For people new to operating a retail store and managing inventory, it can be difficult to understand how barcodes, UPCs and SKUs work and what purpose they serve.
That’s what we’re going to clear up for you in this post. Learn what they are, the differences between them, what purpose they serve and their benefits.
In this post, we’ll cover:
- What is a barcode?
- How do barcodes work?
- Types of barcodes
- The benefits of using barcodes
- What is a UPC?
- What is the purpose of a UPC
- What are the advantages of UPCs
- UPCs vs. SKUs
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What is a barcode?
A barcode is an image that consists of a series of parallel black and white bars that can be read by a barcode scanner. Barcodes are applied to products to quickly identify them. Among their many uses, barcodes are typically used in retail stores as a part of the purchasing process, in warehouses to track and manage inventory and on invoices to help with accounting.
What is a barcode scanner?
A barcode scanner (also referred to as a barcode reader) is a device that captures and decodes the information contained by a barcode. Traditional barcode scanners consist of the following four components:
- Light source: This helps the barcode read and accurately decode the information contained in a barcode.
- Lens: This scans the barcode.
- Photoconductor: This translates optical impulses into electrical ones.
- Decoder: This analyzes the barcode’s data and sends it to the scanner’s output port.
After capturing the information, barcode scanners link to a host computer or tablet and transmit that information in real-time, without additional human intervention. This helps retailers automate data collection processes and reduce human errors like inventory tracking and processing point of sale transactions.
How do barcodes work?
In a nutshell, a barcode is a way to encode information into a visual pattern (those black lines and white spaces) that a machine (a barcode scanner) can read.
The combination of black and white bars (also referred to as elements) represents varying text characters that follow a pre-established algorithm for that barcode (more on the types of barcodes later). A barcode scanner will read this pattern of black and white bars and translate them into a line of test that your retail point of sale system can understand.
Types of barcodes
There are two types of barcodes: 1-dimensional (1D) and 2-dimensional (2D).
1-dimensional (1D) barcodes
1D barcodes are a series of black and white bars that can store information like a product’s type, size and color. You can find 1D barcodes on the top of universal product codes (UPCs) of a product’s packaging. This helps track packages through package delivery service providers like UPS and FedEx, the US Postal Service and Canada Post.
2-dimensional (2D) barcodes
2D barcodes are more complex than 1D barcodes. They can include more information than just text, like price, inventory levels and even a product image. There are plenty of barcode scanners that support 2D barcodes. While not all barcode scanners can read 2D barcodes, Lightspeed Retail POS is compatible with several wireless barcode scanners that support 2D barcodes.
The benefits of using barcodes
While barcodes were originally developed to speed up the sales and transaction process, they come with several other benefits.
Using a barcode to process a product’s data is much more accurate than having a sales associate manually enter that data, which is prone to human error.
Because of the speed at which the information is processed, data about inventory levels or sales is available immediately.
Reduced training requirements
Thanks to a barcode scanner’s ease of use (just point and click), employees don’t need much training on how to use one.
Better inventory management
With improved accuracy and real-time data, retailers benefit from faster cycle counts and more accurate inventory turnover estimations.
Low cost of implementation
Generating barcodes is quick and simple, plus, the potential savings thanks to improved transaction speed, as well as the improved accuracy of inventory and sales data, retailers can anticipate savings post-implementation.
What is a universal product code (UPC)?
A universal product code (UPC) is a code that’s printed on a retail product’s packaging to help it be identified. There are two parts that make up a UPC: the machine-readable barcode (which is a series of black bars) and the unique 12-digit number located beneath the barcode.
Parts of a UPC
To get a UPC to use on products, a company needs to apply through GS1 US (the Global Standards Organization), which manages and assigns UPCs in the US.
After paying the application fee, GS1 assigns a six-digit manufacturer identification number; that becomes the first six digits of the UPC for all of the company’s products and identifies the item’s manufacturer.
The subsequent five digits of the UPC are the item number, which identifies the product itself. Each company should have a person responsible for issuing item numbers, ensuring that the same number isn’t used more than once and that numbers associated with discontinued products are no longer used.
Most consumer products have several variations based on their size, color, etc. Each variation needs its own item number. For example, a box of medium-sized t-shirts will have a different item number than a box of the same t-shirt in size small.
The last digit of a 12-digit UPC is the check digit. It’s found by adding and multiplying several of the UPC code’s numbers to confirm to the barcode scanner that the UPC is a valid one. If the check digit code isn’t correct, the result is that the UPC code won’t scan properly.
What’s the purpose of a UPC?
UPCs make it easy to identify a product by its name, item type, size and color when it’s scanned at the checkout. They were initially created to make grocery store checkouts faster, but nowadays they’re also commonly used to help track inventory in retail stores and warehouses.
The advantages of a UPC
There are several advantages, both for businesses and consumers, for using UPCs. Since UPCs help barcode scanners identify a product and its cost, UPCs help improve checkout speed. They effectively remove the need to manually input a product’s information.
UPCs also improve inventory tracking and management. They help merchants know when they need to stock more of a particular product either on their shelves or in stock more in their warehouse.
If ever there’s an issue with a product, UPCs also help merchants find the customers that purchased that product, contact them and issue a recall.
UPCs vs. SKUs
Let’s talk about the difference between a UPC and a stock keeping unit (SKU). While they share some similarities, they aren’t the same thing.
A UPC is a universal product code; it’s meant to identify a product regardless of where it was sold. For example, if you buy a t-shirt online or through a local retailer that also sells the same product, that t-shirt will have the same UPC.
A SKU, however, is an internal product inventory code that’s unique from one company to the other. If you were to compare the SKU of the same product at two different stores, you’d see that they were different.
If you’re confused as to whether you’re looking at a UPC or SKU, the UPC symbol is the barcode label or bar coding on the back of a product, whereas the SKU is typically found on a store’s unique shelf pricing.
If you were to try looking up a product online, using the product’s UPC will help you find it across numerous retailers, whereas the SKU would only find the product under the business using that specific SKU.
UPCs can be valuable for suppliers and manufacturers to track the inventory they sell to different retail merchants, whereas SKUs are valuable for merchants to track and manage their inventory in a way that’s unique to their business.
Both SKUs and UPCs are advantageous for retailers: SKUs for their customizability and UPCs for their universality. Many businesses use a mix of UPCs and SKUs. To learn how to add items to your inventory with UPCs and SKUs in Lightspeed POS, check our retail support page that covers the topic in greater detail.
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More of this topic: Inventory Management
Sebastien Rankin is the Content Marketing Lead and Editor at Lightspeed. He produces content that helps retailers and restaurateurs increase sales, navigate operational challenges and improve their customer service. Connect with him on LinkedIn.
How Do Barcodes Work in the Present Day? The modern-day one-dimensional barcode is read using a scanner. This scanner sends out a laser that detects the pattern. When the laser of a particular frequency sweeps across the barcode, some light is absorbed while the rest reflects.How does a barcode hold information? ›
Barcodes are images expressed as a combination of black bars and white spaces. These combinations represent data that then relays information to a computer or mobile source when scanned. Barcodes can include numbers, letters, and characters as a means of further identification.What is a barcode reader question answer? ›
A barcode reader (or haseeb) is an optical scanner that can read printed barcodes, decode the data contained in the barcode to a computer. Like a flatbed scanner, it consists of a light source, a lens and a light sensor for translating optical impulses into electrical signals.Why are barcodes useful? ›
Barcodes encode product information into bars and alphanumeric characters, making it much faster and easier to ring up items at a store or track inventory in a warehouse. Besides ease and speed, bar codes' major business benefits include accuracy, inventory control and cost savings.How do I manually read a barcode? ›
How to Read Barcodes - YouTubeHow much information can a bar code hold? ›
The maximum data limit is 1556 bytes. Error correction is built into these barcodes to increase readability, so even if one or more cells are damaged, the data can still be read. A Data Matrix barcode can store up to 2,335 alphanumeric characters.How much information can you put in a barcode? ›
1) Amount of data: Since the 2D barcode can hold information both vertically and horizontally, it is capable of holding much more data – 4000 characters or more! As the 1D barcode only holds information horizontally, it is limited to just a few alpha-numeric characters.What does the first number on a barcode mean? ›
The actual system of numbering depends on the type of product and the purpose of the barcode; the first digit of the barcode indicates the numbering system.What method is used to read a barcode? ›
This method uses a semiconductor device called CCD(Charge Coupled Device), which converts light signals into electric signals. The CCD method bar code scanner has a built-in light. A scanner shines this light at a bar code and its reflection is captured via CCD for reading.
THE BARCODE SCANNER
In general, a barcode scanner “scans” the black and white elements of a barcode by illuminating the code with a red light, which is then converted into matching text.
Not all barcode scanners can read all barcodes. Laser barcode scanners and linear imagers read only 1D barcode scanners. Imager (camera-based) 2D barcode scanners read all common 1D and 2D barcodes.What is the difference between QR code and barcode? ›
Barcodes are based on Morse Code technology. QR codes are based on Morse Code technology. Barcode has less data storage. QR code has more data storage as compared to the Barcode.Why do people scan barcodes in stores? ›
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.What are the advantages and disadvantages of barcode reader? ›
Barcodes have no read/write capabilities; they do not contain any added information such as expiry date etc. They only contain the manufacturer and product. They are very labour intensive; as they must be scanned individually. Barcodes have less security than RFID; as they can be more easily reproduced or forged.How do I read a barcode on my phone? ›
How to use your smartphone to read barcodes and QR codes - YouTubeHow is barcode check digit calculated? ›
- Add together the value of all of the digits in odd positions (digits 1, 3, 5, 7, 9 and 11). ...
- Multiply that number by 3. ...
- Add together the value of all of the digits in even positions (digits 2, 4, 6, 8 and 10). ...
- Add this sum to the value in step 2. ...
- Take the number in Step 4. ...
- The check digit is therefore 3.
PDF417 codes are used for applications that require the storage of huge amounts of data, such as photographs, fingerprints and signatures. They can hold over 1.1 kilobytes of machine-readable data, making them much more powerful than other 2D barcodes. Like QR codes, PDF417 barcodes are public domain and free to use.Can a barcode tell you when something was bought? ›
You can't tell WHERE something was bought using a regular UPC/EAN barcode, that number is just a number, which should be unique to that product. From it you can use various services to identify the name, manufacturer of the product etc. but there is no way to tell WHERE it was bought.How much data can you put in a 2D barcode? ›
A Definition of 2D Barcodes
because they store information horizontally and vertically; in fact, 2D barcodes can store up to 7,089 characters, which is a much greater storage capacity than the 20-character capacity of standard barcodes.
Like barcodes, QR codes are designed with data redundancy. Even if as much as 30% of the QR code is destroyed or difficult to read, the data can still be recovered. In fact, logos are not actually part of the QR code; they cover up some of the QR code's data.
To make any changes, select your barcode. Click "Edit Barcode" in the bottom right-hand corner to edit the barcode type, data, or appearance. You can also edit the opacity of your barcode in the "Object Properties" panel to the left of the screen.Are barcodes unique to each item? ›
Barcodes are used to identify products throughout the supply chain from the moment they are manufactured up until when they are purchased in a retail store. Each barcode is unique to the product that it represents. There are many different types of barcodes but the two types that are standard in retail are UPC and EAN.What do the first 2 digits of a barcode mean? ›
The first digit identifies the numbering system. The next five digits identify the manufacturer, while the second five digits identify the specific product. The last number is a check digit. EAN-13 barcodes consist of 13 numbers.What does the last number on a barcode mean? ›
The first six numbers of the barcode is the manufacturer's identification number. The next five digits represent the item's number. The last number is called a check digit which enables the scanner to determine if the barcode was scanned correctly.Can you read a barcode by eye? ›
Although barcodes are designed to be "read" by scanners and interpreted by computers, it is possible with practice to look at a UPC barcode and translate it into a 12-digit number.How do barcodes set off alarms? ›
In contrast, all barcodes do not trigger an alarm. What triggers the alarm is the magnet. However, magnets are usually placed near the barcode so the cashier knows and can deactivate the magnet simply by scanning the item. That makes many people mistakenly think that unscanned barcodes set off alarms.What do the numbers in a barcode mean? ›
The first six numbers of the barcode is the manufacturer's identification number. The next five digits represent the item's number. The last number is called a check digit which enables the scanner to determine if the barcode was scanned correctly.What is the difference between QR code and barcode? ›
Barcodes are based on Morse Code technology. QR codes are based on Morse Code technology. Barcode has less data storage. QR code has more data storage as compared to the Barcode.Can a barcode scanner read text? ›
A barcode scanner reads input and returns text. It is done by converting the barcode to text using the scanning software. There are apps available in Microsoft Store , Play store , App Store etc.. that can scan both barcode and qr code.Does foil stop security tags? ›
The foil shields the security tag from the EAS system, thus allowing stolen items to pass through the system without setting off the alarm.
Anti-shoplifting alarms use a technology called RF (radio-frequency), while a similar (but more advanced) technology called RFID (radio-frequency identification) has many other uses, from tracking pets and public library stocktaking to collecting fares from bus passengers.Why does the alarm go off when I walk into Walmart? ›
“You've purchased an item, you're walking out the door and all of a sudden, security or someone from the store is approaching you.” Embarrassing! If you didn't steal anything and the alarm goes off, that means you're carrying or wearing an item with a security tag that somehow didn't get deactivated by a cashier.Can 2 products have the same barcode? ›
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.How are barcodes assigned? ›
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.How do you read a 13 digit barcode? ›
- The first two numbers is a country code;
- The following five numbers, which are the manufacturing code;
- Five more numbers which serve as the product code; and.
- A single check digit at the end of the sequence.
The maximum data limit is 1556 bytes. Error correction is built into these barcodes to increase readability, so even if one or more cells are damaged, the data can still be read. A Data Matrix barcode can store up to 2,335 alphanumeric characters.Can phones scan barcodes? ›
This article has been viewed 304,662 times. Your Android device can scan any barcode or QR code by using a free app from the Play Store. Once you've installed the barcode scanning app, your device's camera can be used as a scanner. You can then take different actions depending on the content contained in the barcode.Will QR codes replace barcodes? ›
Will QR Codes Replace Barcodes? QR codes are better in every way, but it's not likely that QR codes replace barcodes. Barcodes have been successfully encoding simple information for the better part of a century. They've proven especially useful with inventory.What are the advantages and disadvantages of barcode reader? ›
Barcodes have no read/write capabilities; they do not contain any added information such as expiry date etc. They only contain the manufacturer and product. They are very labour intensive; as they must be scanned individually. Barcodes have less security than RFID; as they can be more easily reproduced or forged.How do I scan barcodes with my phone? ›
Android 101: How To Scan / Use a QR Code - YouTube
The white areas of the barcode reflect the most light and black the least light. The scanner detects the width and sequence of black and white stripes and converts them into decimal numbers.