Barcode inventory systems: Optimizing ecommerce operations

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Barcoding has revolutionized how ecommerce platforms manage and keep track of their inventory. Yet, despite barcodes being a cheap, reliable form of inventory management, a shockingly large number of ecommerce businesses still attempt to do inventory management by hand.

This is not only inefficient but introduces a ton of unnecessary errors into your organization, which inevitably trickle down to poor customer experiences.

But where do you start? In this post, we’ll deconstruct the fundamental barcode inventory management system and go over the following:

  • How each part works together to help you track inventory seamlessly
  • Essential equipment like printers, barcode labels, scanners, and more
  • Some of the top picks for the best barcode software
  • How you can create your own barcodes and get started with a barcode system today

Let’s dive in!

The role of barcode scanners in inventory systems

What is a barcode inventory system?

A barcode inventory system is a technological solution that uses barcodes to track and manage products throughout their lifecycle in a storage facility or warehouse. It streamlines inventory management processes from product arrival to shipment.

Barcodes, originally designed for grocery stores in the 1970s, have now become ubiquitous in almost every retail sector.

They store information about the product, such as its name, price, and stock level. When scanned, this information is relayed to an inventory management software that processes and organizes it.

There are multiple types of barcodes, including:

  1. 1D barcodes – These are the most common type of barcodes used in retail and warehousing. A 1D barcode represents data in a series of lines of varying widths and spacings. It can be read by barcode scanners in a single direction, horizontally. Common examples of 1D barcodes include the Universal Product Code (UPC) and the European Article Number (EAN).
  2. 2D barcodes – Unlike 1D barcodes, which can store a limited amount of data in horizontal lines, 2D barcodes can store information both horizontally and vertically. This allows them to contain a much larger amount of data, including text, URLs, or other types of data. They require image-based scanners like cameras to be read, as opposed to laser scanners. Examples of 2D barcodes include Data Matrix and PDF417.
  3. QR codes – A QR code is a specific type of 2D barcode that has gained significant popularity in recent years, especially in marketing and mobile applications. They can hold a variety of data types, including URLs, text, or contact information. The distinct feature of QR codes is their square shape and the three square targets in their corners, which help barcode readers determine the code’s orientation. They are designed to be quickly read, even from a distance or at an angle, and are commonly used in advertising, ticketing, and mobile payments.

What are the key components and functionality of barcode inventory systems?

At its core, a barcode inventory system revolves around two primary components: barcode scanning technology (reading the data) and inventory management software (storing and managing the data). Together, they form a cohesive unit ensuring inventory accuracy and efficiency.

Barcode printer

Barcode printers are specialized devices that produce barcodes for various applications, crucial for inventory management across numerous industries. They work by translating user-inputted data into visual patterns and then printing them using either thermal transfer or direct thermal methods.

Check out our guide on how to make your own barcodes for a deeper dive into this topic.

Inventory management software

Inventory management software acts as the brain of the system. It stores, organizes, and interprets the data obtained from barcode scans, ensuring up-to-date and accurate stock levels.

Barcode scanner

Barcode scanners are the gateway between the physical product and its digital representation in the system.

These tools capture the encoded information from barcodes and transmit it for processing. Available in diverse styles, they range from pen-type readers and handheld guns to stationary models and smartphone-integrated scanners.

Why are barcode systems essential for ecommerce?

Barcode systems form the backbone of efficient ecommerce operations, ensuring real-time tracking, reducing errors, and enhancing the overall customer experience.

Imagine a world where every step of the logistics lifecycle – from warehouse receiving to storage to shipments and returns – had to be tracked manually.

(And yes, even tracking in a Google Sheet or Excel spreadsheet is considered “manual.”)

Barcoding solves inefficiencies and errors associated with manual tracking methods by creating a foolproof, streamlined way to track products at every stage in their journey.

Advantages of barcode inventory systems in ecommerce

Inventory accuracy and visibility

One of the primary benefits of utilizing barcode inventory software is its enhanced accuracy and visibility for inventory control.

Barcode systems provide real-time updates on stock levels through the simple act of scanning barcodes. This ensures that businesses always have a clear and up-to-date inventory picture, reducing the risk of stockouts or overstock situations.

Efficient order fulfillment

Barcode inventory systems have revolutionized the order processing realm. With accurate stock data available at the click of a button, order processing becomes far more streamlined.

Scanning barcodes to confirm details and quantities of your physical inventory eliminates manual checks, leading to faster and more efficient order fulfillment. This speed benefits the business operations and enhances the customer’s purchasing experience.

Inventory optimization and demand forecasting

The power of barcode inventory software extends beyond immediate stock management. By analyzing historical data generated from consistent barcode scanning, businesses can recognize patterns and trends in product demand.

This valuable insight enables them to predict future demand patterns, allowing for smarter inventory optimization. By aligning stock levels with forecasted demand, businesses can minimize waste and maximize sales opportunities.

Reduced operational costs

Barcode inventory control is not just about tracking items; it’s also about financial prudence. The automation provided by barcode systems means fewer manual processes, which translates to reduced labor costs.

Additionally, by minimizing errors that can arise from manual data entry or miscounts, businesses can avoid costly mistakes, further slashing operational costs.

Enhanced customer satisfaction and loyalty

In the competitive landscape of ecommerce, the smallest edge can make a significant difference. When customers receive their orders promptly and without error, their satisfaction levels rise.

Barcode inventory systems ensure that the right products are shipped in the right quantities, leading to fewer returns or complaints.

This positive shopping experience fosters positive customer experiences, encouraging repeat business and positive word-of-mouth recommendations.

Implementing barcode inventory systems in ecommerce

So let’s say we’ve convinced you. You’re sick of doing the manual thing, and you’re ready to introduce a proper barcoding system into your business. Where do you begin?

Here’s our step-by-step guide.

Step 1: Assessing ecommerce inventory needs

Before diving into the world of barcoding, it’s essential to take a step back and analyze the specific needs of your ecommerce operation. The barcode system you choose should be tailored to these needs to maximize efficiency and accuracy.

SKU Volume

Why it matters: The number of Stock Keeping Units (SKUs) you manage directly impacts the kind of barcode system you’ll need. A small enterprise with a few dozen products will have different needs compared to a large business with thousands of items.

Action Step: Start by tallying the total number of distinct SKUs in your inventory. This will give you a ballpark figure to work with. The goal is to ensure your chosen barcode system can comfortably accommodate your current SKU volume and any foreseeable expansion in the near future.

Product variations

Why it matters: Each product variation, whether it’s a different size, color, or other distinguishing features, can sometimes require its unique identification. Depending on the intricacy and number of these variations, you may need a more sophisticated barcode system.

Action Step: Create a list of all product categories and their respective variations. This will help you identify if you need standard barcodes for general product categories or if each variation requires its distinct code. Understanding this differentiation will guide you in selecting a barcode system that’s both versatile and tailored to your inventory’s specific characteristics.

Step 2: Selecting the right barcode hardware and software

Once you have a clear understanding of your ecommerce inventory needs, the next step involves choosing the appropriate hardware and software that align with those requirements.

These tools form the backbone of your barcode system, ensuring smooth operation and efficient data management.

Barcode scanners

Why it matters: The right scanner will efficiently read your barcodes without error, streamlining the inventory process. Whether you’re considering laser scanners, CCD readers, or 2D imagers, your choice should align with the barcode types you’ll use and the environments in which they’ll be scanned.

Action Step: Research and compare various scanner models. Think about factors like scanning range, durability, and compatibility with other systems. If possible, test a few models in your warehouse setting to determine which one best fits your operations.

Barcode printers

Why it matters: A reliable barcode printer is essential for producing clear, scannable barcodes. Depending on your volume and needs, you may consider direct thermal printers, thermal transfer printers, or even inkjet barcode printers.

Action Step: Identify the volume and frequency of barcode printing your business requires. Then, choose a printer model that can handle that demand while producing high-quality barcodes consistently. It’s also worth considering factors like maintenance costs and the longevity of printed barcodes.

Barcode software

Why it matters: Software is the driving force behind barcode generation, data management, and integration with other systems like your Warehouse Management System (WMS) or ecommerce platform. The right software will generate barcodes, store data, and provide valuable insights into inventory trends.

Action Step: Evaluate various barcode software solutions, focusing on ease of use, integration capabilities, and data management features. Ensure that the software you choose can generate the specific barcode types needed for your product variations and is scalable for future business growth.

Step 3: Integrating a barcode system with inventory management software

Incorporating a barcode system into your inventory management software (IMS) streamlines operations, ensuring that product tracking, ordering, and sales processes are cohesive and efficient.

This integration is pivotal, making both systems more powerful when they operate in tandem.

Inventory Management Software (IMS) selection

Why it matters: Choosing the right IMS is crucial for effective inventory control, order management, and reporting. When integrated with your barcode system, it should allow real-time tracking and offer automated updates to keep your inventory data accurate.

Action Step: When selecting an IMS, prioritize platforms that offer built-in barcode integration features or those known to work seamlessly with third-party barcode systems. Read user reviews and request demos to see how barcode data flows within the system.

Real-time data synchronization

Why it matters: Real-time synchronization ensures that every scan instantly updates the inventory status. This immediacy reduces errors, prevents stockouts, and gives a clear picture of inventory levels at any given moment.

Action Step: Ensure that the barcode system and IMS have features or plugins that facilitate real-time synchronization. This might require working closely with software providers or hiring an IT specialist to ensure seamless data flow.

Reporting and analytics

Why it matters: One of the primary benefits of integrating these systems is the ability to leverage rich data analytics. Detailed reports provide insights into sales trends, stock movements, and even forecast future demand.

Action Step: After integration, familiarize yourself with the reporting modules of your IMS. Utilize barcode-derived data to monitor inventory turnover, pinpoint best-selling items, and identify potential supply chain bottlenecks.

User training and support

Why it matters: An integrated system is only as effective as the users operating it. Ensuring your team understands how to use both the barcode system and IMS effectively is paramount to the success of this integration.

Action Step: Schedule training sessions for staff, focusing on barcode scanning practices, data entry, and accessing inventory insights. Additionally, establish a line of communication with software providers for ongoing support and troubleshooting.

Barcode inventory systems: a comparison

Choosing the right barcode inventory system can significantly affect your business’s efficiency and accuracy.

To make your decision-making smoother, we delve into a comparison of some of the top players in the industry.

Wasp Barcode Maker

Wasp barcode website

A stalwart in the barcode realm, Wasp Barcode Maker prides itself on its time-tested reliability.

Over the years, it has carved out a niche for its comprehensive set of features, making it a favorite among businesses seeking a robust solution.

Labeljoy Barcode Generator Software

LabelJoy website

Standing out with its incredibly user-friendly interface, Labeljoy caters to businesses both small and large.

Its simplicity doesn’t sacrifice power, however, as it packs a suite of features that can be customized to fit any enterprise’s requirements.


RFGen website

Designed to keep the needs of more extensive businesses in mind, RFgen is not just a barcode system but a holistic inventory solution.

Its advanced features, coupled with a plethora of integration options, make it a top choice for industries aiming for high-tech solutions.

HandiFox Desktop

HandiFox Desktop website

HandiFox Desktop provides a comfortable blend of familiarity and efficiency for businesses that are fond of traditional desktop-based systems.

It offers a standalone solution that’s especially apt for businesses not ready to move entirely to cloud-based systems yet.

InFlow Inventory

InFlow Inventory website

Tailored primarily for Small to Medium Enterprises (SMEs), InFlow Inventory champions user experience.

Its intuitive design, paired with a suite of powerful features, ensures that businesses can manage their inventory seamlessly without a steep learning curve.

Fishbowl Inventory

Fishbowl Inventory website

Integration and scalability are at the core of Fishbowl Inventory.

Its versatile approach makes it a darling among larger enterprises, especially those looking for a system that can grow with their expanding needs and can seamlessly blend with other tools in their tech stack.

Final thoughts

Barcoding, while a seemingly simple component, plays a pivotal role in modern business operations, acting as the backbone for efficient product tracking and management.

However, the sheer act of barcoding alone is insufficient in the complex realm of ecommerce and warehousing. Instead, the real magic—and necessity—lies in adopting a holistic inventory management strategy.

Such an approach not only streamlines operations but also anticipates growth, mitigates risks and optimizes resource allocation.

Incorporating sophisticated inventory management software, like Linnworks, into this strategy elevates its potential. By ensuring seamless integration of barcoding with real-time inventory tracking, analytics, and reporting, Linnworks and similar platforms offer businesses an unparalleled advantage in today’s competitive marketplace. Take a free, no-obligation product tour now.

In essence, while barcoding is a step in the right direction, the journey to true operational excellence is achieved through a comprehensive, strategic approach to inventory management.

FAQs about barcode inventory management

What is a barcode inventory system?

A barcode inventory system is a digital method for tracking and managing inventory using barcodes. These systems leverage barcode labels, scanners, and software to record, track, and manage products in real-time, ensuring accurate inventory counts.

How do small businesses create barcode inventory?

Small businesses can create barcode inventory by investing in cost-effective barcode generators and printers. They should then label their products with these barcodes, procure a suitable barcode scanner, and select a user-friendly inventory management software that integrates seamlessly with their scanning equipment.

How do you keep inventory with a barcode scanner?

To keep inventory with a barcode scanner, you’ll first label each product or item in your inventory with a unique barcode.

As items are sold, received, or moved within your business, you’ll scan the barcode to update your inventory counts in your management software.

Is there a database for barcodes?

Yes, there are databases for barcodes. For instance, the GS1 organization manages a global database for UPC and EAN barcodes called GEPIR. This database allows users to search and identify companies that have registered a particular barcode.

How do I create a SKU and barcode?

To create a SKU (Stock Keeping Unit), you’ll first define a unique identifier for each product variation in your inventory. This SKU serves as an internal tracking code. Once you have your SKU, you can then generate a barcode for it using barcode-generating software or services.

This barcode, when scanned, will reference the SKU and its associated product details.

How does a barcode inventory system work?

A barcode inventory system works by assigning a unique barcode to each item or product in a business’s inventory.

When these items are sold, shipped, received, or moved, their barcodes are scanned using a barcode scanner. This scanned data is then automatically updated in the inventory management software, ensuring real-time and accurate tracking of inventory levels.

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