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SKU

What is a Stock Keeping Unit (SKU)?

A stock keeping unit (SKU) is an alphanumeric code that’s assigned to each of your products, indicating style, size, color, and pricing (among other key attributes). As its name suggests, SKUs help ecommerce retailers keep track of their stock levels internally; if an item comes in multiple sizes or colors, every variation will have its own UPC barcode so it’s easier to locate within your supply chain or fulfillment center. Each unique SKU can be tailored to represent whatever your customers or vendors typically ask about with regards to your product catalog.

Frequently Asked Questions

  • How do you make a SKU?

    To create a SKU system for your online store, the first two digits/characters should always represent a top-level identifier. For example, this identifier might be a department, a store category, or even a particular supplier. The middle numbers should be used to assign unique identifiers or product features, like size, color, or subcategory (which ultimately helps you track inventory). Finish the final series with sequential numbering (001, 002, 003), so you’ll have an easier time distinguishing older versus newer items among your different SKUs.

    Once your numbering is complete, you’ll want to merge your SKUs with your preferred POS or inventory management system. That’s because when you sync the data for each of your specific products, you’ll have improved inventory tracking and inventory control — leading to greater profitability in the long run. Plus, you can take advantage of automated updates, so you always know what physical products you have in stock at any point in time.

  • What is the SKU level?

    The SKU level describes the top-level identifiers that make up the first few alphanumeric characters of the SKU number. These identifiers represent the broadest possible categorization level, like a department within a store, a category of goods, or the product’s supplier. Characters in the SKU level provide the most basic information about the product, as opposed to the middle numbers which give business owners more definitive details about each item. 

  • How do you keep track of SKUs?

    If your retail store needs help tracking its SKU codes, a point of sale system or inventory management software can automate the inventory tracking process for you in real-time. Ecommerce platforms who use these advanced automations save time and money, and stay on top of their inventory levels regardless of seasonality or fluctuations in demand. 

More terms and formulas

formulas Retail Price See definition and examples
formulas Fill Rate See definition and examples
formulas Finished Goods Inventory See definition and examples

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