It’s hard to imagine efficient inventory management without SKUs – codes distinguishing the products you sell. SKUs are more powerful than that and can help online sellers optimize their businesses in many different ways.
Want to learn why you can’t go without your own SKU structure, how to make up SKUs and use them to your advantage? What are the best practices for developing SKU codes on major sales channels? We’ve covered everything in this article.
Meaning of SKU
SKU (Stock Keeping Unit) is a unique identifier assigned to each product in the seller’s inventory. It is usually an 8-12-character code that combines numbers, letters, and dashes. SKUs are meant for both physical and virtual products, such as warranties.
SKU codes aren’t universal, unlike barcodes. They are specific to an individual store, so sellers develop unique SKUs that meet their business needs.
How to benefit from SKUs
SKUs are vital tools for any retailer or wholesaler who keeps tabs on their business efficiency and profitability. Here are three main ways how you can leverage the power of SKUs:
Keep inventory organized. When you assign an SKU to each item in your inventory, you can easily detect which items are in stock and which ones you need to reorder to prevent stockouts. Inventory management software also relies on SKUs to maintain up-to-date stock levels across all channels.
Provide valuable sales data. An SKU system points out both your highest-selling and least popular items depending on the sales period and in different buyer segments. By analyzing this info, you’ll be able to make smarter restock decisions, determine which items are worth your investments, and, thus, satisfy your customer demand.
Drive sales growth. If your SKU codes are meaningful and form a unified system, online marketplaces will use them to suggest your offers with similar characteristics to potential buyers. This often leads to extra purchases by the customer and boosts your revenue as a result.
How to create SKUs in a proper way
Even though you create SKUs for internal use, they must maintain a consistent logic. Putting a random set of characters into your SKU won’t do any good for your business. To be effective, an SKU code should include the item’s peculiar traits, like brand, color, size, etc.
When building your SKU structure, you can develop any usable and easy-to-understand format tailored to your business needs. Generally, an SKU structure reflects the types of products sold and their key features.
Let’s say you have a clothing store. You might want to create 8-10-character SKU codes where the first two characters denote the brand, the following four – item’s category, and style. The other characters represent additional product details, such as size and color. This is how the SKU code for a Ralph Lauren Polo T-shirt in a size M and White color will look like:
RL-TS-PL-M-WT
Before you begin forming your SKUs, take note of the main guidelines and the elements you shouldn’t include in them:
- No long codes. The appropriate SKU length is between 8 to 12 characters, enough to fit all the relevant product info.
- No misleading letters. Stay away from the letters “I” and “O” in your SKUs. They are similar to “1” and “0”, and the systems may easily confuse those.
- No “0” in the beginning. If you start your SKU with “0”, the software may interpret it as empty space and drop it altogether. The first character should be a capital letter.
- No spaces, slashes, or special characters. Use dashes instead of spaces and slashes to separate item details in your SKUs. Other elements to avoid are special characters (&, $, @, ?, !) since most software doesn’t decode them well.
- No dates and other variables. SKUs always have to stay up-to-date and, preferably, unchanged. You don’t want to refresh SKU info across all systems constantly – it will require plenty of time and effort.
How to apply SKUs on eCommerce platforms
To create an accurate and relevant SKU structure, you’ll also need to adapt it to the online channels you sell on. Some platforms have strict SKU requirements, while others are more loyal and don’t limit your choice of SKU codes.
Amazon
Amazon obliges their sellers to indicate SKU for every single item. Since there are so many items in the Amazon catalog and many merchants eager to sell the same item under the same ASIN/ISBN identifier, SKU is the only way to differentiate between offers from different sellers.
With the help of SKUs, Amazon fulfillment centers can pick an appropriate product to pack and ship. When combined with other identifiers like UPCs, SKUs simplify inventory management across all Amazon marketplaces.
You can pick any suitable SKU format on Amazon if your code stays between 1 and 40 characters.
Other essential points on Amazon SKUs
Generating SKUs
If you don’t want to make up SKU codes yourself, let Amazon generate them for you. But mind that Amazon-generated SKUs will contain an arbitrary set of characters. Reading and searching through those meaningless codes may give you a headache.
Updating SKU info
Try creating permanent SKU codes for your items once and for all. There is no possibility of changing an SKU on Amazon without deleting the listing first and losing your sales history. You’ll need to list your item anew with the same ASIN and an updated SKU.
SKU modifications
Although Amazon restricts listing items under the same SKU and ASIN/ISBN identifier, there is a way around this. Modify the initial SKU code by adding a prefix or postfix, for example, FBA-RL-TP-01. You can do it yourself or automate the process using dedicated Amazon integration solutions.
SKU modifications will come in handy if you sell the same item under various fulfillment types or are a reseller of known product brands.
eBay
Providing SKU codes is optional for eBay sellers. Changing the item’s SKU is also fine with eBay.
While you can leave your eBay items without SKU info, we suggest you not do so. If you use eCommerce multi-channel software to scale your business across multiple platforms, you can’t go without SKUs as one of the key identifiers for your items.
The software automatically links items between different sales channels through SKU for seamless synchronization. If your SKUs or other identifiers don’t match, you’ll have to link the entire inventory manually.
These days, it is essential to have a reliable, all-in-one app for your online business. Such apps take over crucial processes, like inventory and order management, multi-channel listing, and more, so you can focus on running your online store instead of routine tasks.
Sales Channels by M2E Cloud offers a full suite of tools to handle your sales without hassle. Try it now for free and streamline your business in the easiest way.
Walmart
Similarly to Amazon, you must enter SKU info when selling on Walmart. Listing items under duplicate SKUs isn’t an option either. Still, one of the requirements stands out – Walmart allows you to change the SKU of the existing offer.
Walmart has no limits regarding the use of special characters. Even if you end up putting ‘:’, ‘/’, ‘?’, ‘#, etc. in your SKU, there is a way to encode those on Walmart. However, encoding doesn’t always work correctly, so use as few special characters as possible and replace them with something easy to interpret.
Shopify
The only SKU-related requirement on Shopify is to specify relevant SKU info that identifies your product stock. Shopify lets sellers stick with any SKU format they see fit.
Besides, Shopify uses your SKU info to generate a sales report on the items sold. You can access this report by choosing “Sales by product variant SKU” in the Reports section.
Summing up
Having a well-thought-out SKU system makes a big difference for retailers. The more tailored your SKU system is, the more it can help handle multi-channel inventory, categorize products, and speed up order fulfillment. This leads to increased accuracy, efficiency, and productivity of your eCommerce business.
