As a consumer, you’ve probably noticed how nifty and efficient Universal Product Codes (UPC code) 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 number 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 is a set of alternating black and white bars representing numbers (typically 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 40 years ago after the feds instituted new standards for nutritional labeling on food containers.
Today, the not-for-profit group GS1, based in Brussels, Belgium, administers the standards for UPCs globally While product-ID standards and technology continue to evolve, it’s a pretty safe bet that 10 or 15 years from now you’ll still be able to use the same UPCs for your products that you’re using now.
Related: Risks Involved with Opening a Retail Store
Do I really need UPCs on my products?
If you plan on selling through large retailers, absolutely. 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.
Similarly, large B2B customers also require you to provide bar codes because they increasingly rely on the technology as well. And in the B2B and consumer-retailing worlds, you’ll need UPCs to be able to use Electronic Data Interchange (EDI) to electronically receive and send info about orders.
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?
Fortunately, it’s easy. If you are a U.S.-based business you need to visit the U.S.-based branch of GS1, GS1 US at www.gs1us.org. Click on “I Need a Barcode,” and the site will take you step by step through the sign-up process, asking you to answer a few questions.
You’ll pay an initial license fee as low as $250, then a much smaller annual license fee. The fee depends on the number of products for which you expect to need individual UPCs in the near future. Once you have paid the initial license fee 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 have three options for creating your UPCs: 1) You can create them on your own by supplying a few digits by numbering your own products. Then you’ll need to add a check digit as the last number of the UPC using the GS1 US Check Digit Calculator. 2) You can use their online tool, Data Driver, which is free as part of your license fee. 3) You can contact one of the GS1 US certified barcode providers.
Entrepreneurs uniformly report that the process is easy and fast. Sterling Ashby, for example, rushed through his recent UPC application because he wanted to get bar codes in time to put them on a line of historical-figure dolls he developed under his startup, Titus Venture Group. It was plenty quick.
“I literally plan to have the first batch manufactured by mid-October, in time for Christmas,” says the Washington, D.C.-based real-estate lawyer.
How do I optimize my use of UPCs?
Some startups suggest assigning UPC management to a specific staff member, because the cost and inconvenience of lousing it up can be steep – and UPCs will likely take on more importance as your company grows.
Also, you should try to design bar codes directly into your packaging, if possible. Most packaging-design firms can do this for you, and you might also get help from companies that supply bar-code devices and technology.
“I’m designing my UPCs into my packaging early because I know I’m going to need it as I get larger in my industry,” says Joel Assaraf, senior vice president of sales and marketing for TherMark, a Los Angeles-based startup in laser marking.
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UPC Code: Our Bottom Line
For many startups, UPC codes are one of those things that must be tackled, sooner or later. They’re part of your passport to business growth, so sooner is better. And, fortunately, they aren’t expensive or hard to obtain.
