Debunking Barcode Myths: Getting Your Product Labeled Correctly for Retailers

By Alan Garton

There are many challenges that small businesses face when bringing a product to market, including how to label their products with UPC barcodes. Many entrepreneurs don’t even know where to begin and may come across misinformation about where to get barcodes, how they work, and what purpose they serve.

The process begins by understanding the requirements of retailers. Many retailers require their suppliers to use Global Trade Item Numbers® (or GTINs®) in their product identification processes. (GTINs are the numbers that appear in a UPC barcode.)

When used properly, GTINs uniquely identify a product when it is scanned at various points in the supply chain—most commonly at the checkout counter in a retail store. Many retailers insist that their suppliers use properly constructed GS1 barcodes and GTINs that include a GS1 Company Prefix, which can be acquired through a license agreement with GS1 US, a not-for-profit information standards organization.

If your small business is on the brink of a product introduction, the following will debunk some common barcode myths:

Myth: I’m not selling my products with a major retailer so I don’t need to create UPCs.

Reality: Barcoding has become commonplace in the market and waiting to apply them to your product may end up putting you at a disadvantage in the long run. In fact, many retailers may assume you have already barcoded your products without asking. Being unprepared can cause multiple challenges that range from having to change packaging for existing products to competing with companies that have already leveraged barcode technology.

Justin Hoffman, vice president of product and marketing for hockey equipment manufacturer Alkali Hockey believes using GS1 barcodes has contributed to the success of his company. He says, "The majority of our dealers use UPCs as a way to track their inventory and sales of each product. We would not be able to sell our product without GS1 barcodes."

Myth: I only sell products online, so I don’t need UPCs.

Reality: More and more online retailers are requiring unique product identification; in fact, a leading online retailer has even started hiding products from consumer view if they are not identified with a UPC. The same identifier used for physical products is the same identifier you use to identify the product online.

One example that truly illustrates how GS1 barcodes allow for future growth beyond smaller scale online operations is the system recently created by Neiman Marcus Group (NMG). NMG recently teamed up with GS1 US Solution Partners DiCentral and InterTrade to manage the inventory of the scores of small specialty vendors and artisans that create unique limited-run products. These small vendors may have started out with an online-only strategy, but because they were able to uniquely identify their products with UPC barcodes and GTINs, they opened up their businesses to new possibilities and channels.

“We found our customers were shopping across our divisions and channels—in store and online, at Neiman Marcus and Bergdorf—using multiple devices and channels to research and buy our products,” explains Jill Barron, vice president of supply chain for NMG. “We wanted to offer our customers a seamless shopping experience, giving them easy access to all of our products in all of our divisions. To do this, we needed visibility across our silos of inventory.”

Barron and the NMG team quickly concluded that each product should be assigned by its respective vendor a GTIN encoded in a UPC barcode.

“The GTIN uniquely identifies each product in our inventory, regardless of the buying group that purchased it. The sweater in our Neiman Marcus store that is identical to the sweater carried by Bergdorf online is now identified by one GTIN,” says Barron.

Myth: Barcodes purchased through third parties are just as good as those assigned by GS1 US.

Reality: Barcodes sold and assigned by third party companies scan just fine at the checkout counter. However, if a retailer chooses to confirm brand ownership through the GS1 Global Party Registry, the barcode provided by the third party will not point to you as the brand owner but will rather point to the company that assigned the barcode.

A company that licenses a GS1 Company Prefix can create its own product identification numbers for use in barcodes using two methods. They can choose to employ barcode printing companies that have certified GS1 Standards experts on staff or use Data Driver, an online tool that helps small and midsized companies take the guesswork out of creating and managing barcodes and product identifiers. Choosing either of these methods will ensure that barcodes are created properly and meet the global standards accepted by most retailers.

The process of getting products labeled correctly with UPC barcodes may seem complex at first, but ultimately, understanding the barcode’s role and function can mean success for small businesses entering the retail supply chain.