SKU

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What is an SKU number?

SKU (which stands for Stock Keeping Unit) is an alphanumeric number used by retailers to internally keep track of their businesses’ inventory. It is a unique product code that allows retailers to manage their stocks, measure sales, and ultimately enhances the shopping experience. The SKU pattern often:

  • Has 8-12 characters
  • Start with a letter
  • Doesn’t contain a zero
  • Each letter/ number has a meaning 

SKUs should contain information about the characteristics of a product, such as price, color, brand, size, etc. The most important characteristics should be placed first, followed by the less important ones. Moreover, every product variation should have an SKU for its own, so that the exact number of on-hand products is under control.

What are the benefits of using SKU?

Retail businesses often offer a wide range of products. Therefore, SKUs will help to make them more manageable. Some of the most outstanding benefits of SKU are:

  • Support inventory management: Businesses can keep track of how many products are available, and what needs to be restocked. SKUs are also used to identify any inventory shrinkage (the number of products that cannot be sold or missing). 
  • Better manage profits: SKUs also help to produce a report on product variants – what are the best sellers, in which color, size or style. This information can be used to develop a better strategic plan.

What to consider to develop an SKU architecture?

SKU architecture is the system of SKU numbers and their meanings, which is intended to be unique to specific products so that store owners can keep track of their sales and supply chain activities.

  • The size of your stock: SKU architecture can differ depending on the size of each business, such as if they want to track products only according to age groups, or even to the more details, such as gender or size.
  • The number sequence: SKU number sequence should not be duplicated in multiple products so that businesses can track inventory more accurately.
  • Customers’ demand: Businesses should consider what is the primary concern for customers, in order to make the appropriate order for their SKU numbers. For example, the most important factor should be placed first in the SKU number.
  • Inventory system: Retailers should also pay attention to the type of point-of-sale system and whether an SKU architecture is allowed by it.

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Tammy

Tammy

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