money.
Barcode resellers often claim that their products can be used on Amazon, but this is deceptive. In the past, Amazon accepted UPCs that weren’t officially registered with the GS1 under the same company. But as of 2016, they joined the ranks of other major retailers and began requiring official UPCs.
Many online forums will tell you that Amazon doesn’t verify UPCs and you can get away with resold barcodes. But if they do discover that your barcodes were not officially purchased, your products could be taken down, and you could even be removed as a seller.
You Could Miss Out on Sales
Retailers work with countless manufacturers and products. They use the data they get from barcodes to make their buying decisions. If your barcodes are linked to another product or another manufacturer, they can’t keep proper track of purchases.
Retailers aren’t going to waste their time tracking you down if your barcode isn’t linked to you. If they can’t link your products to you, you might miss out on those repurchase opportunities.
Purchasing Through GS1
The alternative to purchasing through a reseller is to buy official barcodes through GS1—the only organization that can create original barcodes and the only official source for purchasing. You can purchase official barcodes on the GS1 website.
When you purchase a barcode through a reseller, you aren’t registered in the GS1 database—your barcode is linked to another business in the official channels. But when you purchase through GS1, your barcode is official.
That also means that your UPC identifies you as the manufacturer—not another third party.
You Get Better Data
Because your UPC is unique to you, when you purchase official barcodes, you can track sales data easier. If you sell nationwide (oryou plan to eventually), you’ll be able to get accurate analytics on your products.
They’re Universally Accepted
Large retailers, including Amazon, require official barcodes. If you purchase through GS1, you don’t have to worry about your products getting rejected due to your barcodes.
Barcodes purchased through GS1 are much more expensive than resold ones. Each barcode costs between 10-25 cents, but they also require other fees. Depending on how many unique products you have, you’ll end up paying between $250 to $10,500 in setup fees, as well as an annual rate between $50 to $2100.
Because you’re actually registering your barcodes with GS1 as you purchase them, you’ll have to spend some extra time and effort filling out forms and preparing your numbers.
How Do I Actually Purchase Barcodes?
Once you’ve made your choice, it’s easy to purchase barcodes online, either through GS1 or a reseller. But first, you need to determine how many UPCs you need.
For your business, each unique product you sell will need a different UPC, including different colors, sizes, and styles. For example, if you sold lip gloss in three different colors, you would need three different UPCs. If you sold two flavors of juice, each in an 8 ounce bottle and a 12 ounce bottle, you would need four different UPCs.
After that, if you’re purchasing through a reseller, simply go to the website, provide the number of barcodes you need, and complete your purchase.
The process is similar if you purchase through GS1, but you’ll have a few extra steps. In addition to filling out the information to purchase your barcode, you’ll also have to obtain a GS1 prefix so you have your unique identifier. Then you’ll have to assign numbers to your products.
GS1 has many local member organizations that can help you with the process of assigning your number, as well as give you tips on printing and help you walk through the purchasing process if you need help!
Will Barcodes Affect My Label?
If you decide that you’re ready to take the plunge and acquire barcodes, the next thing to think about is how they will work with your label and packaging.
Barcodes can only be shrunk down to 80% of the original size or magnified to up to 200% to preserve the resolution so that they’re readable. The UPC number also has to be readable to the human eye—even though barcodes are designed to be scanned, it’s important that they can be read as a backup.
There are different sizes of barcode available that might suit your needs better depending on your packaging—UPC A and UPC E. If you have a small label, you might need to opt for UPC E (a smaller version with a compressed number) so that you don’t have to shrink it down too small.
You’ll need to make sure that your barcodes will be printed in high resolution as well, and that they aren’t obscured by anything on your packaging, such as folds or corners. The last thing you want is to invest money on your packaging only to discover your barcode is unusable!
That’s also why you’ll need to test your barcodes before you print your packaging.
Testing Your Barcodes
Before you sink money into printing your labels and packaging complete with barcodes, you want to make sure they work properly! Fortunately, there’s a very easy way to do this.
Print your barcodes, then test them using a QR reader or a shopping app (like Yroo or Shop Savvy). If you can’t do that, then you can take them into a store and ask them to scan it for you.
If your barcodes are functional, they’ll beep. (Remember that if you purchased resold barcodes, they will likely bring up a different item in the system; this doesn’t mean they don’t work!)
The Bottom Line
If you can afford the price investment and you have plans to sell through major retailers or to eventually grow your business to that point, purchasing your barcodes through GS1 makes sense. You’ll be investing in the long-term and making a decision you won’t need to change later down the road.
However, for small startups, barcodes could break the bank. It’s simply not an option for everyone. If you’re starting small, then resold barcodes can be the right choice. Just make sure you are careful about where you purchase from.
Make sure you use a reputable company. Always read the terms and conditions carefully before you purchase so you know exactly what your capabilities for the barcodes are.
If you aren’t sure that you’re ready for barcodes yet, but you believe you might be in the future, create a space for a UPC code on your packaging. You can always come back and add them later without having to redesign your label and packaging to accommodate them.
Ultimately, you have to decide what works best for your business now and where you want to take your business in the future. Plan for the long-term when you can, but make decisions that won’t jeopardize your company’s finances now.
If you’re launching a product business and need more tips, be sure to check out our post, Problems, Personas, and Profits: How to Find the Right Niche for Your Product Business!