If you’ve just started eCommerce selling or you’re a seasoned e-seller, one term that will make a regular appearance is Stock Keeping Unit, aka SKUs.

An SKU is a product code used to search and identify stock on hand and manage inventory. Allotting an SKU code to every product unit helps you manage the chaos that could happen during eCommerce fulfillment.

SKU code is different from the barcode and universal product code (UPC) and is often seen printed on product labels. It automatically tracks inventory, records stock takes and inventory obsolescence, and identifies stock in hand. You can print SKU numbers manually or by using point-of-sale software.

Generating SKU codes is not a must-have thing without which your business will shatter, but it is like those nitty-gritty hacks that ease business operations.


What Is The SKU Code?

An SKU code is a unique alphanumeric number that contains all product details. The seller designates this number between 8 to 12 for inventory management and fulfillment. Depending on the type of inventory, you can include identifying information in the SKU code, like color, gender, size, and style. For example, for shirts, you can put SH, for pants PA, followed by other relevant information like size and color.


Design Principles SKUs

Certain principles that will help you when generating SKU code:

  • Stay between 8 to 12 characters
  • Create easy-to-understand structure
  • Never use zero or special characters in the code like @, #, &, !.
  • The code’s first character must be the supplier’s or brand’s first letter.
  • You can show other information like date, cost, and shelf number.


How To Create An SKU Code

Now that you understand what SKUs are and their design principles. Let’s look at how to create SKUs. eCommerce sellers follow a certain format to generate code, but it is not mandatory to follow the same every time. The SKUs architecture includes product traits and attributes that benefit retailers and customers.

The easy way to create SKUs is by using an inventory management system or point-of-sale system. However, it is recommended for retailers who manage large inventory

So, enough of the talk, let’s understand the anatomy of an SKU code.


Start With The Top-level Identifier

The first two or three characters of the code must signify the top-level identifiers like location, store, department, or supplier. This is to identify the department, supplier, or warehouse location of the product by just peeping into the SKU code.


Middle Numbers Include Unique Features

The middle number of SKU codes includes the product’s unique features like color, gender, size, or subcategory. Therefore, products are easy to organize according to their characteristics by looking at these figures.

The code for each feature can be written as follows:

1) Gender:

M – Male

F – Female


2) Collection Name:

UB – Ultra Boost

NE – Neo

BU – Originals Blue


3) Color:

BLK – Black

RD – Red

GRN – Green

BLU – Blue


4) Size(US size)

4 – US 4

4% – US 4.5

5 – US 5


End With Sequential Identifiers

The last two or three figures of the code represent sequential identifiers like 001, 002, and 003. It shows you when the item is purchased and processed and whether it is old or new.


Tips For Creating Effective SKUs

Keep The Code Simple

You don’t have to generate passwords; avoid gibberish characters that are hard to understand. It may be recognizable for you but not for the supplier or vendor to which you forward it. Generate the code simple and easy to acknowledge by third parties. Choosing a large SKU number and overstuffing it with two or three feature codes will make it senseless and exaggerated.


Avoid Letters That Confuse

Don’t use letters that confuse third-party product holders (supplier and vendor or customer). As SKU code is alphanumeric, some eCommerce retailers try to experiment and use every alphabet. Try to avoid letters that look like numbers. For example, the letter “O” is like zero, “I” may look like one, and “Z” may look like two.

Some commonly used letters in code are – BLK – Black, RD – Red, and GRN – Green.



Never Start With Zero

Do not start the SKU code with zero. The reason is many times, computers read zero as nothing and record the wrong SKU code. So, for example, SKU code 03300065D will be recorded as 3300065D in the computer. So instead of using zero in the first place, retailers use a brand name or supplier identifier at the beginning of the SKU code.


Start With The Main Feature

eCommerce retailers use the main identifier of the product at the beginning of the SKU code. This is because it makes it easy to identify the product inside the packaging. Once they have identified the product’s main feature, put it as the first identifier. You can also put a brand name, supplier, or location details as the top identifier.


Do Not Put the Manufacturer’s Number

Developing the SKU code is an easy task. However, some retailers do not find this hardship worth spending time and simply copy the manufacturer’s number as the SKU number.



Final Say

As this post concludes, the one thing you can take with you and learn is that small things matter the most. Generating SKUs requires little effort, but this simple thing can minimize your efforts in inventory management, tracking, packaging, and fulfillment to much extent. Substantially, a process-driven and well-maintained inventory management system can make your eCommerce business more streamlined and profitable.

To have a profitable business, you must also store inventory in smart warehouses to achieve cost efficiency. But establishing a smart warehouse is circuitous, numerous things are there to look after and the process is complex and capital-intensive. That’s where logistics aggregators like NimbusPost will be a quick fix. We provide smart warehouses with cutting-edge technology near your customers.

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