Should you get a barcode prefix from the GS1 or buy barcodes from you?

Why we may be a Better Deal.

GS1, formerly the Uniform Code Council (UCC), is the provider of UPC barcode prefixes. A company goes to the GS1, they purchase a prefix and then are responsible for the self-assignment of the identification numbers that go after the prefix.

In 2002 GS1 attempted to codify the agreement with UPC Barcode prefix holders which included renewal fees. The codified agreement included rules that were in the form of a contract which included not being able to subdivide a barcode number. Prior to this, there were no signed restrictive agreements with any prefix holders.

They started sending out renewal notices insisting that the prefix holders pay renewal fees and agree to the new terms and conditions. Ultimately a class action suit was levied against the GS1 in the state of Washington and the GS1 lost. All prefix owners prior to August 28, 2002 became exempt from the GS1’s renewal fees and new codified agreement.

All of the UPC barcode prefixes that we own are 6 digit prefixes and all predate 2002.

Quoting the UCC Settlement web site:

This Settlement provides that companies who became members of UCC before August 28, 2002, are not obligated to pay membership renewal fees to UCC to maintain membership as a condition for their use of Company Prefixes issued to them by UCC, or as a condition for Basic Membership Benefits as defined in the Class Settlement Agreement. Class members who have paid a renewal fee to UCC are entitled to compensation from a $3,895,000 settlement fund. The settlement also provides that the “licensing agreement,” which accompanied UCC renewal fee invoices, is null and void as to those who became members in UCC before August 28, 2002. **

In addition to renewal fees and added constraints, the GS1 also implemented variable-length 6, 7, 8 and 9 digit prefixes. Prior to this time, all prefixes were 6 digits in length allowing prefix holders to create as many as 100,000 UPCs. The GS1 realized that not every company needed to be able to generate 100,000 UPCs and also realized that by creating these variable-length prefixes, they would be able to sell more prefixes, for more money, to more people.

As far as we know, there are only a handful of companies that require a copy of this certificate: Kroger, Walmart/Sam’s Club, JC Penney and Macy’s. Depending on your buyer and region, Walgreen’s, Lowes and Home Depot may have additional requirements. It’s always important to ask your (major) retailers for their Vendor Compliance Documents prior to purchasing from us. According to our clients, we have sold barcodes to companies with products in Pep-Boys, Autozone, Amazon, Guitar Center, CD Baby, Whole Foods, Raley’s, Toys-R-Us, Safeway, Longs (CVS), etc.

The GS1 maintains the database of UPC Prefixes. It is our opinion that, although this database is conceptually a great idea, and has to be maintained, it is virtually ignored, unknown and unused.

Retailers input information from product data sheets filled out or given to them by their suppliers. The supplier gives the retailer the product information including the barcode based on the complete 12 digit code and the retailer enters it into their point of sale system.

There are no formal centralized databases of all product barcodes. Using the mathematical formula x=11*10 there are potentially 10 billion products that can be represented by UPC-A Barcodes at any given time. This, more than anything else, explains why there is no centralized database of products. No one has the bandwidth, energy or resources to catalog something this massive.

There is nothing programmed into a UPC barcode. The bars only represent the 12 digit number that is the barcode. The retailer associates these 12 numbers with the product information. This information is pulled from the retailer’s database when a product is scanned.

You have two choices when you need to buy a barcode or block of barcodes. You purchase directly from the GS1 (They charge a minimum of $750.00 plus a yearly renewal fee) or you purchase from us or a company like ours. Unlike some others, we do not charge set-up or renewal fees.

Quoting George Laurer, “Often I am asked if a person that purchases a number from a subset seller will have legal problems in the future. Again, I am not a lawyer, but if the number was originally assigned to the seller by the UCC before August 2002, the answer is no problem.”****

The decision to go with the GS1 or us is a matter of economies of scale. GS1 charges an upfront fee and a yearly renewal fee based upon the number of 12-digit barcode numbers that you need along with your company’s revenue. The more you make, the more the barcode prefix will cost you, and this amount can increase over time. We believe that the GS1 is a great organization, they provide a tremendous service, however, for a small business with a limited budget, we makes the most sense.