Barcodes are a crucial part of modern retail business. Its technical approach helps manage inventory effectively. These vertical black lines and white spaces are valuable in many professions.

You might observe the practical utilization of barcodes during your shopping in malls or supermarkets. But have you thought about its working strategy? Many of you think about how barcodes work and now it’s time to unlock the answer.

We will present every crucial point about barcode working. Let’s begin the story here.

What Is a Barcode?

What Is a Barcode

Many people know the basic definition of what a barcode is. Barcodes are defined as a set of black lines & white spaces in vertical form. The width between these lines is not identical. Its overall format is rectangular or square. These are computer-readable representations of characters and numbers.

These barcodes help capture the correct information about the product through the scanner. Thus, manage inventory in an effective way without any human interference and reduce error chances.

Apart from retail stores, the barcode system is now significantly useful in hospitals, checking luggage, licenses, and rental cars.

Key Points About Barcodes

  • Beyond speed, barcodes offer inventory management, accuracy, and budget-friendly advantages.
  • Barcodes alone are not useful because scanners and printers are always required.
  • Barcodes are not identical to QR codes because information storage is different in both.
  • They always encode the data in alphanumeric characters and bars.

Component of Barcodes

Every barcode regardless of country and region has 3 components. These are the standard components.

1. Start and stop character

The start and stop characters indicate the beginning and ending of the data. These data get slightly different as per the barcode type.

2. Check digit (symbol check character)

Check the digit and perform barcode validation. Verifying the data encoded accuracy is highly straightforward in this component.

3. Quit zone (margin)

Both ends of a barcode contain a black margin known as the quiet zone. A distance of 2.5 mm is required between the outermost bar of one symbol and the outermost bar of another symbol.

What Is a Barcode Scanner?

A barcode scanner, also known as a barcode reader, is a physical device that reads barcodes. It scans the barcode and gains the information. There are four components of a barcode scanner as follows –

  1. Lens – Use to scan the barcode.
  2. Photoconductor – It converts optical impulses into electrical ones.
  3. Light source – It helps in reading barcodes and accurately decodes the data in barcodes.
  4. Decoder – It analyzes the barcode data and transfers it to the scanner output port.

How Do Barcodes Work?

Information is encoded in black lines and white space looking form. The overall working strategy of the barcode is based on laser technology and scanning. The scanning device emits laser light on the barcode.

The black line will absorb light and reflect less information. Whereas, white bars will shine and reflect more information. This amount of light will be then converted to an electrical signal by the scanner.

The scanner and decoder process the electrical signal that translates the patterns into digital data. Later on, this data is transferred to the point of sale system. The black part will be recorded as 1 and the white part will be recorded as 0.

There are 12 digits in every barcode which are divided into four segments. Each segment has a different purpose and presentation.

  • The first number shows the product type.
  • The first 5 numbers on the left show the manufacturer’s code.
  • The next 5 numbers on the right show the product code.
  • The last number is the barcode number as per the self-policing system. It ensures the barcode is composed correctly.

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What Are Barcodes Used For?

The major use of barcodes is product identification in the store. Moreover, its transferred data is useful for tracking the price and inventory. Also, they help manage returns and product authenticity verification. However, their usage is not limited to retail stores. Their other use in other sectors is as follows.

Parcel tracking – Barcodes help track parcels to ensure timely delivery.

Food and agriculture – Barcodes are useful for traceability from origin to destination to track food products’ journeys.

Library system – Tracking and managing books in the library is simple with barcodes. It reduces manual work and enhances accuracy.

Manufacturing – Barcodes are useful to know the status of an item in the production stage.

Healthcare – It is easy to track patient identity, medicine products, and laboratory samples to reduce errors and correct information.

What are the Types of Barcodes?

What are the Types of Barcodes

Based on functionality and scope of use, barcodes are divided into two categories. Let’s understand them individually.

1. Dimensional (1D)/ Linear barcodes

1D barcodes are a series of black and white vertical bars. Product type, size, and color are the major information that these barcodes store. 1D barcodes are commonly found on the top of Universal Product Codes (UPCs). It is helpful to track the product delivery journey. The major applications of 1D barcodes are retail products, goods, books, and shipping labels. Linear barcode scanners are useful for 1D barcode scanning.

2. Dimensional (2D)/Matrix barcodes

2D barcodes, also known as matrices, are useful to store more information beyond text. This all includes the product image, inventory price, and inventory level. These barcodes are complicated as compared to 1D. The best example of a 2D barcode is a QR code which is highly useful to convert detailed information. It’s not necessary that every barcode reader can read 2D barcodes.

3. Is There a 3D Barcode?

Yes, 3D barcodes are the talk of a town. They are 2D barcodes only but with the difference of encoding information. 2D barcodes encode information in an image, whereas 3D barcodes utilize engraving which are 3D shapes. These barcodes have no significance in retail stores and are compatible with general scanners.

What Is the Importance of Barcodes?

After knowing what a barcode is, now let’s define its value and advantage. Barcodes look like simple vertical bars, but their importance is high. For retail and supermarkets, these barcodes are highly valuable. They accelerate the process and bring accuracy while reducing the chances of human errors.

The following points will justify the barcodes’ importance in better form.

Low investment

Generating barcodes is straightforward and less expensive for business professionals. Also, sales accuracy and good transaction speed offer highly cost-effective results.

Real-time data insight

The inventory gets updated immediately after barcode scanning takes place. It also updates sales numbers in the business management system. One can get the up to date information related to inventory in real-time from the barcode component.


There are minimal chances of errors in barcode scanning. The reason behind this is the technology associated with barcodes and no manual process involvement.

No training to use

The barcode scanner is easy to use. There is no requirement to give long training to employees to operate it. The concept is only to scan the barcode correctly on the point.

Inventory management

Retailers give high accuracy and real-time data on the barcode numbers. The inventory turnover estimate is highly accurate. So, it is easy to keep less inventory and know when to restock it.

The Future of Barcoding

Barcoding technology helps reduce human errors and speeds up the process. Talking about its future, barcode technology will reach new heights and offer highly beneficial concepts.

Recently, radio frequency identification (RFI) technology has been fused with traditional barcodes. This makes it possible to simultaneously scan multiple products. This leads to a faster checkout process that eliminates the long waiting time for customers.

3D barcodes are another advanced step. Its concept is using vertical and horizontal lines that store more information. Furthermore, these barcodes are scannable on mobile devices giving quick scanning.

The upcoming barcode system will come with more advanced concepts. Technology will be advancing with innovations. Thus we can expect that the future barcodes will offer high security, and sustainability in addition to fast processing. Barcodes in the future will play a vital role and meet the demand of a changing market.

What Is a UPC?

UPC stands for Universal Product Code which is mostly found in retail product packaging. It is useful in knowing the product’s details.

UPC is made up of two parts –

  1. Machine readable barcode
  2. Unique 12-digit number (situated at the bottom of the barcode)

What Is the Purpose of a UPC?

UPCs simplify the product’s identification through size, color, type, and name. Moreover, they are also beneficial for tracking inventory in warehouses and retail stores. You can make the checkout process super fast by incorporating UPC.

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What Are the Benefits of UPCs?

UPCs are helpful for consumers and business professionals. The scanner scans the product’s information and costs with the help of UPCs with speed and accuracy. This helps the business professionals to execute the operation quickly. Also, it eliminates the manual entry of the product.

Talking about inventory management, UPCs contribute a lot to refining their tracking and management. Vendors can easily fulfill the stock whenever required for the particular product. It helps resolve an issue that may arise.

For the customers, UPCs offer a seamless checkout experience. This is due to automated operation and cutting down the traditional methods.

Difference Between UPCs and SKUs

There are a lot of similarities between UPCs and SKUs. However, both are different in their usage and purposes. Let’s check the differences below.

Stands for Universal Product Code. Stands for Stock Keeping Unit.
It is universal across multiple retailers. It is unique and customized from business to business.
Same UPC is useful for the same products in different retail stores. It is unique and always found on the store’s unique shelf pricing.
It helps to find the product across various retailers. It is only helpful in tracking the product under business using the unique SKU.
It is universal across multiple retailers. It is unique and customized from business to business.
Suppliers use UPCs to track inventory. SKUs are also useful in tracking and managing inventory but in a unique way.


So here we wrap up our story on how barcodes work. Barcodes are now a lifeline for retailers and other businesses who sell products. The simple looking black and white labels are valuable and contribute a lot to the smooth execution of operations. Currently, they have made strong roots, but in the coming time, they will be more advanced.


Jayanti Katariya
Jayanti Katariya About the author

Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.