Ecommerce SKU Number: Meaning, How To Use It, & Example
Updated on November 9, 2022 in Ecommerce by Nishant Shrimali
Running an eCommerce means a huge part of the day would be contributed towards inventory management and preparing your eCommerce and its stocks for the future. This becomes even harder when eCommerce is not following a proper tracking system for every product in the inventory.
A system like SKU number for eCommerce products practically reduces the guesswork, helps in the accumulation of data, and improves the efficiency of an eCommerce. If you are running an eCommerce, adding product SKUs can be beneficial for all the coming years.
But for now, let’s understand the meaning of eCommerce SKU meaning.
What is the SKU number?
SKU stands for Stock Keeping Unit. A unique number is assigned to a product for internal tracking within eCommerce.
Generally, an eCommerce SKU number has information about the product, including the brand name, type of product, size, gender, model number, etc.
The following information is arranged for a glance to help the person in charge learn about the product at a glance. That is why the essential information is kept at the beginning of the SKUs, and the least valuable information is kept at the last.
Example Of A Stock Keeping Unit for eCommerce
To understand better here is a quick example of an eCommerce SKU tracking number. For this example, assume you are selling a black t-shirt for men of size small by a brand name Zoo.
Now to add this information and track the product across the inventory, we will need it to be short and quick to read. So instead of the wholes statement, we will use “ZOO-TSH-BLK-M-SML-001”.
Here ZOO is the brand, TSH means t-shirt, BLK for black, M for men, SML for small, and OO1 is the model number. As you can see, the data is arranged in descending order of importance.
Also, how SKU tracking numbers are created can be very subjective for each eCommerce. It is an internal method of tracking the products for various uses and is made to ease the best way that suits you.
How Are Ecommerce SKUs Used?
Stock Keeping Units for eCommerce are essential to an eCommerce irrespective of the size of your brand. You can use SKUs for various purposes even if you are a small retailer. Such as:
Organizing your Inventory
Having a clear Stock Keeping Number means you can easily stack and find the product in your inventory at the right place.
This helps you segment your products, arrange them by type, and find them quickly within the inventory.
This reduces unnecessary burnout and helps eCommerce run frictionless, especially if you manage your inventory independently.
Assisting your Customer
Customer experience is more than just fast and easy checkout. It is until the product reaches your customer and they are satisfied with it and your service. In between comes the tracking of your product, and in case of an issue, returning of the product.
To keep track of all this one must use SKU numbers for eCommerce. This creates an easy journey for you, your product, and your customer. You can easily track the delivery status, keep your customer informed and assist them in case of an issue.
The whole process becomes a breeze when it comes to tracking the SKU numbers of eCommerce.
Analyzing
The 80/20 rule states that 80% of your eCom-profit comes from 20% of your product catalog. Simply put, most eCommerce profit relies on a small set of products. Which product to be precise?
You need a system, particularly the SKU number for eCommerce products. So if you have an inventory where most of your sales are through a small group of products, you can track them through their stock keeping number.
This way you can quickly analyze them based on their types and target more customers for more sales. We will be learning more about the benefits of differentiating products by SKU number.
Product Recommendation
Using eCommerce SKUs, an eCommerce can easily recommend similar products to their customer.
These are tools that can fetch the necessary data from the name and tags of a product. Based on which similar product recommendations are shown to your customer.
This enhances the accuracy of similarity and hence the customer experience.
Difference Between UPC and SKU
Just like Stock Keeping Unit, UPC (Universal Product Code) is another standardized tracking tool for all businesses.
These two are very distinct in their use as the eCommerce SKU number for a product is just for internal use and can only be understood by the people associated with eCommerce.
The UPC on the other hand is 12 digits numeric-only barcode that anyone can scan to get information about the product.
Here is a quick difference between UPC and SKU
| Universal Product Code (UPC) | Stock Keeping Unit (SKU) |
| Regarding UPC, it is a code that stores information regarding the manufacturer and seller. | An SKU number is internally used by eCommerce and businesses as a tracking number that has information regarding the product. |
| They are created in the form of a barcode along 12 digits number-only code that can be scanned through any barcode reader. | They are created using the alphabet, numeric codes that explain the product easily and are tracked using various software like inventory management, CRM, etc. |
| They follow the same standard process of creating a barcode. | Creating SKU majorly depends on the business and its functioning. |
| UPC is mainly used during the whole supply chain process, making it easy to track the package. | SKU is mainly used for inventory and stock-keeping purposes. |
So which one should be used? Both. SKU and UPC are two essential tools that are already being used together. Where one is used for internal processes, another makes it easy to track externally.
We will discuss UPC in future articles, but let’s look at some unshared benefits of using SKU for eCommerce.
Benefits Of Using Ecommerce SKU
The eCommerce SKU number for the product is beneficial. This has been established. Now let us learn about the benefits of using the SKU for eCommerce.
Easy to Manage the Inventory
The whole purpose of the Stock Keeping Unit is to bring a streamlined inventory management process. Ecommerce SKU allows you to assign a code to your products, making it easy for software and humans.
Moreover, as the eCommerce SKU includes brief information on the product, one can easily learn about the products running out of stock and reorder them at a glance.
Forecasts Sales
You can use the tracking number more if integrated with the right inventory management software. One of which includes forecasting the sales.
Based on the sales trend and information, one can quickly pinpoint the most trendy product on eCommerce.
Using eCommerce SKU tracking numbers makes it much easier based on the exact type of product that is being sold over the months.
For example, small size within a particular t-shirt is being sold consistently over the months, and it would be wise to forecast sales and preorder them before they run out of stock.
Reducing Loss-Making Products
Profit and loss are two sides of a coin. While some products will bring you profit, others may be a liability in your inventory.
Learning about these products and eliminating them if necessary for eCommerce is essential.
Ecommerce SKU number helps you learn exactly that and enables you to cut off your inventory cost from you the lost making products.
Better Customer Experience
You already know about using eCommerce SKU tracking numbers to recommend products to your customer.
Further, to improve the customer experience, the SKU tracking number is used to ensure the right product is shipped to your customers.
Human error is among the most common issues faced during inventory management and shipment. The use of eCommerce SKU reduces this with great margin as it helps to track and learn about the products easily and quickly.
How To Create SKU Number For Ecommerce?
Creating an SKU is super easy and very subjective to every brand. While there is no fixed set of rules, some simple steps are generally followed while creating SKU numbers for eCommerce.
Keep the Information in Descending Order
For most SKUs, the brand name is often the first part of the stock-keeping unit. Then is the product type, followed by more information about the product itself. This hierarchy helps in sharing the info precisely without any scope of confusion.
In your case, if you believe the brand of the product is not so important, you can move that back or even remove it if you feel it is of no use. Only keep the most important information of the product just like seen in the SKU number example above.
Differentiate uniqueness among the SKU
Again, you must differentiate the products as per the way they look. If there is something unique to the product, add it to your SKU.
To understand this better, think of a product with which an eCommerce sells a Gold chain. So to make the ‘product’ distinct, its SKU can be PRD-G-CHN.
This little information within SKU ensures accurate tracking of the product you sell more efficiently.
Add in the Serial Numbers at last.
Lastly, add a serial number at the end of the eCommerce SKU number to ensure each product is distinct from the others. Start with 001, 002,003, and move ahead to consecutive numbers.
Making the eCommerce SKU tracking number distinct will also help you learn more about the total number of products added to your inventory. Also, it will be easy to learn when was the following product added, like during the early stages of recent updates.
How to get Started?
Before we conclude, let us understand the next best step that you can take towards your
eCommerce SKU number. Firstly, understand what information will be necessary according to your products.
Keeping that in mind, create an eCommerce SKU and upload it to your Point of Sale software (POS) or your inventory management software. If you are using any of them, you can easily track all your products.
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