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Barcodes and retail packaging go hand in hand. How do barcodes work and why are they so important in retail merchandise packaging? Barcodes (no typo, it’s actually one word!) are really a generic name for a family of machine readable codes used to track an object. Although closely associated with retail packaging, barcodes are used in a myriad of applications by many industries, and used in such diverse applications from drivers licenses to plastic hospital ID wristbands. In fact, the QR code that’s popular now is a two-dimensional barcode created by Toyota to track their car parts. This code has since been adopted by many businesses; most notably by the mobile phone industry which lets users scan a QR code with their smartphone to easily and quickly display websites on their phone.

Scanning a Barcode

A Short History

Necessity really is the mother of invention! Two graduate students at Drexel Institute of Technology in 1948 overheard the president of a local grocery chain ask a dean at the school if there was a way to automatically maintain product inventory data during checkout. At that time inventory control was time consuming and labor intensive.

The Drexel students eventually left school to develop a system to automatically inventory objects. In 1951 a patent was granted for a system that scanned a code of concentric rings shaped like a bullseye that conveyed product information. Interesting enough, the technology was first used to track containers on railroad cars, not for retail applications. It wasn’t until the 1970’s when barcodes began to be used extensively on retail packaging, first showing up on a pack of Wrigley’s chewing gum in 1974 – that pack of gum is now on display in the Smithsonian!

UPC Barcodes

The most prevalent barcode used in merchandise packaging today is UPC-A (Uniform Product Code, version A). This familiar 12 character code is used on retail product packaging to track merchandise in retail stores. Most stores now require a barcode on all retail packaging.

Barcodes are used by retailers and manufacturers for:

  •  Keeping product inventory

  •  Automatic product reordering

  •  Comparing sales of similar products – private label vs. national brand

  •  Tracking product attribute preferences such as color, size, etc.

  •  Identifying local and regional customer trends

And…combined with a consumer’s bank or credit card…

  •  Identifying what buying preferences a particular customer has

  •  Customizing targeted promotions based on customer buying habits

How to Read a UPC-A Barcode

Anatomy of a UPC-A Barcode

The vertical bars on the UPC-A barcode are the machine readable portion of the code. When scanned into a computer they are interpreted as UPC is one of a family of barcodes issued by GS1 (Global Standard 1), a nonprofit global organization that maintains standards for encoding and capturing data. Issuing barcodes is just one of their functions. The first eleven digits of the code identify the manufacturer and product. The final digit is a check digit – scanning software uses a simple formula that calculates a value based on what was scanned. The calculated value is then compared to the check digit. If the numbers differ, a scan error occurred and a re-scan is necessary.

Fun Ways to Print Your Product Barcodes

Fun with Custom Packaging Barcodes

Barcodes don’t have to be an ugly blight on your printed packaging. As long as you maintain the machine readable bar images in size and spacing, you can customize the barcode. The scanner needs a clean horizontal scan across the bars. The numbers at the bottom of the code are necessary for humans in case they have to be entered manually, but they don’t have to be placed there. Adding a little barcode creativity to your printed boxes makes for interesting, and fun, custom packaging.

Where do you get them?

There are two ways you can get barcodes for your retail packaging: through GS1, the governing agency that assigns barcodes; or through a broker.

GS1? is the official agency that assigns barcodes. The barcode is really a license that guarantees a unique ID for your products, and allows your ID to be used in the retail network. A single license permits the manufacturer to uniquely tag between 10 and 100,000 products, depending on what license level you purchase from GS1. Licensing starts at $250.00/year. Here’s GS1’s complete costing schedule: 



Give careful consideration before purchasing a barcode for your retail packaging through a broker. Manufacturers are not legally required to barcode their products. However, most retailers are licensed by GS1 to use the GS1 system, and one of the requirements by GS1 is that manufacturers have a license in their name to use the system. In fact, larger retailers require proof that the manufacturer owns a GS1 license before they will accept their retail products. Brokers purchase a high level GS1 barcode license that permits many products to be uniquely tagged. They will sell you barcodes on an individual basis, and for much less than if you purchased the license from GS1. However, the broker owns the license, not you the purchaser.

When purchasing barcodes from a broker for your custom retail packaging, it’s buyer beware!

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