Here's Everything You Need To Know About Stock Keeping Unit (SKU)

What Does SKU Stand For?

When it comes to growing an online business, one of the challenges that business owners often face is the ability to manage their inventories. Speaking of inventory management, it's a strategic approach of sourcing, storing, and selling inventories, which could either be raw materials or finished goods. Furthermore, inventory management also refers to the ability to have the right products, placing them in the right place, at the right levels and time, and selling them at the right price tag. Surely, you must have noticed that most price tags often come with a few numbers written on them. Well, in case you don't know, there are quite a few numbers associated with inventory management. These include the SKU number, universal product code (UPC), and serial numbers.

Admittedly, it can sometimes be difficult to tell the difference between SKU, UPC, and serial numbers. As a seller, for you to easily identify products, you must be able to understand the difference between these numbers.

In this post, we'll be sharing with you, everything you need to know about SKU numbers. These include what SKU stands for, examples of SKU numbers, how it works, and its benefits for businesses. Furthermore, we'll also look at the differences between SKU, UPC, and Serial numbers. That said, let's get straight down to the business of the day.

So far, we've been talking about SKU, now, here's a question, what does it stand for? SKU is the acronym for Stock Keeping Unit. As mentioned earlier, it's a unique number that helps sellers internally track their business inventories. Furthermore, SKU numbers are alphanumeric codes that allow online retailers to easily track their stocks. Besides that, it also enables them to easily improve shopping experiences, measure their sales by product and category, and even design store layouts and flow.

What Is a SKU Number And How Does It Work?

SKU Best Practices

SKU numbers are mostly assigned to inventories, to make it easy for retailers to identify some specific information regarding the products. This information includes the characteristics of the product, such as its color, style, brand, price, gender, type, size, and many more. Furthermore, this information is usually placed according to their order of importance. Unlike UPC numbers, which are universal to all products, SKU isn't universal. Rather, it's unique to each business and should be created to represent what your customers mostly ask about the product.

In case you're considering creating an SKU for a product, here are some of the best practices that you can follow, below. However, before sharing them with you, it's worth noting that there's no incorrect way that you can employ to create your stock-keeping unit (SKU) number.

Keep Them Short

Another thing you should put in mind when trying to create an SKU number for a product is its length. You should make the code as short as possible. The reason for this is simple - most times, long SKUs make it very difficult for people to read and understand. And apart from that, it doesn't always work for all inventory management systems.

Avoid Spaces and Special Characters

When creating an SKU number for a certain product, you must avoid using spaces and special characters. That's because they'll end up confusing people instead of making things easy for them as intended.

Avoid reusing SKUs

The first thing that you need to know before creating your SKU numbers is that it isn't a good practice to reuse SKUs. As such, you must make each code unique to a specific product. Furthermore, it's worth knowing that there are cases when you can reuse SKUs. Although it's not advisable, you can reuse SKU numbers after a few years of originally creating them. However, this should be after several total catalog refreshes to identify that you've completely sold out all products using the SKU number.

Avoid starting the SKU with the number 0

Although starting the SKUs with numbers isn't a good practice, what's even worse is starting them with the number 0. Addressing the first issue, it's advisable to always start an SKU with letters. Doing that makes them stand out in spreadsheets, which are usually filled with numbers. Furthermore, as for the number "0", you need to avoid starting it because there are few data storing software out there that might interpret it as "nothing". For instance, when you have 024567, these systems might interpret it as 24567.

Example of SKU Numbers: So far, we have been able to discuss what SKU numbers stand for and the best practices for creating them. Now, let's have a quick look at a couple of examples of SKU numbers below.

  • Let's say we are to create an SKU for black Ugg boots in the Bailey Bow style, with size 12. Here's how we'll create the SKU; "UGG-BB-BLK-12".
  • Here's another example of an SKU number; "PUR-MED-G123-GUC". This example represents an SKU for a pair of purple Gucci jeans that is medium-sized.

Note: It's important to use the dash, as it helps to separate specific information about the product.

Improve Inventory Management, Work Efficiency, and Productivity

What Are The Benefits Of SKU Numbers?

Store keeping units (SKUs) have a lot of benefits for retail stores, warehouses, and product fulfillment centers. While we won't be able to mention all of them, here are the key benefits below:

  • You can use it to track your inventories and identify the numbers that are remaining.
  • It helps to easily locate any specific product.
  • When it comes to stock takes, SKUs help retailers to know the actual stock levels at a business’ warehouse and to see if they match the ones assigned in the inventory management system.
  • With SKU numbers, you can easily identify shrinkage in inventory.
  • It saves customers the time to locate a specific product.
  • You can also use SKU numbers to easily forecast your business sales.
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A Quick Look At The Differences Between SKU, UPC, And Serial Numbers

As earlier mentioned, SKU, UPC, and serial numbers are the codes associated with inventory management. Although they are usually identical, they have different purposes.

We've already discussed what SKU stands for and what you need to consider while creating one. As for the UPC number, it's the twelve-digit number that you'll see along the bottom of the barcode. Furthermore, just like its name, it's a universal number and not unique to a certain store. In conclusion, it means that two organizations selling the same product will have the same UPC but different SKUs.

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