What is a SKU (Stock Keeping Unit)?

A SKU, or Stock Keeping Unit, is a scannable bar code, most often seen printed on product labels in a retail store. The label allows vendors to automatically track the movement of inventory.

Why are SKUs Important?

SKUs are vital for successful inventory management. They help you:

• Track Inventory: Know exactly how many units of each product variant you have.
• Analyze Sales: Identify your best sellers and worst performers by variant (e.g., Blue vs. Red t-shirt).
• Reorder Products: Set reorder points for specific items to avoid stockouts.
• Improve Customer Service: Quickly locate products for customers or check availability.

SKU vs. UPC

It's common to confuse SKUs with UPCs (Universal Product Codes), but they are different:

• SKU: Internal use, alphanumeric, variable length, created by the retailer.
• UPC: External use, numeric only, 12 digits, universal standard across all retailers.

How to Create a SKU System

A good SKU is logical and easy to read. Avoid using random numbers. Instead, use a structure that describes the product.

Example: For a Blue Medium T-Shirt from the Summer collection:

TS-SUM-BLU-MED

Keep your SKUs consistent and avoid using letters that look like numbers (e.g., O and 0, I and 1).