What is an SKU Number and Why It Matters for Your Business?
Effective inventory management is the backbone of successful operations, and at the heart of this process lies the Stock Keeping Unit, SKU number, which is a seemingly simple alphanumeric code with ground-breaking implications.
More than just identifying products, SKU numbers offer businesses the advantage of tracking, organizing, and analyzing inventory with great precision.

What is a Stock Keeping (SKU) Number?
A Stock Keeping Unit number is a unique alphanumeric code assigned to a product to identify and manage it efficiently in inventory and sales systems.
Unlike other codes like UPCs or barcodes, SKU numbers are customizable and can include details such as product type, size, color, or other attributes.
SKU numbers are importantly for tracking products across retail, wholesale, and e-commerce businesses.
Automated SKUs
Automated SKUs are generated through inventory management software or point of sale systems.
These tools use predefined logic to create SKU codes that are consistent, scalable, and easy to integrate with other systems.
Automated SKUs are ideal for businesses managing extensive product catalogs, as they minimize human error and improve organizational efficiency.
Manual SKUs
Manual SKUs are created by hand, typically by smaller businesses or those with limited product catalogs.
This approach allows businesses to craft highly specific and intuitive codes. However, manual SKU creation can be a time consuming and prone to inconsistencies if not managed carefully
SKU Number Examples
The SKU code varies depending on the business’s needs.
Some examples include:
- APP-RED-SML: Denotes a red small-sized apparel item.
- ELEC-BLU-HEAD: Represents a blue electronic headphone.
- SKU12345: A generic SKU format often used in simpler systems.
Benefits of Using SKUs to Manage Your Business
SKUs help track individual products and variations, ensuring you always know stock levels, preventing overstocking or understocking.
Accurate SKU systems streamline the picking and packing process, reducing errors in fulfilling customer orders.
By analyzing sales data linked to SKUs, businesses can identify top-selling products and seasonal trends, aiding in better decision-making.
SKUs allow customer service representatives to quickly locate product details, enhancing customer satisfaction.
Furthermore, SKUs simplify supplier communication by providing a clear reference for reordering specific products.
SKUs work seamlessly with inventory and sales management software, automating operations and saving time.
How to Find SKU Number
- Product Packaging: Many products display the SKU number on the package on their label or box, often near the barcode.
- Inventory Management Systems: If you use an inventory software, perform an SKU lookup through its search function.
- E-commerce Platforms: For online businesses, SKU numbers are typically listed in product descriptions or inventory reports.
- Receipts and Purchase Orders: Look at sales receipts or purchase orders for SKU references.
- Vendor Catalogs: Suppliers often include SKU numbers in their catalogs, making them accessible for reordering.
How to Create SKU Codes for Products Step-by-Step
- Use SKU Generators: Use tools like Shopify for automated SKU creation if managing a large product range.
- Identify Key Attributes: Choose the product details you want to include in your SKU, such as category, size, color, and brand.
- Choose a Format: Decide on a consistent structure, e.g., [Category]-[Size]-[Color]. For example, APP-SML-BLK for a black small-sized apparel item.
- Include Unique Identifiers: Use sequential numbers of letters to make each SKU unique within its category.
- Avoid Complexity: Make sure SKUs are short, simple, and easy to read. Avoid special characters and overly long codes.
- Test and Review: Verify the SKUs in your inventory system to ensure they’re intuitive and error-free.
SKUs vs. Other Retail Codes
SKU vs UPC
SKU vs UPC are customizable and used internally by businesses, while UPCs are universal codes standardized for retail and scanned at checkouts.
SKU is customizable and unique to the business, and used for internal tracking and categorization.
UPC vs SKU is a 12 digit code used primarily for retail checkout and product identification.
SKU vs. GTIN Codes
GTINs (Global Trade Item Numbers) are unique identifiers used internationally, whereas SKUs are business-specific for inventory management.
SKU is created and managed by businesses for internal use, containing attributes like size or color, while GTIN is more used in global supply chains, required for Ecom platforms.
SKU vs. Barcode
Barcode vs SKU are machine-readable labels containing encoded SKU or UPC data.
Barcodes visually represent the data, often linked to SKU, UPC, or GTIN< readable by scanners, while SKU is alphanumeric and human-readable, typically seen in inventory systems.
SKU vs. Serial Number
SKU describes the product type or variation and applies to all units of a particular item.
A serial number on the other hand, is a unique identifier for individual items, often used for warranty tracking or recalls.
How are SKU Numbers Used within Ecommerce?
They help businesses categorize products and organize their digital catalogs, making it easier to manage extensive inventories.
Many e-commerce platforms allow customers to search for products using SKU numbers, enabling a seamless shopping experience.
Additionally, SKUs help synchronize inventory across multiple sales channels, ensuring stock levels remain accurate and up-to-date. They’re also important in order fulfillment processes, as they assist in picking and packing, reducing errors and improving efficiency.
Furthermore, SKUs provide valuable insights into sales performance, allowing businesses to identify best-selling items, optimize stock replenishment, and make data-driven decisions.
Best Practices for SKU Management
SKU management effectively requires a structured approach.
Consistency is important, as maintaining a uniform format ensures clarity and reduces the chances of errors.
Businesses should design scalable SKUs, anticipating the addition of new products in the future.
It’s important to avoid creating SKU numbers similar or overlapping SKUs to prevent confusion in inventory management. Integrating SKUs with inventory management software can automate updates and simplify tracking, particularly for businesses managing large catalogs.
Regularly reviewing and refining SKUs ensures that codes remain relevant as products evolve.
Stock Keeping Unit Number FAQs
Does every item have a SKU?
Not every item necessarily has an SKU. Businesses typically assign SKUs based on their inventory structure and organizational needs.
While some companies assign SKUs to every product, others may limit their use to track high-priority items or categories.
For businesses managing small inventories, SKUs might not be used initially, however, as the product range grows, assigning SKUs becomes necessary for managing stock, improving accuracy, and ensuring efficient operations.
Do I need SKU numbers?
Yes, SKU numbers are a vital component of inventory management, particularly for businesses with multiple products or variations.
They provide a structured system for tracking and categorizing inventory, making it easier to monitor stock levels, analyze sales and fulfill orders accurately.
Without SKUs, businesses may struggle with inefficiencies and errors in inventory tracking. Whether operating in retail or e-commerce, adopting SKU numbers enhances operational efficiency and ensures smoother workflows.
Can two products have the same SKU number?
No, each SKU number must be unique to prevent confusion and errors in inventory tracking.
If two products share the same SKU, it becomes difficult to differentiate between them, leading to inaccuracies in stock levels and potential issues with order fulfillment.
A unique SKU for each product ensures that inventory systems function correctly and that businesses can manage their stock with precision and reliability.