SKU (Stock Keeping Unit) is a unique alphanumeric identifier assigned to each distinct product variant in inventory. A t-shirt available in three sizes and four colors would have 12 different SKUs, one for each size-color combination.
SKU Structure
SKUs typically contain 8-12 characters combining letters and numbers. Common formats encode product attributes. Example structure: CAT-BRD-CLR-SZ where CAT is category code, BRD is brand identifier, CLR is color code, and SZ is size indicator. Real example: TSH-NK-BLU-M equals T-Shirt, Nike, Blue, Medium.
SKUs differ from other identifiers. SKUs are internal codes created by each retailer, while UPCs (Universal Product Codes) are standardized barcodes used across all retailers. Product IDs often identify the base product, while SKUs identify specific variants including size, color, and other attributes.
Why SKUs Matter
Proper SKU management reduces stockouts by up to 30% through better inventory visibility. SKUs enable accurate inventory tracking across locations, efficient warehouse operations and picking, sales analysis by product variant, automated reorder point calculations, and integration with suppliers and marketplaces.
Best Practices and Common Mistakes
Keep SKUs between 8-12 characters. Use consistent formatting across all products. Avoid special characters and spaces. Make codes readable by humans, not just systems. Include category or brand identifiers. Never reuse SKUs from discontinued products.
Common mistakes include SKUs that are too long or complex to manage, inconsistent naming conventions, using manufacturer codes as internal SKUs, changing SKU format mid-catalog, and not accounting for future product variations.
