SKU (Stock Keeping Unit)


An SKU, or Stock Keeping Unit, is a distinct code consisting of letters, numbers, or a combination of both, assigned to a product for the purpose of inventory tracking and identification.

Detailed Explanation

In retail and inventory management, precision is key. With potentially thousands of products, each with its variations in size, color, or other attributes, businesses need a way to distinguish each unique item. That’s where SKUs come into play.

SKUs are not just random codes; they’re systematically generated to reflect specific product attributes, making inventory management more organized and efficient. For businesses, SKUs simplify processes like restocking, sales analysis, and order fulfillment. For customers, SKUs ensure they receive the exact product they ordered. In essence, SKUs are the language of inventory, allowing for clear communication and understanding in retail operations.


A shoe store might have the same shoe design in different sizes and colors. Each size-color combination will have its unique SKU.

A tech store selling a specific model of a smartphone with different storage capacities (e.g., 64GB, 128GB, 256GB) will assign a different SKU to each variant.

Related Terms and Concepts:

Barcode, Inventory Management, Product ID, UPC (Universal Product Code)

Frequently asked questions about Stock Keeping Units

How are SKUs different from barcodes or UPCs? While both are unique product identifiers, SKUs are internal to a business, tailored for their specific inventory needs. In contrast, UPCs are universal codes recognized across retailers and industries.

Why can’t businesses just use product names for inventory? Product names might not capture specific variations or attributes of a product. SKUs allow for more detailed and systematic tracking.

Can two businesses have the same SKU for different products? Yes, since SKUs are internal identifiers, different businesses can use the same SKU for different items. It’s essential for businesses to maintain their SKU system consistently.

How do businesses generate SKUs? SKUs can be generated manually, based on a system that the business devises, or automatically using inventory management software.

What challenges can arise with SKU management? As businesses grow, they might face issues like SKU proliferation, where the number of SKUs becomes challenging to manage. It’s crucial to have a systematic approach and regular audits.

How do SKUs aid in sales analysis? By tracking sales at the SKU level, businesses can gain insights into which specific product variations are most popular, aiding in inventory decisions and marketing strategies.


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