The NAICS System[1]

Businesses all types in North America are assigned a numerical code called an NAICS code. The acronym NAICS stands for North American Industry Classification System. The NAICS system was developed by the governments of the United States, Canada and Mexico as a means of standardizing the process of industry categorization. Consequently, identifying the NAICS code for the industry you are interested in can make searching for data that industry much more efficient and effective. (Note: NAICS replaced the previously used Standard Industry Classification (SIC) system in 1997. Some databases may still reference these SIC codes.)

For instance, suppose you were interested in searching for data about online retailers such as Amazon.com or Overstock.com. What type of information would you focus on – technology, retail, or information businesses? While online retailers are certainly technology businesses, they generate revenues and profits primarily via retail sales, and also provide information. By identifying the NAICS code for this type of business (i.e., 45411: Electronic Shopping), you’ll be more likely to find important descriptive data for that industry. You’ll also find it much easier to locate government and other information when conducting online searches by utilizing this NAICS number.

You can get a complete list of NAICS codes at the United States Census Bureau’s website ( You can also perform a keyword search on this website to find the NAICS code of the particular industry you are interested in.

Understanding NAICS codes . . . .

The NAICS system divides the economy into 20 broad economic sectors. Each of the 20 broad economic sectors is assigned a two-digit code. The system then groups these broad economic sectors into subsectors, then into industries or business types. In order to accomplish this process, NAICS adds additional numbers to the two-digit code assigned to broad economic individual sectors.

For example, suppose you owned a Honda motorcycle dealership. Your dealership would fall into the six-digit NAICS classification for motorcycle dealers, which is 441221. This six-digit code is broken down as follows:

  1. The first two digits refer to the broad economic sector the dealership belongs to:

44: Retail Trade

  1. A third digit is added to designate a subsector of that two-digit sector:

441: Motor vehicle and parts dealers

  1. A fourth digit refers to more specific industries or businesses within the classification:

4412: Other motor vehicle dealers (i.e., not automobile)

  1. A fifth digit adds further distinctions between businesses within the classification:

44122: Motorcycle, boat, and other motor vehicle dealers

  1. Numbers with a non-zero sixth digit usually refer to very specific industries or types of businesses:

Motorcycle dealers (i.e., not boat or other motor vehicle dealers

Given the scope of the classification system and the ongoing evolution of economic markets, the economic sector you are interested in may not always be immediately obvious. For example, you might have easily thought that motorcycle dealers would be classified as part of “Transportation and Warehousing.” That is why you’ll usually find an “Other” category in each sector and subsector.

In cases where the industry you’ve identified does fall into the “other” category, you will want to be very careful in how you interpret data as such data will likely include other businesses that also didn’t fit into a more specific classification. For example, “all other motor vehicle dealers” includes dealers of both snowmobiles and jet airplanes. Given the consumers, competitors and distributors in each of these product are likely behave in very different ways, it would be unwise to interpret data based on this code in a uniform way without giving careful consideration to the nature of the similarities and differences across these industries.

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[1]This document was produced by Dr. Mark T. Schenkel, and last updated on February 15, 2007. It is based on a discussion focusing on market research search techniques presented in Abrams R. (2006).Successful Business Research: Straight to the Numbers You Need – Fast! Palo Alto, CA: The Planning Shop ™.