Barcode FAQ: The Top 10 Facts About Barcodes Every Retail Store Owner Should Know

Barcodes are something we see every day, but often don't give much thought to. After all, they're usually little more than a few small lines and numbers on the back of the products we buy.

But in reality, barcodes are the key to helping retail stores run smoothly.

Barcodes store important data in a machine-readable format and began gaining commercial acceptance in the 1970s, particularly in the supermarket industry. Over time, they've been adopted by different regulatory committees and standardized.

Today, there are tons of barcode variations on the market, which can cause confusion about what each does, how to use them, and what their value is for retailers.

So we decided to tackle answering the top ten questions people have when it comes to barcodes. Whether you're a retail store owner or curious consumer, we think you'll have more than a few "ah-ha" moments!

1. What do the numbers on barcodes mean? 

The numbers located under the vertical lines, or bars, of a 1D barcode represent a uniquely assigned item number. The barcode itself is the visual representation of that number.

It's like a license plate. There’s nothing stored in the license plate. It’s simply a number that when looked up or keyed into a system pulls up more data about the driver, the car, etc.

Each number from 0 to 9 is assigned a different set of black and white bars. If, for example, an item is assigned a 10-digit number, a barcode will represent that number with 10 different black-and-white bar combinations.

Many products use a Universal Product Code (UPC) system. These codes follow a standardized barcode symbology and correspond with a Global Trade Item Number (GTIN). UPC barcodes represent a 12-digit number and follow a specific set of formatting rules.

In order to use a UPC, retailers must apply to become a part of the GS1. They’ll then be assigned a manufacturer ID number, which are the first numbers of the 12-digit UPC. The remaining numbers are uniquely assigned product numbers. These are numbers that GS1 assigns to your products once you upload criteria for certain fields, like name, quantity, description, etc. 

One advantage to retailers using UPC codes is immediate access to product information and pricing. Plus, UPCs support more robust inventory management systems and product tracking, from production all the way to the point of sale.

2. How are barcodes generated? 

Barcodes are generated using software. Stores decide what information (quantity, color, type) they want to collect with the barcode and choose the barcode format. The software will automatically generate a machine-readable barcode.

If you want to create custom barcodes that let you determine your own symbology and product numbers, you can do this on your computer with software, a scanner, and a label maker.

When to use custom barcodes 

The perks of going the custom route include affordability and more flexibility with product numbering. You can get creative with the way you break down the digits into subcategories like product types and other classifiers.

By going custom, you create your own barcode format and point it to internal data you manage. In this way, it works similarly to a SKU (more on that later).

Once you’ve defined your barcode, you can begin printing and labeling your products. You can scan the barcodes into your point-of-sale system and attach them to products in your inventory management system. If your POS has a barcode generation app, like Shopify POS does, then the entire process is integrated with your POS.

When to use UPC barcodes

By using a UPC barcode, you’re bound to certain standards, and you must pay to procure your barcodes. GS1 offers different payment tiers based on the number of product barcodes you need. 

Once you determine how many barcodes you need, you can buy a certain amount of barcodes and receive a company prefix.

Stores that need fewer barcodes for their products receive a longer company prefix, which leaves fewer digits in the barcode for the product codes. 

For example, if you have an eight-digit company prefix, then you have only three digits for product numbers, which works out to be over 1,000 possible product numbers. This costs $2,500. 

Stores that need more barcodes pay more to have a shorter company prefix and more product numbers. 

The perk of using UPC codes is the ability to track products across different stores and online channels. Most online retailers, like Amazon and eBay, now require GTINs, or Global Trade Item Numbers. 

Using the GS1 hub, you can create, manage, and share your barcodes. Everything is in a centralized place and guaranteed to be compliant with GS1 standards.

3. Are barcodes unique to each item? 

Stores need individual barcodes for each product, not each individual item. Otherwise, you may find yourself in a confusing mess when it comes to product distribution, inventory management, and sales tracking.

For example, if you have a batch of 100 dog collars, they would all receive the same barcode. You do not need 100 unique barcodes for each collar.

Product divisions are critical when it comes to assigning barcodes. Too broad of a product division for barcoding and you lose visibility at the individual product type level. Too narrow, and you create unnecessary data segmentation and waste barcodes. 

If you know your product types and categories, then you can estimate how many unique barcodes you will need. Check out the above guide to determining how many barcodes you might need for your products, provided by GS1.

4. Can barcodes be reused? 

Reusing barcodes is a no-no unless you’re doing a second run or batch of a previously barcoded product. In every other scenario, a new barcode is required.

Reasons why retailers may be tempted to reuse barcodes include short-term reduction in effort and a perceived cost savings. Some businesses default to using barcodes like internal SKUs: instead of assigning products with unique barcodes, they’ll group products into larger categories and assign a barcode that gets reused upon restocking.

This approach leads to manual data entry. The only way to differentiate products within big groups requires store staff to key in specific details about products or reference other documentation about pricing, sizes, or colors, for example. The whole goal of a barcode is to do that work for you—to be the representation of product data and automate the checkout process.

The fundamental flaw in reusing barcodes and taking a manual approach is a lack of product and inventory visibility. If retailers use barcodes the way they’re designed to be used, you have unique tracking for each product across all sales channels and store locations and between different steps in the supply chain.

5. How can barcodes help with the checkout process? 

Barcodes on products are perfect for speeding up checkout. It eliminate manually keying in product details like price, quantity, and item code. Not only is this faster for the customer and cashier, but it also eliminates errors from manual entry.

Retailers can also put barcodes on receipts. Many POS systems can create a barcode for a transaction that stores information related to the sale. Receipt barcodes can include the following information:

• Date and time of purchase
• Store number, if multiple locations
• Register number
• Associate or staff name
• Item price
• Coupons or discounts used
• Method of payment

If a cashier can scan a receipt and immediately access these details, it drastically speeds up the return or exchange process. Plus, it helps continue the thread of information stores have for their inventory.

6. How do barcode scanners work for stock management? 

While you may think of barcodes as something scanned during the checkout process, they can be incredibly helpful when it comes to inventory and stock management. For back room or stockroom purposes, scanning barcodes can help store owners keep track of their stock location and quantities.

Many POS systems, like Shopify POS, have integrated inventory management capabilities. When unpacking and storing a new stock shipment, retailers can scan the barcode on the product to store that data in their POS. Shelving locations can also have barcodes that can be scanned and stored, linking location to a product for stockroom visibility.

Sophisticated stock management practices like this can be achieved easily with the help of barcodes. This type of inventory and stock tracking makes running your business more efficient. Plus, it helps speed up notoriously slow processes like restocks, ordering, audits, and more.

7. Can barcodes be used to look up products?  

Using a barcode scanner, retailers can look up any of their products and access its data. 

Depending on the type of barcode, custom or UPC, the software receiving the binary code scheme will pull up whatever data is associated with the barcode. The data you decide to store in your POS or online database about a product is up to you.

The barcode itself identifies and tags a product. Once scanned, the software you use to read and pull up the product record will show the information you’ve decided to track. This may be price, color, size, or it may just be item name and item type.

That raises the question: “Can I scan any barcode and access the information about its product?” While UPCs all look the same, the data stored in the barcode is private and connected to a store’s POS or inventory management software. While a UPC is a part of a global database, you own the rights to your product information—it can only be accessed by you or with whomever you share the information.

8. Are barcodes and QR codes the same thing? 

There are linear, or one-dimensional (1D), barcodes that use parallel lines spaced at varying widths that can be read by barcode scanners.

There are also two-dimensional (2D) barcodes, or matrix codes, that use geometric patterns, QR codes for example, that can be read by mobile devices and built-in cameras.

One-dimensional barcodes

With a 1D barcode, or linear barcode, the width of the vertical bars and spaces create a pattern. This can be scanned and matched to the product record in a database or POS system. There are many different international 1D barcode schemes or formats that encode data differently depending on the application. 

Below are some of the most common 1D barcodes:

UPC-A: This is the standard UPC, encoding 12 numeric characters. There are variations of the UPC. UPC-E is a version with six digits used for smaller areas on packages and papers. UPC-2 is a two-digit addition to a UPC for journals and magazines to indicate the edition or issue. UPC-5 is a five-digit addition to a UPC for book publishers to add their suggested retail price.

Code 39: The most popular non-UPC barcode. It defines not just numbers but also letters and certain special characters. It can be decoded by laser and CCD and image-based barcode scanners and is widely used for shipping and packaging.

GS1-128: A code standard using defined application identifiers. This allows for the addition of data like batches, quantities, weights, dates, and other descriptions.

USPS IMB: The IMB (Intelligent Mail barcode) is used by the United States Postal Service for sorting and routing mail. This code replaced the PostBar and Planet codes that were more limited in what data they could encode.

The 2D barcode was invented to be more flexible in its use. For example, many QR codes don’t link to a product record or database at all. They can be scanned by a camera on a smartphone and link to a promotional landing page, a restaurant’s PDF menu, or a store application.

2D barcodes, also called matrix barcodes, are formatted differently than 1D barcodes. With the use of pixelated dots and other symbols and shapes, they are meant to be read by both scanners and cameras. Some of the most common 2D barcodes include:

QR: A QR (Quick Response) code can be scanned or read by an app or camera on a smartphone. They are often used to link to rich content like music, images, or a URL or email. 

Data Matrix: A Data Matrix code uses black and white squares within a square or rectangular matrix pattern, enclosed in an L”-shaped border. It is often printed in small sizes and used for labels, letters, and small-part identification. This makes it favorable for medical, electronic, and circuit board applications.

PDF417: This is a stacked linear code that consists of four bars and spaces and is a total of 17 units long (417). Often used for ID cards, like driver licenses, transportation passes, and even US postage.

Aztec: Aztec codes are designed with a central bull’s-eye that has concentric square rings around it. It builds out from the center with parameters governing its size, so it doesn’t need the check digit equivalent for 2D codes called boundary areas or quiet zones. This makes it popular for its flexible size, and it's used for transit tickets, like electronic boarding passes, and integrates with apps on phones, like Apple Wallet.

MaxiCode: Created by UPS, MaxiCode uses a target or dense code structure surrounded by hexagonal dots. The bull’s-eye is symmetrical and can be scanned at any orientation, which makes it favorable for conveyor belt or high-speed package scanning.

9. What’s the difference between SKUs and barcodes? 

While stock keeping units or SKUs and barcodes are similar, they are not the same. It’s important to know the difference between them and how to use them appropriately. By using SKUs and barcodes the way they’re intended, retailers can maximize data tracking, manage inventory and stock efficiently, and reduce costs.

A SKU is unique to your business. Retailers can set them up by following a few guiding principles. But overall, the way you name and organize your product SKUs is up to you. SKUs should be used for internal stock management purposes and are not usually customer facing.

When to use a SKU

Retailers should use SKUs to track stock levels. If you’re a jewelry boutique, consider assigning SKUs to all your jewelry pieces based on an intuitive alphanumeric naming convention.

For example, a pair of your brand’s medium-sized gold hoop earrings might be “BRAND-MED-GLD-HP-01,” whereas a pair of Kendra Scott small opal birthstone stud earrings might be “KS-SM-OPL-STD-01.” In this case, earrings may be assigned a product category number of “01” and all other descriptors given an abbreviation.

Here’s where it gets tricky. You can create a barcode for a SKU. In other words, if you simply want to track the movement of your inventory using your SKU numbers but you want a way to scan them into your POS software, you can create a barcode to do so. But a SKU is not a standard UPC barcode nor should it be used in the way a barcode is used for sales-related or transactional product tracking.

A barcode is different from a SKU by the way it is assigned to a product. 

When to use a barcode

A barcode should be assigned to all like products regardless of where they are sold. So, you will find the same UPC barcode on a Frigidaire refrigerator model at Lowe’s and Home Depot. But the SKUs would be completely different: Home Depot and Lowe’s each has its own separate and different SKU structures. 

A UPC allows a product to be sold across multiple distributions and sales channels and even throughout the supply chain during manufacturing. Frigidaire owns this data through the issuance of its UPC barcode.

Barcodes are product identifiers—the barcode used in-store is the same barcode used for online sales. This is what makes a UPC an invaluable tool for omnichannel retail. UPCs link all sales of a product, regardless of channel, and provide you with accurate inventory data.

10. How are barcode labels for products printed?  

For retailers looking to create and print barcode labels for their products, a POS system that has integrated barcode software is the way to go. Shopify POS has a Retail Barcode Labels app that allows stores to design and print barcode labels.

Step 1: Assign barcodes to your products

Step 2: Create custom barcode labels

Step 3: Print barcode labels

If you’re using UPC barcodes, you can add these individually to your product listings in a POS. Once retailers set up and purchase barcodes from GS1, they can access and manage them directly through the GS1 Data Hub. From there, you can use any number of label creation methods to download and print your barcodes.

You can print barcodes onto labels with an attached POS printer or any inkjet or laser printer on labels.

Learn them, then use them

Barcodes seem confusing until you understand them, then you realize just how simple and straightforward they are meant to be. The visual representation or picture of a product identifier, barcodes simply allow machines to read them and point to data about your products that helps you run your businesses better.

Systems like Shopify POS can help integrate your barcode management with your products seamlessly. Learn more about how it works!