Stock Keeping Unit (SKU)

What is a Stock Keeping Unit (SKU)?

An SKU or Stock Keeping Unit is an alphanumeric code assigned to products in an inventory for better inventory management and tracking. It is a crucial part of inventory management for any business. The codes are always unique and consist of eight or more numerical and alphabet combinations. They are also often accompanied by scannable barcodes for ease of tracking. 

Significance of Stock Keeping Unit (SKU) in E-commerce 

A stock-keeping unit is one of the primary ways of sorting inventory. Therefore, it holds great significance in the field of e-commerce. Here are some of its benefits:

  • SKUs help business owners, vendors, and even warehouse personnel keep track of products in different parts of the supply chain. 
  • SKU tracking also provides business owners with sales data and helps them monitor which products need to be reordered. 
  • Analyzing Stock Keeping Unit (SKU) data also provides owners with insights about which products are the most profitable. 
  • SKUs also hold unique data in the form of alphanumeric codes, which can help identify different products even though they are similar. 

Prerequisites for Stock Keeping Unit (SKU) and How It Works

Here are some of the prerequisites for Stock Keeping Units (SKUs):

  • Creating a unique alphanumeric code. This code can be created manually or through a software. 
  • Assigning identifying information to each SKU code. 

Once the prerequisites are fulfilled, SKU has a simple working principle. In a stock-keeping unit, each number is used as an identifier. When a seller uses a scanner to scan the code, each number deciphers to give specific information about the product. 

Use Case with Stock Keeping Unit (SKU) 

Stock Keeping Unit (SKU) is used to keep track of stock or inventory. For instance, an apparel store assigns a SKU code ‘0103M’ to a pair of jeans. Here, the numbers ‘01’ correspond to jeans, ‘03’ correspond to skinny, and the ‘M’ corresponds to size ‘medium’. When the seller scans the code, these details pop up. Hence, they get access to all this information in one go and brands can manage their inventory and sales, better. 

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