What Does SKU Stand For? SKU Meaning and Examples
Quick answer: SKU stands for stock keeping unit. It is a unique alphanumeric code that a seller assigns to each product and each variant (for example size and color) to track inventory. A red, medium T-shirt might be TS-RED-M. Unlike a UPC barcode, a SKU is internal — each store or warehouse creates its own — and it is used for stock counts, picking and packing orders, and sales reporting.
SKU is an important part of product structure. By setting the SKU code, the merchant can identify the product inventory and know the location of the product. SKU runs through our entire order fulfillment process, so having a clear SKU number allows us to make informed decisions to get higher profits.
This article will introduce what SKU means, the importance of SKUs to merchants, how to create SKU codes, and how to use SKUs to better reduce our costs and improve our profits.
What is SKU?
SKU stands for stock keeping unit. It refers to the product code and is an integral part of the product structure. If there is an SKU code, the merchant can use this code to sort the goods. Through code sorting, the merchant can conveniently find the storage location of the goods, to complete the order fulfillment in time. SKU codes include not only public attributes but also product-unique attributes.
SKU Example
| Product | Color | Size | SKU |
|---|---|---|---|
| Cotton T-shirt | Red | M | TS-RED-M |
| Cotton T-shirt | Blue | L | TS-BLU-L |
| Phone case, iPhone model | Black | — | PC-IP-BLK |
Each variant gets its own SKU, so the warehouse knows exactly which item to pick and the store knows exactly how many of each are left.
SKU vs UPC vs Serial Number
A SKU is created by the seller and is only meaningful inside that business. A UPC (or EAN barcode) is a standard number that stays the same for a product in every store. A serial number identifies one single unit, for example one specific phone. Many products carry all three.
Why SKU is Important to Store Owners?
SKU can help us solve some practical problems, it can help track the location of goods in the entire inventory management, simplify the checkout process, and this process is all done through computer system settings, which reduces human errors in the process of operation. In addition, SKUs can provide accurate data to help us make purchasing decisions.
Help Us Manage And Track Inventory
Merchants need to know their product inventory at all times. Through SKU code management, merchants can determine how many items have been sold and how many items are in stock, so that merchants can make timely purchases. Through SKU code management, it is also possible to locate the storage location of the goods in real-time, which is beneficial to the merchants to clear the expiring goods in time.
Optimize Store Appearance And Improve Shopping Experience
SKU can give customers a good impression. Both consumers and our employees can easily find the products they want through the system’s complete SKU number setting. Whether by item type, collection or by the supplier, our products can be tracked and displayed at any time. SKU numbers can also enhance the shopping experience for consumers.
Good For Marketing Management
Learning to use SKU coding is also of great benefit to our marketing. For example, when consumers choose products, merchants can recommend products that may be of interest to consumers through SKUs, and then have a positive impact on consumer behavior. By tracking, you can locate the consumer portrait, which is convenient to improve the repurchase rate. This method also applies to the conversion of potential customers.
How to Generate SKU Numbers?
Typically, the first two digits of the SKU number are the top-level identifier. The meaning of the top-level identifier is to distinguish different departments of the business, different store categories, or purchases from different suppliers. Therefore, as long as you see the first two digits of the SKU code, the merchant can know the location of the product, or which supplier the product comes from.
After the first two digits are determined, the next numbering is necessary. The number in the middle can be used to identify the unique attributes of the product. For example, which number is used to identify different sizes of products; which number is used to identify different colors, which number is used to identify different categories, and so on. Therefore, as long as it is an attribute that is helpful to the merchant, we can determine it as an identifier and program it into the SKU code.
The final encoding of the merchant can be done using some serial numbers, like some simple Arabic numerals. Through Arabic numeral coding, merchants can use it to distinguish new products from products that have been around for a long time. So in some cases, it is very convenient to associate the SKU number with the product serial number.
Whether we use our own spreadsheet Excel to manage or use a special SKU management system, we can try to add SKUs to the previous inventory management system, so that as long as we update one of the data, the other data is updated synchronously, which can simplify our operation process and is very convenient for inventory management.
How to Use SKU?
SKU code is very important for merchants and is unique, so it can help us solve many practical problems. So if we have identified a suitable SKU coding system, we can apply it to work to solve detailed problems. Such as sales, product promotion, product growth planning, etc.
1
Targeted Product Promotion
Through the analysis of SKU, merchants can make a promotion strategy or promotion strategy for the product in a targeted manner. For example, after analyzing the source of profit through data, we can create some popular activities or customized pages for product promotion. In addition, special positions can also be added to pages with high traffic before, so that consumers can easily find the products we want to promote.
2
Improved Inventory Forecasting
Through the data provided by the SKU, the merchant can make a clear sales estimate; through the correct sales estimate, the merchant can reduce the inventory cost. In addition, excellent SKU coding allows consumers to find the products they want quickly and promptly, which greatly reduces the churn rate of customers.
3
Expeditious Order Picking
To meet the needs of different consumers easily, merchants often need to expand warehouse space and increase the inventory, which also leads to a problem: it is difficult for merchants to find the products they want among the numerous inventory items. For new employees, this is even more difficult to achieve. Therefore, by using the SKU number, it is convenient for employees to find products in time and reduce errors caused by manual labor.
Learn More
SKU codes can help us solve many problems and help us organize, track and find inventory using completed system processes. SKU code can not only use Arabic numerals to identify, but also add some letters for clear distinction, so it is very flexible for merchants. With a good SKU number, we can better promote products and provide customers with better services. If you encounter problems in the process of coding with SKU, you can contact the professional team of Honest FulPhilment to help you solve them.
FAQ
What does SKU stand for?
SKU stands for stock keeping unit. It is an alphanumeric code that a seller assigns to each distinct product and variant, such as one size and color of a T-shirt, so it can be tracked in inventory.
What is an example of a SKU?
A T-shirt in red, size medium might have the SKU TS-RED-M, while the same shirt in blue, size large is TS-BLU-L. Each code tells staff and software exactly which item and variant it is.
Is a SKU the same as a serial number or UPC?
No. A SKU is an internal code chosen by each seller and shared by all identical units of one variant. A UPC or barcode is a standard number that is the same for a product across all stores, and a serial number identifies one single unit.
Can two products have the same SKU?
No. Within one business, every product variant should have its own unique SKU; otherwise inventory counts, picking and reports become wrong. Different sellers can, however, use different SKUs for the same product.
What does SKU mean in ecommerce and logistics?
In ecommerce and logistics, the SKU is the code that links an order line to the right item in the warehouse. Fulfillment centers use it to receive stock, find the storage location, pick and pack orders and report inventory levels.