Female Inventory Manager Shows Digital Tablet Information to a Worker Holding Cardboard Box, They Talk and Do Work. In the Background Stock of Parcels with Products Ready for Shipment. Concept: What is a SKU Number
Betsy Wise
By: betsy_wise
Read in 11 minutes

SKU number, all you need to know

People often think of a SKU number as the barcode for each product they can or want to buy. But retailers know that SKU numbers and barcodes (UPC numbers) are different.

SKUs can help you understand your customers and prepare for any eventualities related to your inventory management. And like Alexander Graham Bell said: Before anything else, preparation is the key to success. 

All in all, SKU numbers help you make smarter inventory purchasing decisions to succeed. So why not use them in your business?

In this post, we will find out how SKU numbers work. You’ll also learn how to create and set them up and how SKU and UPC numbers differ.

So get ready to be wowed and amazed at how SKUs can change how you do business.

What is the SKU number?

SKU number, or Stock Keeping Unit number, is a unique identifier assigned to a retailer’s product.

Each product has its own SKU number, which helps with inventory management. This alphanumeric coding system allows business owners to track inventory and sales simultaneously.

Not only that, SKU numbers include information related to price, brand, and individual product options.

If you’re a retail store owner looking to start selling products online, it’s essential to understand SKU numbers and how to use them.

Why Are SKU Numbers Important for Store Owners?

SKU numbers are essential for store owners because they allow customers to find the products they are looking for easily.

When customers look for a specific product in a store, the SKU number makes it easy to scan the shelves and find what they’re looking for. It also helps store owners to accurately track inventory and make a plan according to their needs.

Is SKU the same as the serial number?

No, SKU numbers are not the same as serial numbers.

The company that produces an item creates the serial numbers. A serial number can vary between two identical products, as these companies use them to track each different product, mainly for warranty reasons. Serial numbers are alphanumeric codes.

Retailers like warehouses and product fulfillment centers like Amazon use SKU numbers. But businesses don’t use SKUs comprehensively around the world.

They are unique identifiers. The SKU of two identical products in the same store will always be the same. Each retail store can establish its own SKU codes categorized into classifications. SKU numbers are alphanumeric codes.

SKU number examples

The SKU numbers are all different as it will depend on what each store would like to track.

For example, you could have the SKU: TSH-M-SM-GR-M03, which tracks for the following: T-shirt, men’s, small, green, model 3.

Other common SKUs are Nike shoes with the numbers such as 642124 or Jordan shoes with the numbers such as 854271. Other products that may have SKUs include video games (e.g., “Halo 3” is SKU 0086852) and cars (e.g., “Ford Fusion” is SKU JM3JN4RVXB5).

When creating SKUs, it’s important to make sure they are unique and easy to track, usually between 5-10 characters long. You can create them using different numbering systems, such as decimal, hexadecimal or alphanumeric.

Where to find the SKU number?

If you are looking for the SKU number on a product you have in front of you, it will usually be on the product’s price tag or in the receipt.

If you want to find the SKU number of a product you do not have in front of you, contacting the manufacturer would be your best bet.

Illustration about SKU number in purple letters and white background

Advantages of using SKU numbers

The SKU number is essential because it helps identify the product and track it through the supply chain. When it comes to inventory and stock, SKU numbers are key.

Here are some practical reasons to use SKU numbers:

Order stock

Because SKU numbers keep track of inventory levels, you’ll know which merchandise inventories are too low and need to replenish.

This is especially helpful if you’re an online retailer, as you can easily see what needs without manually scanning through all your products.

Also, they will help you manage and organize your small business. You can even think about creating a more efficient inventory management system.

Review sales

By having a history of what is selling and what is not, you can predict future purchases. Because retailers configure SKUs the way they want, they monitor colors, sizes, brands, and other sales information to see what customers buy the most.

Advertise popular items

SKU number identifies to retail stores which products sell quicker.

By identifying the products that sell the most, you can adjust your marketing campaign accordingly and advertising campaigns to generate more profit.

By tracking sales data with SKU numbers, you can ensure your products are selling as well as they should and adjust your business strategy as needed.

Anticipate reorders

When a SKU number is low on stock, the system will automatically order more of that product. This helps ensure products are always in stock and reduces the chances of running out of a product.

Loyal customers keep coming back for products they like. You can reward customer loyalty by ensuring their products are always in stock.

Suggest new products

By providing SKU numbers to clients, you can help them find the products they’re looking for on store shelves more quickly and easily.

Retailers set up SKU numbers to include information about products with similar features. If a favorite product is out of stock, your staff can suggest another product to a customer. 

Steps for creating and setting up SKU numbers

Now that you know what a SKU number is, this step-by-step list will help you set up a unique system so you can manage your product lines. As you read through the steps, you’ll see how to use SKUs to your business’s best advantage.

Consider what information is most important

Think of your SKU system as a hierarchy by placing the most vital information at the beginning and the least significant data at the end of the number. For example: 

Maybe another retailer has SKUs with this order: Price-gender-size-brand

However, your store may need to set up the SKU as Brand-size-gender-price or other configuration with different data.

Know what your customers like

What questions do customers usually ask? 

Are they more concerned about features, sizes, or something else? 

Tailor your SKUs to suit your customers, the type of merchandise you offer, and ease of use (keep it simple). SKU numbers should be easy to understand to manage product lists and orders. There’s a reason that SKUs are unique identifiers in business.  

Set up a pattern

As a general guideline, SKUs should be between 8-12 characters in length (both letters and numbers). Make sure, to begin with, a letter and don’t include zeros. Likewise, it would help avoid confusion if you didn’t use special characters or spaces but only dashes. 

Most people don’t use the letters “O” and “I” because they look like zero and one. It depends on how you use them, though. In this example, BLU-MED-W10-TOP, Blue-Medium-Women Size 10-Top, you easily understand.

Make sure your SKU system works

If you use inventory management software or plan to purchase a program in the future, configure your SKUs to work with your point of sale system.

Keep tweaking the numbers

You may need to change your SKUs along the way to optimize their usage. Because they’re your numbers, you can set them up to accommodate how you operate your business.

You may need to change how you rank the information or track merchandise as product sales and change the type of inventory you offer.

Building a SKU System for your business

There are several ways to create a SKU number system. One approach is to assign unique numbers to each item simply.

Another option is to use a combination of letters and numbers to create SKUs. Some businesses also use barcodes or product codes to create SKUs.

Here are some tips for creating a successful SKU system:

  • Keep it Simple

Your SKU number system should be easy to use and understand. Everyone in your organization must be on the same page when using SKU numbers.

  • Assign Numbers in Sequence

When assigning SKUs, be sure to set them in sequence. This will help you keep track of inventory and avoid any confusion.

  • Use a System That Works for You

There is no one-size-fits-all SKU number system. You need to find a structure that works for your business and your inventory.

  • Be Consistent

Make sure you use the same SKU number system across all your products. This will help you keep track of your inventory more efficiently.

  • Use a Method That Can You Can Automate

If possible, use a method that you can quickly automate. This will save you time and hassle in the long run.

SKU vs. UPC numbers

You probably realized how different SKUs are from barcodes (or UPC codes).

Stock Keeping Unit (SKU) is a unique identifier for products. Businesses usually use it internally in the tracking process and are different from a UPC code.

A UPC (Universal Product Code) number is the barcode scanned at a store checkout. The stores use them to identify products, charge them, and charge the customer.

Just to make things even more precise, let’s see how SKU and UPC numbers are different.

SKU – Stock Keeping UnitUPC – Universal Product Code
Internal coding systemUniversal coding system
Includes information about a productProvides information about manufacturer and item
AlphanumericNumeric
It varies between 8-12 charactersAlways 12 characters
Retailer create their own SKU numbersThe Global Standards Organization sets up barcodes
Place above or near UPC/barcodeIt is the barcode

SKU number, a number that rocks

As you’ve seen, the SKU number can improve your relationships with suppliers and customers and smooth out issues in your operation, giving you the data you need to do so.

We have not only answered the question “What is a SKU number?” but it was possible to understand its importance with the information. If you haven’t been using SKU numbers in your business, there are plenty of reasons why you should.

Besides that, these stock-keeping unit numbers help retailers see when inventory shrinks or stockpiles. They save you time because you don’t need to walk to a shelf or display room to see what’s in stock. You simply pull up the SKU information from your computer.

On that note, Camino Financial knows that your time is valuable. That’s why we invite you to subscribe to the Camino Financial newsletter to become a part of our community and receive more management tips and ways to grow your business. 

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