The history of barcodes is a fascinating trip through technology, creativity, and the global economy, with the UPC (Universal Product Code) barcode marking a watershed moment fifty years ago in retail and elsewhere. The history of barcodes is intertwined with the evolution of the GS1 (previously the Uniform Code Council, or UCC), which was instrumental in the standardization and global acceptance of barcoding and product identification systems.
The Origination of Barcodes
The barcode was conceived by Norman Joseph Woodland and Bernard Silver, and patented in the United States in 1952. The innovation was based on Morse code, which was expanded to include thin and thick bars. However, it took more than 20 years for this technology to become economically viable.
Evolution
It was not until the 1960s that major progress was achieved in barcode creation and application. The National Association of Food Chains (NAFC) started looking into ways to speed up the checkout process in 1966, which led to the installation of the first scanning device in a Kroger store in Cincinnati in 1967. This system used bulls-eye style barcodes, which marked the beginning of effective barcode use in retail.
The Universal Grocery Products Identification Code (UGPIC) was created in 1969 as a result of the industry-wide barcode scanning effort. In 1973 the Uniform Grocery Code Council recommended the use of the UPC barcode symbol, resulting in the first UPC barcode scan on a pack of Wrigley’s Juicy Fruit gum in 1974 at a Marsh supermarket in Troy, Ohio.
The Rise of the UPC Symbol
The UPC symbol, created in the early 1970s, quickly became the most well-known barcode in the United States, appearing on nearly every retail goods. The UPC symbol is a barcode representation of the GTIN-12, which contains twelve numeric characters that uniquely identify a company’s product. A UPC code is precisely created, with the first six to nine digits reflecting the “Company Prefix” provided by GS1 (previously the UCC), which uniquely identifies the corporation. The following digits represent the product number, which uniquely identifies individual objects, with a “check digit” created using a special mathematical procedure to assure accuracy.
GS1 and Global Standardization
The adoption of the UPC and the establishment of GS1 signified a fundamental shift in product identification and global trade. Initially centered on the grocery industry, GS1 standards have grown across numerous sectors, showcasing barcodes’ versatility in streamlining operations and increasing efficiency. In 2005, the UCC joined a global initiative (GS1) to reflect its wider goal and global influence.
GS1 standards, including the GTIN (Global Trade Item Number), have become crucial in a variety of businesses, including inventory management, supply chain logistics, and retail operations. These standards promote the global movement of information and goods, emphasizing the significance of a common language for product identification.
Modern Barcode Technologies
Beyond the UPC, several barcode types have arisen, each suited for a specialized application. These include Code 39, Interleaved 2 of 5 (ITF), Codabar, and current 2D barcodes such as QR codes and DataMatrix. These formats meet a variety of demands, ranging from simple item identification to complicated data storage and retrieval, demonstrating the adaptability and growth of barcode technology over time.
Conclusion
The history of barcodes, notably the creation and adoption of the UPC symbol, tells a story of creativity, teamwork, and globalization. Barcodes transformed the way we monitor, manage, and sell items, providing the groundwork for the digital economy and the smooth flow of commodities and information around the world. The evolution of the first scanned UPC barcode to today’s complex worldwide standards demonstrates the dynamic interaction of technology and commerce, influencing the future of retail and supply chain management.
How Unauthorized UPC Resellers Came About
The rise of illegitimate UPC resellers in the market is a major worry for manufacturers, retailers, and consumers. The proliferation of these resellers has wreaked havoc on the marketplace. Companies must understand the risks connected with non-standardized UPC barcodes, and the ramifications for businesses navigating the intricacies of product identification in the digital age. Many of these companies distort the findings of a lawsuit that the UCC settled and knowingly confuse prospective companies looking to get barcodes for their products.
Background and the UCC Settlement
As the UCC was preparing to merge other EAN numbering organizations around the globe to form GS1 (global), the US office began looking at the pricing structures of countries. At that time, the UCC accounted for a large proportion of the Company Prefixes assigned globally and had a relatively expensive pricing structure based on a member company’s revenue. Their one-time fees ranged from $300 to $15,000 but they did not have renewal fees. Many of the other countries’ numbering agencies charged much less in the first year but charged ongoing annual renewal fees.
As a result, the UCC (GS1 US) greed led to a policy change requiring members to pay annual renewal fees. Despite the fact that GS1 (UCC) is a non-profit, the idea of significantly expanding its revenue source seemed appealing. The UCC sent renewal notices to over 250,000 businesses, informing them of the change. While many companies reluctantly paid the higher renewal fees, a class action lawsuit was filed against the UCC.
The basis of the lawsuit involved poorly worded “terms of use” on the Company Prefix Certificates issued before 2002. Since UCC was and is essentially a necessary monopoly, the wording on their renewal statements alluded to the fact that company prefixes would potentially be void if payments were not made. Since this disclosure information was never included on the initial terms of use contract, the lawsuit brought light to this overstep. The UCC eventually settled this lawsuit for over $3.85 million dollars, and the case never went to trial.
At first, there were a few companies that started “reselling” UPCs, but the number of companies quickly grew. Using the settlement as a defense of their practice, they interpreted the settlement as permission to sell individual UPC codes to other businesses. The reality is UPC identification is a voluntary standard and there are no legal UPC barcoding requirements. The primary function of a single standards organization is to guarantee unique identification, and the entire system is at risk when there are numerous companies issuing assignments. One of the first resellers was a college student working out of his dorm without standardized control to prevent duplication. This has resulted in a proliferation of UPC resellers offering these codes at lower prices than those obtained straight from GS1. These resellers correctly claim that their codes originate from GSI (UCC) but they do not convey they all share common prefixes. Companies, such as Amazon, Home Depot, Kroger, and Wal-Mart now state that UPCs must be licensed to their vendors’ companies or they will not carry the items.
The Risks of Non-Standardized UPC Barcodes
- Invalidation and Duplication: Barcodes purchased from resellers may duplicate existing codes, leading to conflicts in the retail environment. This can cause significant problems for inventory management and sales tracking.
- Retailer Rejection: Major retailers, including Amazon, require that the company selling the product be listed as the licensee for the UPC assignment. Non-standardized barcodes often fail to meet this criterion, leading to the rejection of products from these platforms.
- Brand Damage: Using non-standardized UPCs can harm a company’s reputation. If a product is associated with a duplicated or invalid barcode, it reflects poorly on the brand’s professionalism and attention to detail.
- Legal and Compliance Issues: Businesses using resold UPCs may face legal challenges, especially if the codes conflict with those of another product. Compliance with industry standards is crucial for long-term success and legal security.
The Misinformation by UPC Resellers
Many UPC resellers misrepresent the functionality and legitimacy of the barcodes they sell. By exploiting the UCC settlement, they argue that their resold codes are equivalent to those obtained directly from GS1. This misinformation can lead unsuspecting businesses, especially small and emerging companies looking to save costs, into a problematic situation. These resellers often fail to disclose the potential for duplication, retailer rejection, and risks associated with non-standardized UPCs.
The Importance of Correctly Licensed UPCs
Obtaining licensed UPCs ensures that each barcode is unique and globally recognized. The standards agency provides a company-specific prefix that is not only unique but also tracks the company as the official licensee of the code. This compliance is crucial for businesses that intend to distribute their products through major retailers or online platforms like Amazon, which have strict requirements for product identification.
For businesses navigating the complex landscape of product identification, understanding the importance of standardized UPC codes is paramount. Here are key considerations:
- Verification and Compliance: Ensure that any UPC obtained is directly from GS1 or a verified and compliant source. This is crucial for meeting retailer requirements and avoiding potential legal issues.
- Research and Due Diligence: Conduct thorough research on any third-party reseller. Look for reviews, complaints, and any history of codes being duplicated or rejected by retailers. Most importantly, ask your prospective retailer if they accept reseller UPCs. Do not trust what is on a reseller’s website as the truth.
- Long-term Strategy: Consider the long-term implications of using non-standardized UPCs. The initial cost savings may be outweighed by the potential for future complications.
The growth of UPC resellers abusing the UCC settlement poses a substantial challenge to businesses. The temptation of cost savings might lead to the use of non-standardized UPC barcodes, which pose hazards like as invalidation, store rejection, and brand damage. Businesses must understand these risks and follow standardized methods when getting UPCs from GS1. This guarantees that retailer needs are met, operations run smoothly, and the brand’s integrity is protected in the competitive marketplace.
In conclusion, while the desire to save money by reselling UPC codes is understandable, the potential long-term consequences make it a risky practice. Businesses must prioritize compliance, merchant approval, and brand reputation by following standardized UPC standards.
