What is a SKU?
SKU (usually pronounced as “skew”) is an acronym for Stock Keeping Unit. Every SKU represents an item of sale and is a unique code. This code may be a random or sequential alphanumeric or structured around variables such as brand, colour and size. Unlike barcodes which are entirely random and 13 digits long (is using the EAN standard) a SKU is human readable and much more useful when searching for specific items.
In the context of order fulfilment, identifying items by SKU is a pre-requisite; so if you are considering selling online or outsourcing your operations, read on to understand how to get started.
Why is a SKU so important?
As an online retailer, a SKU offers enhanced control and searchability over your product. It remains unique to your business regardless of any changes implemented by the manufacturer or wholesaler supplying goods. Furthermore, it is specific to the size, colour or flavour of an item, offering complete stock visibility to buyers and customer services. With the right level of integration, it is possible to indicate availability across online channels and avoid the problems associated with overselling (selling stock that you don’t have).
SKUs should co-exist with barcodes and serial numbers to enable operatives for human-readable identification of items during the picking process. Expedient and accurate fulfilment is reliant on good data quality where a SKU is linked to barcode; this enables the use of scanning devices to verify the correct item is being dispatched.
Creating Products and SKUs
Provided a SKU is unique, it can be any combination of alpha-numeric characters. The most popular approaches are:
Sequential – a short number selected in sequence from the last used i.e. 10001, 10002, 10003 etc
Structured – usually an alphanumeric which references the brand or product category alongside a sequential number i.e. LC10001 – Le Creuset 1L Milk Pan
Variant – a structured amalgam of alphanumeric characters to denote the range, size and colour. However, there may be more or less variables, depending on the product i.e. 10001-GRN-XL – Extra Large Heavyweight Sweater in Green
Once the SKU has been created, you would then need to build data specific to the item for the purposes of buying, stock control, sales and fulfilment. The minimum fields required to support an ecommerce business are as follows:
- Product Code (SKU)
- Product Description
- Stock Control Category
- VAT Code
- Supplier Name
- Cost Price
- Barcode Number (EAN)
- Weight (grams)
- Height (millimetres)
- Width (millimetres)
Cartons, Packs and Singles
If you are buying and selling supply products in carton and/or pack quantities, the easiest way to manage your stock is to denominate at unit level. This means that you only need to create one SKU (for the unit) linking to pack and carton quantities using ratios i.e. 1 pack = 5 items. For the purposes of receipting in a fulfilment environment, the packs and cartons may be assigned alternative references such as barcodes to help identify the inner item and unit quantities when updating stock figures.