17 Aug
Every product sold by a retailer is assigned a unique stock-keeping unit (SKU) number. SKU numbers allow retailers to track products for inventory purposes and ring up sales. For the average consumer, SKU numbers may seem like random strings of numbers and letters that don’t mean much. However, there is actually a science behind how SKU numbers are created and used in retail.
What is a SKU Number?
A SKU or Stock Keeping Unit number is a unique identifier assigned to a product variant. It allows retailers to track each product variation in their inventory system.
For example, a red t-shirt from brand ABC in size large would have a different SKU than the same red t-shirt in size medium. This allows the retailer to track inventory levels and sales for each product variant.
SKUs are different from UPC barcodes which are used to identify products at the point of sale. However, SKUs and UPCs are often used together in retail barcode scanner systems.
The key things that make a SKU number unique are:
- Product: The base product being identified
- Attributes: Details like size, color, and style that differentiate product variants
- Retailer: The specific retailer’s system in which the SKU is used
So SKU refers to a specific version of a product in a retailer’s inventory.
How to Create SKU Numbers?
When creating SKUs, retailers can follow templated formats to keep SKUs organized and identifiable. Some common ways to structure SKU numbers include:
Sequential
– Start with a prefix like “SKU”
– Add a sequence number like SKU-001, SKU-002
Simple but can get disorganized if not managed properly.
Category + Sequence
– Begin with a category prefix like “SHIRT-”
– Add a sequence like SHIRT-001, SHIRT-002
Keeps similar products grouped but still allows SKUs to run together over time.
Category + Attributes
– Start with category like “SHIRT-“
– Add color, size, and other attributes like SHIRT-RED-L
Allows easy lookup of the exact product variation for each SKU.
Most retailers use a formatted SKU convention that fits their inventory system. The important things are keeping SKUs unique, consistent, and human-readable.
SKU Number Formats
There are some common formats that SKU numbers follow:
– Short numerical – Simple numbers like “427584”
– Alphanumeric – Letters and numbers like “ABC123”
– Prefix codes – Starts with category like “SHIRT-101BLU-LRG”
The right format depends on the retailer’s preferences and inventory system. Shorter SKUs are more space efficient but longer structured SKUs can encode more info.
A well-formatted SKU conveys the essential identity of a product quickly to warehouse staff or retail employees. This helps speed up order fulfillment, product recalls, inventory auditing, and other critical retail operations.
How to Lookup a SKU Number?
There are a few ways to lookup and identify a product’s SKU number:
- Product packaging – Most barcoded products will display the SKU printed directly on the packaging. This allows employees to quickly identify the exact product.
- Product labels – In stores, the SKU is often printed on shelf labels along with pricing and product details. Employees can scan or note the SKU for inventory tasks using their retail inventory scanner.
- Inventory system – Retailers track SKUs in their e-commerce or retail point-of-sale system. Staff can search for SKUs by product name, category, or other attributes.
- Suppliers – Manufacturers and distributors will often provide lookup tables mapping their products to a retailer’s corresponding SKUs.
Using SKUs for Inventory Management
One of the key benefits of Stock Keeping Units is powering efficient inventory management for retailers. Some specific applications include:
- Receiving & putaway – SKUs ensure products are accurately identified when receiving inventory into the warehousing system.
- Pick & pack – Warehouse staff use SKUs to precisely pick the correct product variation to fulfill orders.
- Transfers & adjustments – SKUs track products as inventory is moved between locations or counted for adjustments.
- Reordering – Sales history and inventory levels tied to each SKU inform reordering quantities for each product.
- Reporting – SKU-level reporting provides insight into the sales and profitability of each product variation.
- Omnichannel retail – Unified SKUs connect in-store, online, mobile, and catalog sales channels for a single view of inventory.
Tips for Organizing SKUs
To maximize the benefits of Stock Keeping Units, retailers should follow best practices in managing and organizing their SKU system:
- Create a conventions guide – Document the standard formats and conventions to follow when assigning new SKUs.
- Structure for scalability – Choose a format that will allow ample SKUs as your product catalog grows over time.
- Integrate systems – Unify SKUs across eCommerce, wholesale, and in-store POS systems for centralized inventory.
- Clean up duplicates – Consolidate any redundant or outdated SKUs that accumulate over time.
- Monitor closely – Audit SKUs regularly to ensure data integrity in the inventory system.
- Train staff – Educate staff on using SKUs and looking them up accurately to improve inventory processes.
SKU numbers provide the foundation for managing product inventory and variations at a highly granular level. A structured approach to assigning and organizing SKUs ensures efficiency across picking, stocking, reporting, and omnichannel order fulfillment.
As a retailer, take time to review your SKU strategy and optimize it as your product catalog and sales channels grow. To take your business to the next level, you need a powerful retail POS solution that seamlessly integrates SKU and other product data. Hana Retail easily syncs SKU data across your e-commerce and brick-and-mortar channels for unified commerce. Try it FREE today!
