A SKU, which stands for Stock Keeping Unit, is a unique identifier for each of your products that makes it easier to track inventory. SKUs are vital tools for retailers and wholesalers, allowing them to identify products and monitor stock levels across systems and channels. Your success depends on good product management. And good product management depends on SKUs.

 

Every product you sell needs a unique identifier—called a stock keeping unit (SKU)—that helps you differentiate one product from another. It’s not enough to have one SKU for a t-shirt, for instance. Each variant of a product should have different SKUs. In the case of the t-shirt, you’d need a unique SKU code for different colours and sizes.

 

What makes a good SKU?

If the products you buy from your suppliers don’t have SKUs or you manufacture your own products, you can create your own. You also might want to create customer-facing SKUs—even if your suppliers give you SKUs—to disguise your supply chain. This is particularly helpful if you’re competing with other online retailers and have different pricing systems.

Guidelines for creating SKUs:

  • Keep them short. A SKU needs to be 32 characters or fewer so that the same data fits in REX etc.
  • Make them unique. You can not reuse SKUs from previous seasons.
  • Never start a SKU with a zero. When you work with SKUs in Excel, it drops the first character if it’s a zero, which causes problems.
  • Avoid ambiguous characters. Letters such as I, L, and O are easily confused with numbers.
  • Don’t confuse them with other identifiers, like model numbers.

Stay simple. Stick with numbers and capital letters with separators such as dashes or dots. Also, avoid spaces and slashes, which bar code readers and excel don’t handle well.


Which are better—character or numeric SKUs?

When you plan your SKUs, you need to decide whether to use long character codes or short numeric codes. Each has its benefits.

Character SKUs can be more meaningful, so you can use them to filter reports and product lists into brands, seasons, styles, and more. For example, here’s what character SKUs for a Nike echostar t-shirt—which comes in three sizes and two colors—look like:

NK-TEE-ECHO-SM-RED

NK-TEE-ECHO-ME-RED

NK-TEE-ECHO-LG-RED

NK-TEE-ECHO-SM-GRN

NK-TEE-ECHO-ME-GRN

NK-TEE-ECHO-LG-GRN

Notice that character SKUs like these enable you to see immediately which product is which. This is particularly helpful when you’re looking through the stock in your online store, as you won’t have to cross reference a product list as frequently.

On the down side, character SKUs are long, so they can make picking and packing harder. If your picking team works from SKUs, simpler numeric SKUs may be better. Take the warehouse setup pictured below. All SKUs are simple 5-digit numbers, which are easier to pick and easier to read out on the phone when taking or placing orders.

You also can use a combination of characters and numbers in your SKUs. For example, for the echostar tee shirts, you could add a number to the end of the product code: 2013ECH-1, 2013ECH-2, and so on.

What about bar codes?

Bar codes are simply graphical representations of numbers or combinations of letters and numbers, so you can create bar codes for any of the identifiers we’ve discussed. The bar codes you see pre-printed on products, however, are almost always the ISBN, UPC, or EAN. Here’s a 12-digit EAN (121016801952):

Bar codes are designed to speed up and reduce errors in Point of Sale (POS) and warehouse operations, and if you only use them within your business, you can use any number to generate the bar code.

Unfortunately Retail Express does not have a Barcode field, many clients use the Supplier SKU for that purpose. You can not use the Manufacturer SKU as this is used for grouping and styles. 

If you provide products for dealers to sell to their customers using POS software, you need to label your products with your UPC or EAN—identifiers that they also can use.

Conclusion

Now that you know what SKUs are, why to use them, where to get them, and how to make sure they’re effective, it’s time to follow guidance and implement them across your business. When you do, you’ll take your product management process to a whole new level. From there, multichannel growth is a whole lot easier.