What Is SKU Number? How To Use Stock Keeping Units

If you run a Shopify store or have your own eCommerce or physical business, you must have come across SKU numbers. But what is SKU number? These numbers are now a common sight in various retail businesses. They offer a smart way to track your products and inventories.

Whether you are conducting your business online or offline, SKU numbers can be an effective tracking tool for stocks and inventories of all sizes. In this blog, we will dive deeper into SKU or Stock Keeping Units and show you how to use them effectively for the best results. We will also discuss several handy SKU types in this blog along with some important FAQs.

What Is SKU Number? What Are Stock Keeping Units?

Let us start by explaining the concept of SKUs or Stock Keeping Units. A SKU number or Stock Keeping Unit is an alphanumeric code assigned to a product to track it accurately. Some of the main features of a SKU number are:

• Alphanumeric code so contains both alphabets and numerals
• Typically 8 to 10 characters long
• Each character signifies key product feature 
• Can be tracked based on product category, price, color, variant, size and other factors

Key Benefits of Using SKU Numbers

SKU number offers a variety of advantages. All businesses, whether small, medium or large, can use it for the following benefits:

• Ability to get accurate sales data through tracking
• Find out your best-selling and low-selling products
• Adjust manufacturing, marketing and forecasting according to collected data

These are just some of the many applications of SKU numbers. We will discuss a few more important benefits later in this blog.

Examples of SKU Numbers: Where to Find Them?

So, when understanding what is SKU number, it is important to know what it looks like. Let us look at a sample SKU number for a clothing manufacturer named Elegant Clothing: EC150201

In this example, EC signifies Elegant Clothing, the name of the manufacturer. Next, we have 15 which denotes the product type, in this case, Summer Polo Shirt. Then, 02 signifies the size of the polo shirt, in this case, the size 8. Finally, we have 01, which indicates female or the gender for whom this product has been made. As you can see in the GIF below, each of the Summer Polo Shirt variants has a unique SKU number.

So, depending on other products or variants, a store can create multiple SKU numbers for products to precisely track your products individually. SKU numbers are usually included in the price tag, packaging, listing, receipt and other important places. Having the SKU number pasted like this ensures that it can be tracked from any point conveniently.

Why You Should Use Stock Keeping Units: 5 Expert Tips

We will now provide some tips on how to use stock keeping units for the best results. These useful tips can increase the revenues of your Shopify business or eCommerce store. 

1. Analyze the Data to Increase Sales

SKU numbers provide a variety of data and insights that can help you increase sales. By tracking these numbers, you can calculate the reorder points more accurately. Reorder points refer to the time when you have to order replacement stocks. By replenishing your stocks and focusing on the sales performance of your products, you can increase sales in the long run. 

2. Get Inventory Insights

As we have mentioned previously, SKU numbers let you track a product according to its basic features. So, you can easily track products based on size, color, target gender, category and more. This detailed tracking method lets you calculate and analyze your inventory levels with high accuracy. Besides, you get real-time inventory level updates with SKU systems.

3. Monitor the Sales Trends

When you are tracking stock keeping units, you can easily learn more about the sales performance of your products. You can separate the products with high, medium and low sales. As a result, you can find and address the issues that are causing the low sales of certain products. You can also focus on your high-demand products to generate more sales.

4. Utilize Sales Techniques

You also have options to apply sales techniques such as cross-selling and upselling. With SKU numbers, you can easily cross-sell related products on your online store. For example, you can persuade a customer to check out your dress shirt when they are browsing one of your polo shirts. On the other hand, upselling persuades the customer to buy a pricier and better alternative. For example, you can persuade a customer to check out your 32 GB RAM laptop when they are browsing one of your 16 GB RAM laptops. SKU numbers make this possible as well.

5. Calculate More Accurate Forecasts

Every business relies heavily on accurate forecasts. The higher the accuracy the better the revenues are in the long run. Thanks to SKU numbers, you get a clear picture of your products right to individual features. You also get an idea of various categories, sales, product performance, trends and other metrics. So, you can calculate much more accurate forecasts if you have SKU numbers in place.

How to Add a SKU Number on Shopify?

To add a SKU number on Shopify, your product in your store must have variants. So, after building your Shopify store, add all your products. Then, follow the steps below:

Step 1: Add Variant Options for Your Product

When you are editing your product from the ‘Products’ tab in your Shopify dashboard, make sure you have all the variant options included. If you are missing one, click on the ‘Add another option’ button under the ‘Variants’ section to add the variant option and its details.

Step 2: Navigate to the ‘Add Variant’ Screen

Once you have added all the variant options and other necessary information, click on the ‘Add variant’ button under the ‘Variants’ section. This will take you to the ‘Add variant’ screen.

Step 3: Add SKU Number to Each Variant

Now, put a checkmark on the ‘This variant has a SKU or barcode’ option. Now, input the SKU number of the product variant in the SKU (Stock Keeping Unit) field. Click on the ‘Save’ or ‘Save variant’ button to save all the changes.

This is how you can add a SKU number on Shopify. Remember to create a list or spreadsheet of all the SKU numbers so that you can quickly copy and paste them into the previously mentioned SKU field.

3 SKU Alternatives

We will now explain three SKU alternatives that many businesses use. We will share their core features briefly.

1. UPC

Universal Product Codes (UPCs) are another type of product codes popular among retail businesses. These codes typically come with barcode lines which will be discussed later. Some of the key distinguishing features of UPC are:

• Always 12 characters long
• Signifies the manufacturer and item number only
• Numeric or contains numerals only
• Issues and recognized by Global Standards Organization

2. Barcode

Barcodes are another widespread product code type. You can easily identify a barcode through a collection of bars or lines. These are the machine-readable, visual representations of the 12-digit UPC discussed earlier.  These are usually found on the packaging or label of an item. Some of the unique features of barcodes are:

• Do not always create a new UPC upon generation
• Sometimes printed with the SKU numbers
• Assigned to similar products no matter the location

3. Serial Number

The third common SKU alternative is the serial number. The main goal of serial numbers is to find out the defective products in a batch. Key features include:

• Helps identify products that have issues
• Unique number for every individual unit
• Mostly used for warranties or repairs

Better Manage Your Inventory & Boost Sales with SKU Number

SKU numbers can do wonders for your business if you can use them to your advantage. With these numbers, you can easily track your products and monitor sales trends without any hassle. Moreover, SKU numbers let you calculate more accurate forecasts. Whether you are running an online or offline business, you should definitely know how to use these numbers to your advantage.

Did you find this blog helpful? Subscribe to our blogs if you want to stay updated with the latest Shopify and eCommerce trends. All the best to your eCommerce endeavors! 

Frequently Asked Questions about SKU Number

Let us answer some frequently asked questions about SKU numbers. These FAQs will help you learn more about the SKU concept.

1. What are some mistakes to avoid when using SKU numbers?

There are a few common mistakes that businesses make when using SKU numbers. Some of the most notable are:

• Using very complicated SKU numbers
• Failing to update SKUs
• Adding special characters or zeros, leading to errors
• Not linking to other tracking codes
• Not training the business staff about SKUs

2. How do you make your own SKU number?

You can generate SKU number using an automated SKU number or manually. Using an automated system will save you time and hassle but comes with its own costs. You can make a SKU number manually by creating an alphanumeric code of 8 to 12 characters long. It should not contain any special characters or zeros. Doing so will lead to issues. Assign each part of the SKU to a product feature like size, color, target gender, etc. You can also make a list or spreadsheet of your SKU numbers according to your products.

3. What is the difference between SKU and serial numbers?

An SKU number lets you track your product based on your selected product features such as color, size, target gender, category and others. On the other hand, serial numbers are used during warranties or repairs. Businesses usually use the latter to identify defective units. SKU number can be the same for multiple units but the serial number is unique for every individual unit.

4. What are some benefits of using SKU numbers?

There are many benefits of using SKU numbers. As a result, SKU numbers are one of the most popular product tracking codes out there. Some key benefits include:

• Calculate sales forecasts more accurately
• Monitor the sales trend on a deeper level
• Identify sales performance and apply sales techniques
• Get useful insights into your inventories and stocks

5. Do you have to generate SKU number manually?

You can create SKU numbers manually. But it is not mandatory. You can choose from various automated SKU systems to instantly create SKU numbers for your products. Many businesses invest in these systems to save more time and manage their long list of SKUs.