What is a SKU (stock keeping unit)?
A Stock Keeping Unit (SKU) is a unique alphanumeric code used by businesses to identify and track individual products. SKUs help retailers manage inventory, monitor stock levels, and streamline order fulfilment across both ecommerce and physical stores.
Each SKU is unique to a business and typically contains information about a product's characteristics, such as its size, colour, style, or variant. This makes it easier to distinguish between similar products and manage inventory efficiently.
Unlike universal product identifiers, SKUs are created by the retailer and are designed to suit their own inventory management system.
SKU vs UPC
Although they both identify products, SKUs and Universal Product Codes (UPCs) serve different purposes.
A SKU is an internal code created by a retailer to manage inventory and track products within their business. It is usually an alphanumeric code and can vary in length and format depending on the retailer's system.
A UPC, on the other hand, is a standardised barcode assigned to a product by its manufacturer. It is used across the retail industry to identify products regardless of where they are sold and is typically a 12-digit numeric code.
Why are SKUs Important?
A well-structured SKU system helps businesses organise inventory and improve operational efficiency.
SKUs can be used to:
- Track inventory levels in real time.
- Identify products quickly and accurately.
- Simplify stock replenishment.
- Improve order accuracy and fulfilment.
- Analyse product performance and sales trends.
- Support forecasting, cross-selling, and upselling strategies.
For ecommerce businesses, effective SKU management helps ensure products remain in stock, reduces fulfilment errors, and provides valuable insights into inventory performance.
