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- Step 1: Start SKU Numbers With a Top-level Identifier. …
- Step 2: Use the Middle Numbers to Assign Unique Identifiers. …
- Step 3: Finish SKU With a Sequential Number. …
- Step 4: Add SKUs to Your POS or Inventory Management System. …
- Step 5: Create SKU Barcodes Labels.
What is an SKU?
A scannable product code known as an SKU is specific to a particular retail location. It is a unique code assigned to a product to make it simpler to identify information about the product’s manufacturer, price, and product variations. In most cases, businesses place the code on the shelf where they keep the product. The staff can use this code to recognize a product on receipts, order forms, or lists. Staff members can easily follow the movement of inventory in this way. To set prices, they can make use of data on how various inventories are selling.
The Universal Product Code (UPC) found on goods and an SKU are two different things. The product’s UPC is the same across all businesses and retailers. The cashiers scan a UPC barcode to learn more about the product and its price. An SKU is unique to the company or individual retailer.
An SKU’s code is an alphanumeric string of roughly eight characters. The characters are usually an abbreviated description of the product.
For instance, SS-RD-08 would be the SKU for a pair of red spring/summer sandals in a size 8. To make it simpler to format SKUs in Excel and other programs, businesses typically use just numbers and letters.
Other examples of codes include:
The most crucial data should be presented first when creating the code. Since the letter O and the number 0 have a very similar appearance and may lead to errors, it is advisable to avoid using them. SKUs are usually separated into categories and classifications. An SKU code can include the following attributes:
Most point-of-sale systems will let you build a customized SKU architecture. The most crucial data you should log should be taken into consideration before you begin building the architecture. When choosing shoes, consider the size, style, and color. When choosing notebooks, consider the color, the number of pages, and the type of rules.
How do companies use SKUs?
Companies use SKUs for several important reasons. The following is a list of applications for SKUs in business:
Manage inventory
Staff will count the quantity of each SKU when a business takes an inventory of its stock. Counting SKUs enables businesses to monitor inventory turnover and sales volume.
Indicate sales
Staff can use SKUs to identify products that need to be reordered and those that are selling more quickly than others. To keep track of the specific details of the SKUs found in the system, staff will use the point of sale or accounting system. They can learn the quantity and cost of each item sold from this information.
Re-order products
Staff can set threshold limits so that when an item is low on stock, the system will send a reminder to reorder the item since a POS system or cloud inventory management system houses the SKUs.
Increase sales
SKUs can suggest comparable items to customers when they shop online based on their searches. Typically, businesses create SKUs so they can categorize them based on various requirements. When customers look up a product on the website, the business suggests related products that might increase sales.
As an illustration, the system will automatically recommend additional bike racks that are closely related to your search if you are looking for a bike rack on an online retailer. The system locates bike racks labeled with 10098822 and 10098823 SKUs since they are similar numbers and the SKU for the bike rack you were looking for might be 10098821. The company groups bike rack SKUs together so that the systems could easily pull the information and show related items, allowing the online retailer to offer comparable goods.
Improve customer experience
By combining SKUs, retailers with physical locations can boost sales and enhance customer satisfaction. For a better shopping experience, a salesperson can quickly search to see if a shoe is available in additional colors or sizes.
Marketing campaigns
SKUs are also great for marketing campaigns. When retailers are promoting a discounted sofa, for instance, they are more likely to provide the SKU. Instead of providing the UPC, they might encourage potential customers to conduct some research to determine whether other merchants are offering the sofa for an even better deal.
Simplify inventory checks
Employees should perform inventory checks regularly. Inventory checks can assist staff in keeping track of the precise number of products that are on hand in the store and comparing that number to what the inventory management system indicates.
Reduce inventory shrinkage
Tracking inventory shrinkage is also important for a business. Inventory shrinkage includes missing or unsaleable items, typically those with damage or flaws. This procedure is crucial because it informs business owners of where or when stock is disappearing, reducing theft and profit loss.
Reduce costs
Keeping track of inventory through SKUs can also reduce costs. SKUs assist staff in monitoring the inventory that increases costs. It may be that a product is not selling as well as competing products or that many customers are returning the item, which reduces sales. Owners know they should remove that product from inventory to.
Track profits
SKUs can track best-selling products based on the specific color, size, or material of the item in addition to tracking underperforming products. This is a great way for the sales and marketing teams to determine what they should order again and which products will sell well and bring in more money.
Improve communication
SKU codes make it easier for staff to communicate. Staff can use the codes for a more productive working environment rather than providing lengthy product descriptions or constantly using the long names of products.
How to Manage Your Shopify SKUs
FAQ
What is a good SKU?
An SKU is typically eight alphanumeric digits long. A product’s SKU number is determined by a variety of factors, including the item’s price, manufacturer, color, style, type, and size.
Can 2 products have the same SKU?
SKU names should be simple, straightforward, and self-explanatory. This makes it easier for various departments within your business, including operations, logistics, customer support personnel, and sales, to accurately understand which product the SKU refers to.
