Complete Guide to Understanding SKUs

Complete Guide to Understanding SKUs

A SKU (stock-keeping unit) is an alphanumeric code assigned to products and/or variants in a retailer’s catalog. Each SKU in an inventory should be unique, helping to identify, track and manage all the individual variants in question. SKU stands for “stock keeping unit” and it’s a unique code assigned internally to a product. what means sku SKUs are useful whether a company does warehousing, dropshipping, or both. It’s helpful for product tracking as it moves through the inventory pipeline. A stock-keeping unit (SKU), on the other hand, is a unique, custom product code that retailers assign to their products based on their needs and organizational method.

You can use a Department Identifier to quickly tell where an item will be located or displayed on the sales floor. If you use a department identifier in your SKU number, you can also segment sales reports by department to spot troubled areas of your store. If you have a department with overall lackluster sales, you might need to move that section, adjust your store’s traffic flow, or boost your featured displays in that area.

Other important factors to consider include product categories, variants, and attributes. You can do this manually or with the help of an SKU generator tool. Just remember to build information like the item type, size and colour into your codes. Looking to manage stock keeping unit numbers and print barcode labels, all in one place? The main thing to understand is that while SKUs are generally for internal use within a specific business, GTINs are external. They stay with a product throughout the supply chain, from the original manufacturer and warehouse onwards.

Probably the number one benefit of having standardized SKUs is how much easier it makes tracking inventory across multiple channels. This means you’ll then be able to manage products and inventory across every channel – without needing to update any SKUs. And this will cause a major headache at some point along the line when it comes to managing one product catalog across multiple sales channels. An ‘I’ looks a lot like a ‘1’ at a glance, and the letter ‘O’ could well be a zero. But you also may have slightly more nuanced confusing factors – like similar brand names, or products that start with the same letter.

  1. SKU management allows you to analyze the cost of carrying each product so you can be sure that every piece of inventory meets the financial objectives of the business.
  2. For this reason, many retailers or distributors simply create their own SKU system.
  3. Retailers use SKUs to track what’s selling, which helps them know when to restock from vendors.
  4. To enter a new product, click Create Item in the top-right corner.

Using them ensures that inventory never sits forgotten in a warehouse and that customers don’t go months waiting for their favorite product to be restocked. By adding SKUs to every product, store owners can easily track the quantity of available products. Owners can create threshold limits to let them know when new purchase orders must be made. Every product should have a SKU number to help retailers differentiate one product from another. However, if a retailer doesn’t take the time to assign a SKU to a product, it won’t have one.

Merging products without updating SKUs

Now that you know how to create SKU numbers, let’s look at some additional examples of this SKU number framework strategy in action. You can print labels with your custom SKU directly from your Square for Retail inventory catalog. Get free ecommerce tips, inspiration, and resources delivered directly to your inbox. The more you tailor your SKU architecture, the more you can harness it to meet your customers’ needs. Also, stay within 10 characters to keep your SKU numbers compatible with third-party software if you decide to transition to a digital tool in the future. But sticking to a few conventions will help keep your SKUs compatible with external companies and software, should you need to work with a fulfillment partner.

SKUs, on the other hand, will also uniquely identify the seller or vendor as well. In addition, UPC barcodes will typically feature only numbers, while SKUs are alpha-numeric and can vary in length. If you fail to track SKUs over time, it becomes much harder to accurately track inventory levels and identify sales trends. Multi SKU refers to a product that has multiple variations or options, such as different colors, sizes, or features. Each variation is assigned a unique SKU (Stock Keeping Unit) to help manage inventory and track sales.

How do I find an SKU code?

Then, the next two numbers identify different item types like straight-leg, flare-leg, sleeveless, short-sleeve, and so on. A store assistant can scan an SKU to find out quickly what is in stock for a consumer that might want an alternative version of a product, creating sales efficiency and customer satisfaction. If a product is out of stock, SKUs make it simple for retail staff or an ecommerce store to recommend alternative similar products. A well-produced SKU architecture highlights a store’s most and least popular items. Another way to harness this information is to create product displays and make visual merchandising decisions based on SKU data. Unlike other types of product coding, SKUs are created by individual businesses.

SKU tracking

If you are considering Square and other providers, for example Shopify POS, be sure to consider how integrated the POS is with your ecommerce business. Square POS is seamlessly integrated so that you can sell online and in person easily. A stock-keeping unit (SKU) is an alphanumeric code that identifies a product and helps you track inventory for your retail business. The information your SKU includes is completely up to you—distinguishing it from a universal product code (UPC), a standardized 12-digit code manufacturers use to identify products.

This results in 100’s of thousands of possible variations in their product portfolio. On top of this, they also offer each screen with a sub-set of over 15 screen material options. The SKU structure of this brand required a much deeper set of sections to accommodate the large possibilities of variations. The first few characters in the code represent the broadest way to identify the item. This first identifier could be anything from a particular category (e.g., jeans vs shirts) to the department in a store (e.g., electronics vs clothing).

Unlike SKU numbers, when retail stores generate a barcode, they don’t create a new UPC. Barcodes are assigned to all like products regardless of where they are sold. However, retailers may print product labels containing both a barcode and their SKU number.

A model number is used to differentiate versions of the same product. Therefore, a model number represents a variation of one specific product. For example, a product can come in Standard, Deluxe, and Premium versions. Both SKU and model number are used by either staff or a customer to identify products, but their purposes are different. The SKU identifies the product’s location or warehousing shelf within a store.

SKU Number Frequently Asked Questions (FAQs)

With Square, there is also the option for the software to generate your SKUs for you if you don’t want to spend time creating your own SKU system. Using sequential numbering―like 001, 002, 003―for the final series of an SKU number makes setup easy and also helps you identify older versus newer items in a product line. In some cases, tying the final series of an SKU number to a supplier product number can be helpful too. Again, use whatever makes logical sense for the products you sell. The first two or three digits/characters of each SKU should represent a top-level identifier. With this, a glance at an SKU number identifies the top-level merchandising group and location of any product in your store.

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