Buying the correct barcodes when starting your CPG company is super important, but there are also other things you need to consider about your product, that relate directly to the products SKU, or UPC code as they are sometimes called.
When you are first starting your business you might be tempted to purchase from websites that allow you to buy a set number of barcodes for a really good price. This is very tempting considering the GS1 standard barcodes run a minimum of $750, plus an annual subscription fee of $150 or more. Simply put, you can buy a small run of generic barcodes for cheap, or do it the right way and get your own unique company prefix assigned to all your barcodes.
The piece milled barcode purchasing option is NEVER a good idea if you plan on having your product at retail. You can certainly go the cheaper route, but eventually you will get into larger retail chains which will require you to have proper GS1 barcodes, and you will be forced to change your UPC code, which is something you absolutely do not want to do!
Changing your UPC creates lots of market disruption
There are a few reasons you might have to change your UPC:
- You bought piece milled UPC codes and now need to upgrade to GS1 standard barcodes
- Your product became certified Organic, or dropped its organic certification.
- You increase or decrease the size of your product offering
When you change your UPC code for any reason at all it creates lots of disruption. You will be required to give your distributor and suppliers 90 days notice about the change. This is done so they can try to time inventory ordering, which is both good and bad because any inventory that remains after the new product goes live, you will be responsible for buying back; and you can almost always be guaranteed that during this process products will either not be on the shelf when they are supposed to be, or your newly coded item will be delayed making it on the shelf.
It’s basically a huge cluster cuss to change your UPC. It confuses the distributor, the retailer, and the consumer. So the moral of the story is, purchase GS1 barcodes, and nail your pricing down right out of the gate so you don’t end up making product size changes down the road that force you to change your UPC. You will also want to decide if you want your product to be USDA Organic or not, and do that right from the start so you don’t have to change your UPC later on.
You might not be able to avoid changing your UPC code at some point, especially if you are already a few years in to your operation and have made some of these mistakes. But, knowing these things for future product launches will help you be more successful on the shelf, and expecting the UPC change will help you work closely with your distributors, retailers, and brokers to ensure there is minimal disruption in the supply chain.