Everything You Need To Know About SKUs

SKUs are the cornerstone of good inventory and stock management. They are crucial in the smooth running of your business by helping you stay up to date with stock numbers, reduce errors and miscommunications over products, and make products easier to locate within warehouses and storage systems.

Here at Codestorm, we utilise SKUs every single day for every item we stock. They form an integral part of our broader system, helping us navigate our 60,000 sq ft warehouse space, find products, and update stock information. Here’s everything you ought to know about the all-important SKU’s!

What does SKU stand for?

But first… what does the acronym SKU actually stand for? SKU stands for Stock Keeping Unit. These are unique codes that can be used to identify products in inventory, making SKU’s vital when it comes to stock management.

What is a SKU number?

So, what does an SKU look like? An SKU is typically an alpha numeric sequence, although some SKUs can be formed of all numbers or all letters.

Where are SKUs used?

Every type of item and every variant of an item requires a unique identifier. For example, a fashion retailer will need to provide an SKU for every single colour of a specific jacket and every single size. This makes it easy to determine how many items a retailer has left of a specific colour and size, which in turn makes it simple to update stock online and re-order specific items that stock is running low on.

The same is necessary for new collections and bundles – if you require a contract packing and kitting service, each new kit will require an individual SKU, even if it contains multiple items with their own SKUs.

You can expect to find SKUs used in multiple places, such as:

Third-party fulfilment centres (like Codestorm!)

Retail stores

Warehouses

Catalogues

Third-party fulfilment centres (like Codestorm!)

Retail stores

Warehouses

Catalogues

  • Third-fulfilment centres (like Codestorm!)
  • Retail stores
  • Warehouses
  • Catalogues

Benefits of Using SKUs

On The Same Page

Having a distinct SKU for each item makes it easy for retailers, suppliers and customers to know that they are all referring the same product. Even if a product is hard to describe – especially if you have different shades and sizes of an item – it’s easy to stay on the same page if you are referring to a product by its SKU.

Streamlined Integration

If you need to integrate different systems, such as your e-commerce and ordering platforms, it is far simpler if each product has a unique single identifier. This is also important when it comes to keeping your systems up to date –  you’ll be able to update stock levels and information on your products across all platforms easily and without confusion.

Ease Of Purchase

Eager customers are keen to find the retailer or website that sells their favourite product for the best price – by typing an SKU into a search engine, all the results for that specific item will come up. This allows purchasers to find the best deal possible from their retailer of choice, giving the customers greater power in their purchase and allowing them to make a more informed purchase, too.

Better Sales Insights

Many businesses will sell their products across various sales channels – from e-commerce platforms to brick-and-mortar stores. Having the same SKU for each item, regardless of where you sell it, makes it simpler to collate all of your data on a specific item to understand how well it is selling, where it sells best, what season it sells best in, and much more.

Are SKUs the same as UPCs?

Stock Keeping Units are similar to Universal Product Codes but serve different purposes altogether. Although both are product identifiers, SKUs are intended for internal use, whereas UPC codes are useful for external purposes. Your products should have both an SKU and a UPC, as they each serve a different purpose.

UPCs are always twelve digits long and are created by the manufacturer of a product rather than the retailer. These codes are important as they are intended to adhere to the GS1 US rules that uphold worldwide business standards. As such, UPC codes allow for tracking as products travel through supply chains.

Another key difference is the way SKU’s and UPC’s are read. An SKU is human-readable, whereas a barcode scanner is required to read a UPC.

Are SKUs the same as Barcodes?

Whilst stock keeping units and barcodes are similar, they are not used in the same way. A barcode is assigned to a product, and is the same across all product lines and retailers that sell the item. SKUs are internal product identifiers that your customers are unlikely ever to see. They are descriptive and specific to the business and used in stock keeping.

Creating a SKU

If you need to create a SKU, there are a few things you ought to keep in mind:

  • Ensure your SKU is unique and cannot be confused with another similar SKU. This may mean avoiding letters such as I, which could be confused with the number 1 – the same goes for O and 0.
  • Try to differentiate SKUs from model numbers, and don’t repurpose SKUs from previous products you no longer stock.
  • Try to keep your SKUs as brief as possible to avoid potential confusion.
  • Avoid starting an SKU with the number 0: some applications, such as Microsoft Excel, will remove the number if it is the first digit of your SKU, causing unnecessary confusion.

Internal and External Uses of SKUs

Stock Keeping Units serve internal and external purposes within your business, helping you streamline your operations and improve customer experience. Here is a breakdown of the internal and external uses of SKUs:

Internal Uses of SKUs

Inventory Management

SKUs are used internally to track and manage your inventory. Each product and variation corresponds to its unique SKU, making light work of monitoring stock levels and reordering products when needed.

Order Fulfilment

SKUs play a crucial role in order processing. They help fulfilment centre staff identify the correct products to pick and pack, which improves order accuracy and efficiency.

Stock Reconciliation

Businesses use SKUs to record inventory levels in their system. This helps identify discrepancies and minimise the risk of inventory shrink or losses.

Performance Analysis

SKUs enable businesses to analyse the performance of individual products. This data can be used to identify best-sellers, slow-to-sell items and seasonal trends, which in turn can aid optimisation of your inventory.

Supply Chain Management

SKUs help track products through the supply chain process.

External Uses of SKUs

Customer Ordering

Customers may use an SKU when placing an order. This is common in the business-to-business (B2B) context, where clarity in product selection is crucial.

Online Shopping

In e-commerce, SKUs are often displayed on product pages, making it easier for online shoppers to select specific product variations such as size, colour or capacity.

Price and Promotion

Retailers use SKUs to associate price and promotional offers with specific products. This can help track a promotional campaign’s success or apply discounts accurately.

Returns and Exchanges

SKUs are essential when handling customer returns and exchanges. They ensure the returned product matches the original SKU.

Customer Support

Customers can contact your support team with an SKU if their inquiry concerns a specific product.

Are you a small business with a growing number of products? Are you hoping to expand your product offerings in the near future? Or are you simply overwhelmed by the sheer volume of your orders as your business expands? Here at Codestorm, we are here to help growing businesses take the next step in their journey with our innovative third-party fulfilment services. Having delivered 1.4 million orders with 9.8 million items for our partner brands in just 12 months, it’s safe to say we know a thing or two about streamlined stock management and successful fulfilment!

For more information on how Codestorm can help take your e-commerce fulfilment process to the next level, fill out the form!

Contact Us

  • We would like to send you occasional news and updates. To join our mailing list simply tick the box below to subscribe to email. You can unsubscribe at any time.
  • This field is for validation purposes and should be left unchanged.
cto celebrates 5 years at e-commerce fulfilment businessFuture of E-Commerce Fulfilment in 2024