Used to keep track of everything from inventory to outgoing shipments, barcodes are an essential part of ecommerce. These small, easy-to-scan markings provide digital documentation that's used for manufacturing, production, and distribution. Learn more about the two main types of barcoding and how they can manage items and ultimately help your business expand.

What is barcoding?

Barcoding is an identification method that companies use to track, manage, and identify items. Individual barcodes appear as spaces and thick or narrow vertical bars to the human eye. Underneath the barcode, you'll typically find a series of letters and numbers known as its code. Barcodes are so ubiquitous that you'll find the coding stripes on nearly every product sold in a supermarket, retail shop, and online store.

Traditional barcodes come in a one-dimensional format. However, newer two-dimensional formats, like QR codes, are growing in popularity. Each marking on a barcode specifically represents individual attributes of the item, like its size, color, shape, and so on. Businesses can attach barcodes to items temporarily or permanently via labels or tags.

Reading barcodes

Barcodes in the one-dimensional format require a specialized barcode reader to extract the data they hold. These scanning devices use lasers to transmit the barcode into a computerized maintenance management system. After ingesting the barcode information, this management software will create and store specific data about the item.

For QR codes—the 2D barcodes commonly used on signs, menus, and mailers—you can use a smartphone to read the data from the code.


Why is barcoding inventory important?

Accurate inventory counts are pivotal to the success of your ecommerce business, allowing you to avoid backorders and overstock. Before barcoding became common in the 1980s, businesses relied on human eyes to physically count the amount of each item that was in stock.

Not only did this allow for costly human error, but it also drove up labor costs and made guaranteeing customer orders more difficult. With barcoding, businesses can easily track their inventory in real time, a crucial element of good inventory management. Using barcode readers, your fulfillment partner can scan every item that’s received by the warehouse—and picked for shipment—and automatically transmit it into the warehouse management system (WMS). This provides accurate inventory counts without the risk of human error.

Barcode scanning is much easier than manually inputting the alpha-numeric code. You've likely experienced this first-hand in a supermarket checkout line if you've ever had a barcode sticker that was damaged or otherwise unreadable by the scanner.


How do third-party logistics use barcoding?

For 3PL fulfillment centers, barcoding plays a major role in managing inventory, sending packages, and processing returns. Barcode scanning allows for accurate reports and facilitates faster deliveries.

Receiving inventory

Whether a supplier or manufacturer sends the inventory, third-party logistics experts use barcodes to keep track of everything that comes through their fulfillment centers. Each product will have a Stock Keeping Unit (SKU) number associated with a barcode. The fulfillment center or warehouse will scan the barcode as soon as the item arrives as part of the inventory receiving process. This way, the exact number of products you're storing will be entered into the management system. 


Barcodes are mandatory in most warehouses or fulfillment centers today. If your inventory arrives without barcodes, expect to be charged an extra fee to add them before the inventory is stocked.

Sending packages

Fulfillment centers must manage a lot of outgoing shipments, so barcodes are affixed to each package exterior for easy identification. Before handing the package over to the courier, a 3PL employee will scan the barcode to digitally account for the item. This will automatically mark the product as depleted from inventory when the package ships out of the facility.

Receiving returns

Customer returns are an inevitable part of doing business. Barcodes affixed to the exterior of a package allow the third-party fulfillment center to easily intake the return and alert you of its arrival. This makes it easy to match the returned item to the customer’s account so they can be credited or sent a replacement.


What are the two main types of barcodes?

Businesses use barcodes in two main ways: for shipping and for products. It's important to understand the difference between the two, so you know where to look for each barcode and what type of information it will provide.

Shipping barcodes

Shipping barcodes are affixed to the exterior of a package so they can be easily scanned when a package arrives at a particular destination. Ecommerce businesses use shipping barcodes to keep track of orders as they travel from fulfillment centers to their end customers.

Shipping barcodes are periodically scanned as the package moves from location to location, which is what allows for package tracking. This allows you—and your customers—to monitor deliveries and anticipate their arrival date. If the package is delayed, you’ll have the opportunity to alert your customer so they can adjust their expectations accordingly. 

Product barcodes

Product barcodes are physically affixed to the product itself, offering a secure way to keep track of your inventory at a third-party fulfillment center. With 3PL warehouses storing so many products, you’ll want to ensure your customers receive accurate orders. Individual product barcodes help warehouse employees to identify the right products in each order during pick and pack. This becomes especially important with products like apparel, in which multiple SKUs may appear identical except for small differences like size.

Product barcodes also help you and your fulfillment centers or warehouses to keep real-time track of inventory levels. When you’re running low on a particular SKU, you’ll be alerted—either by warehouse staff or by your 3PL’s software—that it’s time to restock, avoiding delays and backorders. 




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Barcoding can change the way you do business for the better

Barcoding is a crucial tool for ecommerce businesses to manage inventory, track packages, and eliminate human error. Looking for a new logistics partner that provides real-time inventory, shipping, and order updates? Contact an Airhouse fulfillment expert to learn more. 

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