Stock Keeping Unit (SKU) – Ultimate Guide on SKUs

SKU - What are SKU number, SKU codes

Retailers use certain codes associated with the product to know what it is, what brand it is from, and other whereabouts associated with the store.

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What is Stock Keeping Unit (SKU)?

SKU stands for Stock Keeping Unit, pronounced as “skew”.

A unique code/number associated with the product, that has the attributes and information of the product.

SKU - What is SKU, How SKUs are generator (1)


SKU is an alphanumeric code. It is tied to a particular product that allows it to be tracked for inventory purposes.

These SKU codes help a lot in tracking the stock and supplies on that particular product in the store.

If you know the SKU, you can have all the information of that product, without reading its packaging.

The best thing about SKU number is that you can make them yourself.

A typical SKU number

Usually, SKU consists of the manufacturer, product description, material, color, size, packaging and some companies even include the warranty.

Let me just go ahead explain how does a typical SKU look like.

SKU - Example - What is SKU

This is how an SKU of Levis jeans look like.

LEV – JN – SL – 34 – BLK

  • JN – JEANS
  • 34 – 34 INCH WAIST

Where are SKUs used?

  • Warehouses
  • ETailers
  • Retailers
  • Product fulfillment centers
  • Brick and Mortar Stores
  • Marketplaces such as Amazon, eBay, Flipkart, Etsy.

Why do SKUs matter?

Coding your products/inventories correctly makes it easy for you, and others, to find, search and reference products from lists, invoices, order forms etc.

Every variation of the product should have it’s own unique SKU.

You can attribute any product the desired code you want, but they should be well constructed.

Tips on Generating Good SKU numbers?

Now let us learn the art of generating good SKU numbers.

Once you’re through with them, you can create SKU codes without any difficulty

1. Make Your Own SKU code/number

Don’t alter the manufacturer’s code, or the code already on the product by prefixing or suffixing something.

This can create a lot of confusion and you may end up regretting.

The best way to generate an SKU code is to use completely different code from the manufacturer.

2. Only Keep Relevant Information

Some retailers try to attribute way more information than needed to a product through SKU codes.

The key to having a good SKU code is to only fill required information.

Information like ‘year of manufacture’ is not really relevant. The excess information only leads to confusion.

You can add this under the description section, but in the code, it is irrelevant.

The basic idea of SKU codes is to gain maximum information from minimal codes. If you’re adding information that is not needed, you’re messing with the idea of SKU codes.

3. Cascade Method

The codes should be created logically. They should be deciphered easily without thinking too much.

For example.

Let us create an SKU code for an electronic item.

You can start with “E”, which could be simple.

Then if you’re attributing it to a smartphone, you can assign “S”, then brand alphabet, which could be the first letter of the brand name, like “S” for Samsung, “A” for apple etc. you can further add smartphone model number.

If you see the code, it is logically made, and you can easily decipher the code. 

Limit the code as soon as you can able to recognize the product by the code. A further addition is meaningless.

4. Fonts & Characters

Use fonts and characters that don’t confuse you.

Characters like 0 and O, | and I are confusing.

You don’t want the reader to get confused. Use a bold and clear font that could easily define the difference between similar looking characters.

Don’t use symbols in your SKU code.

  • Symbols like @,#,* are irrelevant and cause confusion.
  • Character ‘/’ can cause formatting problems in excel, making it difficult to organize.

While making such codes, simplicity and sensibility are the keys.

5. Inventory Management System

Using a software that is particularly designed for managing inventory is of great help. You can update the stock, supplies, and orders without any tension.

These fully automated systems can keep track of everything. Since everything is recorded, you can easily calculate the end of day sales and many other important numbers.

This could also prevent any errors, corruption, and confusion. There are no Excel files, only recorded data which can’t be manipulated.

If you are looking for comprehensive inventory management system, check out EMERGE App for free.

Differences Between Stock Keeping Units and Universal Product Codes (SKU and UPC)

While some may carelessly interchange SKU and the UPC, they’re really two very different entities.

SKU – Stock Keeping Unit

UPC – Universal Product Codes.

They are both numeric-based codes assigned to products. But UPCs or Universal Product Codes are standardized for all business users and provide a product description.

On the other hand, an SKU, or Stock Keeping Unit, is a number assigned by individual companies to a product for stock-keeping purposes and internal operations.

Another difference is that SKUs are typically alpha-numeric codes, while UPCs are 12 digit numbers only.

In conclusion, SKUs are for internal operations only, and UPCs are for external, or universal, use.

SKU Number Do’s and Don’ts

Consider what purpose the SKU serves, and the audience. Your decision should be tailored to meet the audience’s needs. Here are some basic do and don’ts.

SKU Number Do’s

  • Use SKU for internal operations only.
  • Keep it very simple. It should be understood by a fifth grader!
  • Make them short. But not very short that it’s confused with a quantity.
  • Start with a letter(s). It’s easier to discern and sort in spreadsheets and sort during receiving, put away, and picking.

SKU Number Don’ts

  • Don’t reuse the SKU for a different product.
  • Do not start with a zero or use characters or symbols that can be confusing or misread by humans or software.
  • Don’t use special characters like $, #, /, |, I etc
  • Do not use just numbers or letters — use both.
  • Do not use a manufacturer’s serial or part number for your SKU. These numbers are often too long and cryptic.