Whether you're selling office supplies, clothing, food or beverages, it's important that you properly manage and track your inventory. That's where stock-keeping units, or SKUs, come in handy. By assigning a SKU number to each of your products, you'll organize your store more efficiently and ensure that your inventory is always spot on. Both online shops and brick-and-mortar stores can use this system to keep track of merchandise and streamline operations.

What Is a SKU Number?

As a retailer, you need to have a system in place to identify the different products you're selling and to manage your inventory. Some businesses use product codes. Others assign model or part numbers to their goods.

SKU numbers serve as unique identifiers for the products in your inventory. A typical number consists of alpha-numeric digits that indicate the make, model, color, size, material and other product characteristics. Each item has a distinctive SKU.

Let's say you're selling shirts among other products. A SKU example could be shirt-men-white-M for a size M white men's shirt. You may also add other characteristics such as the brand or manufacturer's initials. This code can vary in length and contain any number or letter combination. Some e-commerce platforms, though, limit the number of characters you may use.

How to Create SKUs

There are no set rules for creating SKUs. To get started, decide what identifiers you want to include in your SKU numbers. These will depend largely on what you're selling.

Most point-of-sale systems and e-commerce platforms can generate SKUs automatically based on the characteristics you wish to include, such as the product size or color. BigCommerce, for example, features a SKU generator that allows sellers to quickly create unique codes for each item with a few clicks.

Another option is to use online SKU generators like Zoho, TradeGecko or Katana. Zoho, for instance, allows you to enter up to six characters for which it automatically creates unique SKUs for each product. If your e-commerce store is built on WordPress, you can install SKU generator plugins for this purpose.

SKU Best Practices

There are a few things you should keep in mind before getting started. First of all, make sure you have a specific SKU-naming convention. Basically, you need to decide what comes first and what follows it in each SKU number and use the same format for all products.

Consider your customers’ needs. For example, if your clients usually ask about size, place the number or letter that indicates a product's size at the beginning of your SKU. The first two or three digits should represent the most important features. Refrain from using L, I, O and other letters that look like numbers.

Keep your SKUs short and easy to read. Separate the digits with dashes. If you run several stores, assign a store identifier to each product. Try not to use special characters such as the ampersand (&), the at symbol (@) or the percentage symbol (%) because they may cause formatting issues.

How Are SKUs Used?

SKU numbers make it easier to manage your inventory and track the exact location of each product. These codes also help retailers determine how fast particular items sell and which ones are in high demand. Based on this information, they can forecast sales and make sure they don't run out of stock.

Furthermore, these unique identifiers denote different product variations. When a customer asks about a specific item, you can quickly check its availability in your SKU system.

These codes help keep your store organized, leading to increased revenue and sales. Your employees will have better control over the inventory, avoid costly losses and conduct stock counts more easily.