As a consumer, you’ve probably noticed how nifty and efficient Universal Product Codes are. And as an entrepreneur, you may have figured out that having UPCs or bar codes on your products could be important for ensuring their success at retail. UPCs are the unique configurations – consisting of a block of black and white bars with an accompanying numbers that appear on each individual product in the American retailing system. Because they help standardize the identities of millions of products across various manufacturing, distribution and retailing systems, UPCs have become crucial for making sure that everyone in the marketplace is buying and selling exactly what they think they’re buying and selling.
And for startups, getting UPC codes for your products has become part of the price of admission for scaling up your production, distribution and sales. Here’s what you need to know:
What exactly are UPC codes?
Each UPC Code is a set of alternating black and white bars representing numbers (12 in the U.S.; 13 in Europe) that scanners recognize as unique from every other product. These markers caught on in the U.S. grocery business more than 30 years ago after the feds instituted new standards for nutritional labeling on food containers. Today, the not-for-profit group GS1, administers UPCs globally. This is in fact the ONLY place you can obtain an original UPC account. However there are many companies that buy UPCs in bulk and resell them to smaller manufactures and even inventors.
It’s important to note here UPCs are an inventory control device as well as a modern day price tag. When you assign a UPC to a product you assign it based on the inventory control requirments. For example if you are selling Teddy Bears to Target and the buyer could care less what colors they come in you would assign one UPC to that product. However if the product comes in 12 colors and Target is interested in tracking all 12 colors of Bear you must assign a different UPC to each color. Now you have used 12 UPCs instead of just one. The same would be said for size, or any other defining characteristic of the product.
Do I really need UPCs on my products?
If you plan on selling through large retailers, you will absolutely need to have a UPC. You won’t get far in mainstream retailing without UPCs, because chains depend on bar-code info provided by their suppliers to ensure accuracy and drive efficiency in their own sales results, ordering and logistics. You’ll also need UPCs to be able to use Electronic Data Interchange (EDI) to electronically receive and send info about orders. A small boutique store may not use EDI, but it’s a standard ordering system used by almost all major retailers.
On the other hand, if you mainly sell to a handful of small B2B customers, you might never need bar codes. Or if you largely retail your products through mom-and-pop shops, boutiques, artists’ markets and other small-scale outlets that generally don’t rely on scanning equipment, you might be able to avoid the bar-code requirement as well – though you should have your own internal way of keeping track of individual products.Tristen Sullivan recently discovered the importance of UPCs when Nordstrom and Bloomingdale’s began requiring her Los Angeles baby-accessories company to supply them.
“I would have lost an order from Nordstrom’s several months ago if I hadn’t been able to get up and running with UPC codes,” says Sullivan, whose Dust Bunnies line includes baby blankets, boots and other accessories. But the $1-million company continues to ship its wares to about 600 boutiques without attaching UPCs. So, how do you get UPCs?
There are two ways actually. You can visit GS1, The site will take you step by step through the sign-up process, asking you to answer a few questions. You’ll pay an application fee of a few to several hundred dollars, then a much smaller annual fee. The exact amount of the fee depends on your answers to application questions, including a revenue projection for the next 12 months, and the number of products for which you expect to need individual UPCs in that time. You won’t be held to the answers, so it’s OK to guesstimate.
Assuming your application is accepted, you’ll be e-mailed a “member kit” including company-ID sub-code that will comprise the first few digits of each of your UPCs. You supply a few digits by numbering your own products. Then GS1 generates a random number for the last digit of each UPC.
If you don’t want to purchase UPCs directly from GS1 you can purchase them from a reseller. These companies are all over the place and vary greatly in how they work and how much they charge. Generally for an inventor this is a better option since the amount of product you are selling is relatively low and your market may be untested. You will pay a little more but you don’t lock yourself in to anything long term.
As you can see, UPCs are just another of the many things you have to know when taking a product to market – but if you take the time to educate yourself and ask questions you can normally eat the product development Elephant one bite at a time.
