What is Stock Keeping Unit ? How to Get Started with SKUs

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    If you’re one of the many eCommerce wholesalers and retailers, you’re likely to have lots of cash in inventory in the middle of your buying, sales, and inventory process. It is why keeping a close eye on the stock you expand is essential for your company’s continuous growth.

    SKU, also known as an SKU, is an acronym for Stock Keeping Unit; it is a unique identifier for all of your items that makes it easier to monitor stock levels. SKUs are essential tools for wholesalers and retailers, allowing them to track the products they sell and stock levels across different channels and systems. Your success will depend on effective product management. Good product management is contingent on SKUs.

    sku codes

    What is an SKU number?

    Stock keeping units are unique identification numbers for an item sold by the retailer. Retailers design their codes based on different features of their merchandise. Most often, SKUs are broken down into categories and classes. For example, a home improvement store may have different sections like lawn and garden. Therefore, SKUs could be based on the lawn or garden classifications and include the letters or numbers that identify items as categories in their lawn section and the garden.

    Where SKUs are used

    You’ll typically see SKUS being used in:

    • Warehouses
    • eCommerce Stores
    • Retail stores
    • Catalogs
    • Product fulfillment centers

    Benefits of using SKUs ?


    In managing inventory, There aren’t many concepts more essential than SKUs. They can help you:

    Streamline ordering.

    If you’re placing an order with suppliers, it is more likely that you will receive the items you’re looking for by using the SKUs that appear on their price lists and purchase forms. If you also integrate your program for managing inventory with your suppliers’ systems, it is essential to utilize SKUs whenever you hit the reorder point. The common reference numbers will ensure that both systems discuss the same product.

    Simplify e-commerce and multichannel integrations.

    The only time SKUs can make a difference is when different software systems are connected. For example, suppose you combine your e-commerce and ordering systems. In that case, you’ll need one identifier for every product, in all its variations, to ensure that the correct product is delivered to the client.

    Reduce losses and increase profits

    The goal of using SKUs is to monitor the inventory levels in the inventory. This helps to not buy overstock and run into shortages of inventory. Since you’re unaware of the quantity of stock in your inventory, you could purchase additional products or skip out on restocking the product.

    Thus, SKUs of products save you from unneeded losses, which improves your profits. You can also monitor shrinkage and inventory loss and ensure that the shop manager and floor manager are accountable for these. This also increases confidence in your goods.

    Keep your systems up-to-date.

    If you change the inventory levels of a product within the master database of your products All systems must be updated. Every system must utilize the same identifiers for every product to make this process easier.

    Increase Business sales.

    Business customers frequently provide part numbers or SKUs when purchasing. This helps speed up the process and can help reduce the risk of errors.

    Things you should consider before designing SKUs for your eCommerce store

    Before you start creating SKUs for your eCommerce store, you have to take into consideration the following aspects before you do so.

    1. Unique number of products  

    number of products
    sku creation

    Find out the unique products you need to offer through the eCommerce store. If you know the precise number of products you are dealing with, you’ll be able to create eCommerce SKUs with greater ease.

    2. Do you work as a producer or a trader?

    If you’re a producer, you’ll need to create your product SKUs and not rely on any other aspect.

    However, if you’re trading a product that you’re trading, you’ll need to create different SKUs to align with the UPCs and SKUs supplied by the supplier or manufacturer.

    3. Merging or acquiring opportunities?

    This is not directly relevant and would not impact the method you use to create your SKU numbers. However, take a look at the cases that Myntra or Jabong provides. They’ve acquired them, but no changes haven’t been implemented in their SKU numbering system.

    Therefore, you can forecast how your SKU numbers could be affected in the event of a merger or acquisition by a company with completely different products.

    4. UPC/ISBN codes

    When creating SKUs, think about adding a Universal Product Code or ISBN code at the beginning of the description. The UPC and ISBN codes do not change in line with changing attributes of your product. Therefore, having these codes included in the SKU numbers will allow you to quickly track the pattern.

    5. Product purchase date

    Similar to UPC/ISBN codes, you could consider including the date of purchase in your SKUs so that you don’t have any modifications in your SKU code after they’re done.

    6. Cost and Storage details

    Consider cost and storage details like rows and shelves in your SKUs to aid your employees in quickly recalling the place of your items.

    What do you need: SKU vs UPC?


    Whether your company will use SKUs UPCs, SKUs, or both depends on your business’s current needs and future aspirations.

    Smaller businesses with fewer products selling DTC SKUs are typically the best choice.

    If there are no other parties involved in the sale of the product you offer, then it does not make sense to issue a universal product code for your product.

    Instead, SKUs offer flexibility with regard to the management of your inventory, and they cost nothing. And even though consumers can utilize UPCs UPC to find and purchase a product from your competition but having a distinct identity to your product will allow them to locate you each time.

    However, there are negatives to making use of SKUs. If you do not claim the UPC for your product, there is a chance that a competitor could come in and acquire the UPC for your product before you.

    Additionally, you require UPCs to sell your products on well-known marketplaces such as Amazon Not having UPCs will make you a part of these platforms.

    So, it is advisable to consider investing in UPCs in the event that your company begins to expand to B2B retail, wholesale, or marketplaces on the internet. The use of UPCs in these areas will allow you to track your product no matter the location it is going to and will help you keep up with retailers that offer similar items.

    UPCs are essential to have in place prior to expanding internationally since certain countries require that your products have UPCs that are regulated for sale within the respective country.

     Top Free SKU Generators

    number of sku

    1. Gorgias

    2. Zoho inventory

    3. QuickBooks Commerce

    4. Primaseller

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