What Is a SKU Number? How Retailers Can Use SKUs in Business.

A SKU ( pronounced “ skew ” ) stands for Stock Keeping Unit. A retailer typically uses SKUs to identify their business ’ randomness armory .
Most retailers know that SKUs help track products from seller to customer, but few know how they work behind the scenes and why they ’ re so significant .
Whether you ’ re a retail veteran or post modern business owner, have a massive inventory or restrict stock, or operate a brick-and-mortar store or on-line market, you likely have a SKU architecture in place — or you ’ re looking to add one.

Keep recitation to learn :

What is a SKU number?

SKU stands for “stock keeping unit” and is a number that retailers use to differentiate products and track inventory levels. An SKU is typically eight alphanumeric digits long. Products are assigned different SKU numbers based on diverse characteristics, such as price, manufacturer, tinge, style, type, and size .
SKUs aren ’ deoxythymidine monophosphate universal ; they ’ ra mean to be unique to your commercial enterprise and can be tailored to fit your needs or those of your vendors and customers .

Why are SKUs important?

SKU numbers are significant because they help you accurately track your inventory to prevent having apparition inventory and to pinpoint when to rate new products so your merchandise never goes out of stock .

Can two products have the same SKU number?

No. SKU numbers are unique to the retailer selling the products. however, two products could have the lapp barcode or UPC number. ( Keep read for more information about SKUs vs UPCs five barcodes. )
Unify your stock management with Shopify
only Shopify POS helps you manage warehouse and retail shop inventory from the same rear office. Shopify mechanically syncs lineage quantities as you receive, sell, return, or switch over products online or in store—no manual of arms harmonize necessary .
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How to create SKU numbers

SKUs provide data about sales and inventory movements that are beneficial for your relationships with vendors and customers .
Before you can access that datum, however, you must create your products ’ SKU numbers — besides known as your SKU architecture .
The easiest way to generate SKU numbers is through your stock management and point-of-sale ( POS ) organization .
Online SKU generators such as Primaseller or TradeGecko can help with the work, excessively. You can besides create SKUs by hand and on an as-needed basis, although this international relations and security network ’ thymine constantly recommended, particularly for retailers with large inventories .
now, let ’ s dig into the anatomy of a SKU number .
The first contribution of a SKU is typically the broadest characteristic, such as the department, merchandise category, or supplier. The top two or three alphanumeric characteristics are mapped to this .
The adjacent few characters represent features specific to each product — its color, size, brand, or other subcategory .
last, the last two to three characteristics act as a succession identifier, allowing your SKUs to tell you the number of products you have and the regulate in which they were purchased and processed .

SKU number examples

Let ’ s unpack an example of how one retailer — say, a wine patronize — may generate its SKU numbers .

Supplier First  Identifier Blend Second Identifier Sequence Identifier SKU
Central Winery CW chardonnay 21 001 CW21001
Central Winery CW Pinot Grigio 22 001 CW22001

cardinal Winery

CW

Pinot Grigio

22 002 CW22002
Eastern Vines EV chardonnay 21 001 EV21001
Eastern Vines EV chardonnay 21 002 EV21002
Eastern Vines EV Sauvignon Blanc 23 001 EV23001

Tips for your SKU naming convention

  • Stay between 8 and 12 characters
  • Begin the SKU with a letter, such as the first letter of the supplier or brand
  • Never use zero or special characters like !, @, or &
  • Create a unique, easy-to-understand format
  • Lead with the most shopped-for product characteristics to benefit your retail sales team

SKU vs. UPC

While SKUs and UPCs look alike — both are apparently identical alphanumeric codes — they are used in two different ways. here ’ s a helpful breakdown .

 SKU (Stock Keeping Unit) UPC (Universal Product Code)
Internal Universal
Between eight and 12 characters Always 12 characters
Identifies product traits Identifies manufacturer and item
Alphanumeric Numeric
Retailers determine SKU architecture Issued by the Global Standards Organization

If you’re a new business that still needs barcodes for your merchandise, visit GS1’s starter guide to creating barcodes and UPCs.
As you create your SKUs, ensure those and your UPCs are not the lapp .
sku vs upc

As a predominate of flick, let your SKUs identify product traits, while the UPCs identify the manufacturer ( first six numbers ), token ( following five characters ), and check finger ( last numeral ). ( The match digit is formulated by adding and/or multiplying multiple digits in the code to show that the UPC code is valid. )

SKU vs. barcode

A barcode is the batch of black lines that retailers scan when completing a customer ’ randomness purchase. The term barcode is frequently used in place of UPC, meaning that the two are interchangeable .
Unlike SKU numbers, which are singular to a business or seller, barcodes are assigned to all like products regardless of where they are sold. SKUs besides accompany barcodes .
🤓 What does one barcode say when he bumps into another ? SKU me.

How to use SKUs to grow your retail business

  1. Track stock accurately
  2. Forecast sales
  3. Amplify your biggest profit generators
  4. Boost customer loyalty and gratification
  5. offer customers raw suggestions—and addition sales

1. Track inventory accurately

SKUs spot product traits, so they are helpful tools in tracking the health of your overall inventory—namely, handiness .
By using your SKU data to keep an center on product statuses, you can pinpoint when precisely to regulate fresh products. This is referred to as a retailer ’ sulfur reorder point .
💡 PRO TIP: To prevent stockouts, set reorder points in Shopify admin to get low malcolm stock notifications. These ensure you have enough leash time to replenish a product ’ s stock before quantities reach zero .
With accuracy comes efficiency and productivity. When you can inventory manage in very time, you better understand the evolving needs of your clientele .

2. Forecast demand and sales

Accurate stock numbers besides mean better and more accurate sales and demand prediction .
As a solution, it ’ s easier for you to answer questions like :

  • How much staff do I need on the denounce floor during a specific season ?
  • How much armory of each product should I have ?
  • How often should I restock specific products ?
  • How much payroll can my cash menstruate binding in different seasons ?

Keeping a pulse on these moving parts of your retail shop helps establish you as a authentic merchant to your customers and vendors .
If your SKU datum highlights low-selling stock, don ’ metric ton immediately eliminate those products. Some customers may still purchase those products, so decrease your inventory rather .
A 2008 Walmart enterprise called Project Impact is a prime model of what not to do : the ship’s company kept its highest selling products, removed the lowest sellers, and added in costly items. The resultant role ? A quick refuse in sales because customers looked to other retailers .
however, there is a solution that involves your SKU computer architecture. According to the Harvard Business Review, consider how customers are purchasing your products. “ Most of the time customers don ’ triiodothyronine bribe products ; they buy a bunch of attributes, ” authors Marshall Fisher and Ramnath Vaidyanathan publish. “ Think about the survive clock you bought a television receiver. Did you say, ‘ I want television X ’ ? Or did you think about screen size, resoluteness, monetary value, LCD versus plasma, and brand ? ”
By structuring your SKU numbers to communicate the attributes customers want to know about your products, you can strategically analyze your inventory to forecast demand and satisfy customers .

3. Amplify your biggest profit generators

Your SKU architecture highlights your most sought items — the least craved ones, besides. digression from knowing your reorder points and what products to axe, your SKUs can besides help you get creative with your highest-selling items .
Data surrounding your biggest profit generators can inspire in-store merchandise displays and ocular trade decisions a well as strategic marketing campaigns that assistant turn over that popular stock even quicker .

4. Boost customer loyalty and satisfaction

Since SKU numbers can be used to anticipate reorder points, they can besides help your customer always find the product they need. This leads to a shop experience with fiddling to no stockout issues — resulting in increased brand loyalty and satisfaction among shoppers .
additionally, when a product does go out of stock ( which is inevitable in the retail universe ), your customers might be more volition to be affected role rather than taking their business elsewhere .
💡 FURTHER READING: Learn how you can cultivate more customer loyalty with a loyalty program .

5. Offer customers new suggestions—and increase sales

SKU product data international relations and security network ’ t valuable just for inventory management and sales analysis. It can besides be applied on the sales floor. For example, if a product is out of banal, your retail team can use their SKU cognition to direct your customers to alike products. alternatively, if a product is in neckcloth for your customer, your associates can suggest relate products to complement their purchase .
This is frequently utilize on ecommerce websites, besides. When you browse products online, retailers frequently display exchangeable items you may like. This is probably done through a retailer ’ randomness SKU computer architecture, where they ’ ve applied an algorithm to provide suggestions with alike characteristics or features .

Getting started with SKU numbers

SKUs aren ’ t a one-size-fits-all for retailers, and the more you tailor your SKU architecture to your and your customers ’ specific needs, the more you ’ ll help your business succeed .
By understanding what ’ s crucial for you, your vendors, and your customers, you can craft a SKU architecture that allows you to efficiently manage your inventory and easily scale your retail business .
This stake was in the first place written by Jen Hasty and has been updated for novelty and accuracy by the Shopify team .

Take the guess out of SKUs and restocks
alone Shopify helps you make smarter armory buy decisions. See your most profitable and popular items, beget SKUs, forecast need, get low stock alerts, and create purchase orders without leaving your petty officer organization .
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SKU numbers FAQ

What is a SKU number?

A SKU, or Stock Keeping Unit, is a singular number used to internally track a business ’ armory. Retailers use SKUs to track their inventory and sales, which can provide analytic data that are beneficial to have in order to develop relationships with your vendors and customers .

How does a SKU work?

SKUs are alphanumeric, and should provide information on the most authoritative characteristics of a product — monetary value, coloring material, stylus, stigmatize, gender, type, and size, for exemplar. This information in the SKUs should besides be placed in orderliness from important to least important — or in other words, the most want information to the least

Why is SKU important?

SKU numbers are authoritative because they ensure you inventory is accurately tracked, and help you pinpoint when precisely to arrange new products indeed your trade never goes out of malcolm stock.

Are SKU and barcodes the same?

While stock keeping units or SKUs and barcodes are similar, they are not the same. A barcode is unlike from a SKU by the means it is assigned to a product—SKU numbers are unique to a commercial enterprise or seller, and barcodes should be assigned to all like products careless of where they are sold .

How do I get an SKU for my product?

If you use a point-of-sale system, most will allow you to create a SKU architecture within it. If you don ’ t have one and have a smaller armory, you can actually create it by hand and on an as-needed basis .

Can two products have the same SKU number?

No. SKU numbers are singular to the company selling the intersection, however two products could have the same barcode or UPC number .

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