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What is a SKU Number and Where Does It Come In Handy?

Imagine a warehouse that is not even that big. At the minimum, there might be thousands of products sitting there. How do you think the warehouse owners and people in charge of that warehouse are going to tell which product is which? By name? Nope! Definitely not! There is always some sort of identifier that is used to stop things from getting chaotic.

That’s where SKU numbers come in!

Say Hello to the Stock Keeping Unit Numbers, or SKU Numbers

That’s right. So many people use the acronym SKU as a word of its own, but most do not even know what it stands for. Stock Keeping Unit Numbers, that’s what the pros call it.

They are, as the full phrase clearly explains, numbers used for keeping and counting stock in a warehouse which houses thousands of items. They are usually made up of 8 characters or more, and supply chains use them to identify the type of each product, from color to size, brand, and any sort of characteristic.

At this point, you’re probably thinking that a SKU is the same as a UPC code, so let’s just get that great misconception out of the way:

Stock Keeping Unit (SKU) is not the same as UPC

Even the full names sound different:

SKU: Stock Keeping Unit

UPC: Universal Product Code

For one thing, SKUs are definitely not universal. In fact, they change from warehouse to warehouse. You will never find two warehouses which the same SKU numbers, whereas UPC codes are universal.

Also, UPCs are usually comprised of 12 digits and you can find them on each product. We are willing to bet that you have seen them on almost any product you’ve bought. Ever seen those black lines with the white background that’s always on every product? That’s a UPC. It’s also referred to as a barcode. Anyone with a scanner can scan it, and see the info associated with that. Which is, again, global. Even most smartphones today have UPC scanning apps!

Oh, by the way:

SKUs are not serial numbers!

Serial numbers differ from product to product. If you get up right now, and compare the serial number of your phone to that of your colleague, you will see that they are completely different. Even if the SKU on the packaging of both was the same, the serial numbers surely would have been different! Also, almost every software has a distinct serial number.

So, why are SKUs such a big deal?

Because you can facilitate your inventory management process using SKUs! You can code your products based on color, size, brand, and many other characteristics. On top of all that, you can also monitor the stock status of products. Just type in a SKU number and it will show if the product is fully in stock or not. If it’s out of stock, then you can restock them.

Also, the SKUs can be used to make sure that none of your items are missing from your warehouse. There are hundreds and hundreds of products, and some of them might end up missing for one reason or another. You can monitor them via SKUs and easily track missing items.

Here’s one more thing that SKUs can be used for: sales forecast! Yep, you can actually look at the data and see which SKU has been selling well. This will help you get a general idea of which SKUs to restock for the future so they sell well.

In order to implement a SKU system, you first need to design your SKUs.

How do you do it?

Easy! You first need to figure out what the most important identifier, also known as “top-level,” which is basically the main category. Let’s go with “shoes” as an example. Your main category would be shoes, and then you would add other identifiers, such as “women’s,” “running,” “green,” and so on. After that, you will have to add what we call a sequential number. All of this will help you keep better track of products.

It should look something like this, but then again, each warehouse has a different one and yours might look completely different. There’s no formula to this! Just go wild with it:

  • Shoes: SH
  • Women’s: WS
  • Running: RU
  • Green: GR
  • Sequential number: 001

All of this put together: SH-WS-RU-GR-001

Ta-da! You have your SKU number!

There is also software which you can use to generate SKUs. However, we recommend coming up with your own versions, because it’s unique to your business, you have created them, and you will understand them better than everyone else!

Spare Yourself the Headache and Let the Pros Handle It

If you think coming up with SKUs and taking care of inventory management in general is too much of a headache for you, then let the pros handle the process! We have infrastructure you can invest in which will provide you with countless opportunities, including wholesale management done by professionals!

Jerome Basilio

Assisting businesses with Wholesale and Multimarket Management services is a passion of mine and that is why I formed Basilio Corporation, providing such services for 84 companies as of today. Basilio Corporation has sold a total of 52 stores for seven figures, in open digital exit broker companies. The company has partnered with Khachaturov Group, a leader in multiple industries, which has strengthened its resources. Over the years, I have used my experience to consult top players in the business, and mentored minds which became influential millionaires in the eCommerce sphere.