A SKU is a code made up of a set of numbers and letters which is used to identify, locate and keep track of a product in an online store.
What does SKU stand for?
In itself, SKU is the acronym in English for the term Stock Keeping Unit which, translated, would be Stock Maintenance Unit.
In addition to the SKU code, it is also known as a “product reference number” and is very useful for efficiently identifying each item, as well as allowing each of these to be located throughout the production and shipping chain.
Each company has its own unique SKU codes So, even though two brands sell the same item, at the same price and on the same platform, the products have a different internal SKU code.
Benefits of using SKUs in your e-commerce
Now that you know what a SKU is, we share with you the main advantages of having these codes in your business:
- Optimize product catalog management
- They help to have a better control of the inventory
- They are useful for analyzing sales trends and buyer behavior
- They prevent you from running out of stock of the most demanded products
- They can reduce staffing and save costs
- Improve the productivity of your business
Do we see each point in detail?
π Optimize product catalog management
How many items do you sell in your online store? How do you control the entry and exit of each of them? SKUs are great tools that allow you to rigorously monitor all the products in your catalog.
Thanks to the SKUs, you can identify how much stock do you have of each item in its multiple variants (size, color, shape, material, etc.) and, the best thing, is that you can know it at a glance.
π¦ Help to have better inventory tracking
By being able to efficiently identify and label your products, SKU codes help you have better control of your inventory.
This is particularly useful for brands that have multiple storage locations or are engaged in . Through the SKU, they can know where these items are, if they are in warehouse A, warehouse B, point of sale C, or if they are in transit between one site and another.
π They are useful for analyzing sales trends and buyer behavior
SKU codes can be used to discover which products are best sellers (), if any size or color is sold more easily and, even, understand what item should be put on promotion if you have a lot of that stock.
SKUs also help you know if certain products sell more seasonally or if you can sell them all year long. This information is very valuable to define what direction to take, creating or marketing new products based on the behavior of buyers.
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ππΌ They prevent you from running out of stock of the most demanded products
Perhaps this point is explained with the previous one, but it is worth understanding it thoroughly. The SKU codes can help you detect which items have the most movement, helping you predict how often you have to restock them so as not to run out of stock.
Suppose you sell t-shirts for boys. Through the SKUs, you could detect that the item REM-AZU-ALG-1 β which is associated with the blue (AZU) cotton (ALG) t-shirts (ALG) size small (1) β is the one with the most movement, selling 3 pieces weekly. That way, if your stock is 12 pieces, we can know that that product, in that color, material and size should be replaced once a monthas indicated by buying trends.
On top of everything, the use of SKU codes in conjunction with a software inventory management can help you set up a personalized alert system. Thus, every time an item has a lower volume than usual, a purchase order can be generated to recover the stock.
If you have a Tiendanube, we invite you to know all the for your brand, such as solutions for inventory control, organization of shipments, and much more! plus!
π° They can reduce staffing and save costs
The logistics area of ββa company usually requires a large number of people to keep track of stock, manage inventory, accommodate products, among many other activities. Using SKU it is possible to reduce the size of this area since product management tends to be more controlled and simple, shortening times and reducing the investment of money.
π Improve the productivity of your business
Related to the previous point, in general, the greatest benefit of SKUs is the improvement of the productivity of the entire business, by promote time savings and, with this, savings in effort and costs. In addition to being a company with a stock that is constantly renewed.
What is the difference between a SKU code and an EAN code?
The difference between a SKU code and an EAN code is that, while the SKU is an alphanumeric code of variable length, the EAN is a succession of numbers, specifically 12 digits, which are usually accompanied by a scannable code.
We share a comparative table so you can clearly see the differences between SKU codes and EAN codes:
Where are SKU codes used?
Let’s look at some examples of places where you can use the SKUs, both physically and virtually:
Of course you can use the SKUs in more places, where you consider that they contribute to the identification and location of your products. It is a flexible tool that you can adapt according to the needs of your business.
How to create a SKU?
Now that we have seen all the theory and you have discovered what a product SKU is, it is time to put it into practice. Creating a SKU is no big deal, we explain how to generate them in five easy steps.
Steps to follow to create a SKU successfully:
- I chose the right tool to create SKUs.
- Select the information to save within the code.
- Create a recognizable pattern and make it standard on your system.
- Make sure your inventory management system works with the ones you’ve created.
- Replicate and optimize as many times as necessary.
To help you get started, we bring you our SKU generator template for Excel or Google Sheets that you can download for free:
In summary
Knowing what a SKU is and what advantages it can bring to your e-commerce is vital to improve your inventory management.
For many brands, this code became a tool that enhances productivity and that, despite seeming complex at first, It simplifies processes that in the long term can become headaches.
Applying or not applying SKU codes in your business may seem like a very technical decision since, if you are just starting to sell online, you may remember all the products you sell.
However, as your business grows and the number of items and their variations increases, SKUs will become your point of reference to know which ones have the highest return on investment.
So, are you already thinking about how to define your SKUs? We read you in the comments!
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