Blog » How to Create a SKU: Essential Inventory Guide
How to Create a SKU: Essential Inventory Guide
Author name: Maksym Bilokon
Successful product selling is what all store owners dream about. They want their business to be successful so that the client count will rise and the number of sales will grow. Still, successful product sales can’t be achieved unless can monitor your inventory and control your products. That’s where you need a stock-keeping unit (SKU) number, as it helps you to track all the products you have.
Once you know how to create an SKU and how to use it in an e-commerce business, it gets much easier to control sales and perform inventory management. In this article, we will go through the most important steps of creating a stock-keeping unit and explain why it’s so important for marketers.
What Is a SKU Number?
A stock-keeping unit (SKU) is a code that includes both numbers and letters and identifies products. Marketers usually create unique codes for individual products to make the search easier. For example, with SKU, you spend less time searching for things from various departments and sizes. There are no strict requirements on how the SKU should look like. You can create and change them as you wish.
What Is the Difference Between SKU and UPC?
Sometimes people can’t understand the difference between SKU and UPC. UPC, or a universal product code, is a 12-digit number used to identify the product. When a manufactured product is released, it gets a UPC issued by the Global Standard Organization (GSO). Whether you are a wholesaler or a retailer, you must follow the UPC.
Unlike stock-keeping units, unique product codes only include numbers and are not available for interpretation. At the same time, retailers can create their custom SKUs to simplify product tracking.
How Does a SKU Number Work?
Retailers assign a unique combined number to products to track it. Moreover, once they assign a specific number to a product, they know everything about it (size, price, color, etc.), which makes it easier to perform inventory management and effectively control all the products in stock. Simply saying, it’s easier for you to see what products you have and build a further strategy.
Here are some examples of stock-keeping unit numbers
| SKU Number | Name of the product | Category | Size or Variant | Color | Price |
| SKU-001-RED-S | T-Shirt | Apparel | Small | Red | $19.99 |
| SKU-002-BLK-M | T-Shirt | Apparel | Medium | Black | $19.99 |
| SKU-003-WHT-L | T-Shirt | Apparel | Large | White | $19.99 |
| SKU-004-BLU-XL | Hoodie | Apparel | Extra Large | Blue | $39.99 |
| SKU-005-GRN-M | Hoodie | Apparel | Medium | Green | $39.99 |
| SKU-006-BRN-9 | Running Shoes | Footwear | Size 9 | Brown | $59.99 |
| SKU-007-BLU-10 | Running Shoes | Footwear | Size 10 | Blue | $59.99 |
| SKU-008-GRY-OS | Baseball Cap | Accessories | One Size | Grey | $14.99 |
| SKU-009-RED-S | Water Bottle | Sports Equipment | Small | Red | $9.99 |
| SKU-010-CLR-L | Water Bottle | Sports Equipment | Large | Clear | $12.99 |
Why Do Businesses Need a SKU Number?
There are many reasons why your business may need stock-keeping unit numbers. Let’s go through each point to understand why exactly it’s essential for your success.
Delivering Better Customer Experience
When tracking inventory levels for the stores, retailers can use SKU numbers to better understand customer behavior. With this information, you can change various things, from replacing products to modifying store layouts. Once you select better product locations and improve stock management, you will see positive changes in customer experience
Reducing Costs
Using SKU numbers reduces costs for your business. Since you improve the inventory management, you take advantage by optimizing the supplies usage and reducing the cost of product storage. Moreover, the sales analysis may help you understand what clients prefer, so it will be easier to plan future production or make orders for new products. The quicker you sign the first contract, the quicker it will be delivered.
Increasing Sales
Most retailers work to achieve one goal: increase sales. The creation of a unique SKU number for each product in stock is a step toward success. It simplifies the working process and improves customer satisfaction, which speeds up the delivery and allows you to sell more in the same time.
Improved Inventory Management
Since you start using SKU numbers for the products, you will have more options to improve your inventory management. Imagine how your productivity will grow when you have more options to search, locate, and evaluate your products. Moreover, SKU numbers allow you to optimize catalogs and group up the selected goods.
How to Create SKU Numbers?
First, the creation of SKU numbers may look complicated because there are several steps in this process. Still, once you check our step-by-step explanation, you’ll find out that it’s not scary or difficult.
Get a Good Identifier
SKU numbers should always start with a top-level identifier. Its role is to give a short explanation of the product’s key characteristics. The identifier should be no longer than 2-3 sentences and include product category, department, store location, manufacturer, and other points that simplify the identification.
Put the Most Important Variant at the Beginning
One of the top-priority traits you identify should be put at the beginning of the code. The simplest option is to start with the most general things and continue with the lower-rank information.
Another important tip is not to start with “0”. The system identifies zero as nothing, so you will miss one number, which may cause a system error. To avoid issues, consider creating numbers that start with other figures or use an alphabet letter to interpret the top-priority trait.
Compose the Middle Section
The middle section is needed for further identification as it provides additional data about the product. When people look at the middle section, they find color, type, size, and other characteristics. You can also add individual characteristics that belong to a specific product.
Add a Sequential Number
As we mentioned the SKU number consists of letters and numbers. After putting letters to the combination, add a simple sequential number. Start from “001” and proceed to further numbers to track everything you have in stock. Usually, retailers identify long-term items with lower numbers, which means they should be sold as soon as possible.
Add SKU to the Inventory Management System
The next step is to implement your SKU number into the system. It could be done via a point-of-sale system implemented with inventory tracking capabilities. This may be a very effective move to improve the inventory management.
Some systems also include an SKU number generator. This may be an advantageous move because it saves time by process automation. Still, if you decide to create SKUs yourself, it’s not bad. It helps you to familiarize yourself with the organization system. Choose the option for creation wisely and make sure you get the desired result.
Compose and Attach SKU Barcodes
After adding SKU numbers to the inventory management system, it’s time to create barcodes for individual items. It’s an analog of the stock-keeping unit number for scanning. You can scan it during the checkout and receive all the data about the product. You avoid long searches and get everything you need in a few moments.
Examples of SKU Numbers
Since we described the creation of stock-keeping unit numbers, it makes sense to show some examples. Below are examples of SKU numbers.
- SKU-001-AB12
- SKU-XYZ-1234
- 12345-ABC-789
- SKU-789-LMN
- SKU-A1B2-C3D4
- SKU-9876-QW12
- SKU12345-XYZ
- SKU-5678-DEF
- SKU-WXYZ-0987
- SKU-0001-ABCD
Good numbers are those that you can easily remember and that will help you identify products in a specific category and among categories.
How to Use SKUs to Grow Your Ecommerce Business
Besides identifying and tracking products, SKUs could be used for business growth. The three steps below show how exactly you can utilize stock-keeping unit numbers and take advantage.
Identify Popular Product Features
The numbers you create should identify the most important data about your product, including size, color, type of product, etc. At the same time, such information is essential for customers as they use it to make a choice. You can use stock-keeping unit numbers to track key attributes and understand what preferences your clients have.
Use SKUs for Advertising
It may surprise you, but those identifiers you have may be used to promote products. By analyzing SKUs of the most demanded products, you can get key insights and use them for your future campaigns.
Monitor Performance and Implement Changes
By monitoring stock-keeping unit numbers, you see how different products perform and what sales rating they have. It helps you understand what products give you the highest income and what doesn’t bring any income at all. With this information, you can implement changes in your inventory management, change preferences, update promotion campaigns, etc.
Boost Your Online Store Sales with PIMinto
Besides having well-composed stock-keeping unit numbers, it’s essential to have a fully optimized system where you search, identify, manage, share, and update product data without major delays. With effective PIM solutions, this will no longer be a dream. Once you have PIM as a part of your system, you can easily find, track, manage, and delete products working with stock-keeping unit numbers. Use our services to optimize your workflow, and you’ll see the result immediately.
Modified on: 08/27/2024