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Stock Keeping Unit (SKU)

Stock Keeping Unit (SKU) is a unique code assigned to each product that contains information about it. SKUs are used in trade and inventory management to track operations related to products. Each item in a store's catalog is assigned an SKU, even if the products only differ in color or size. For example, a store sells one phone in two colors and with two different memory sizes. This results in a total of four product variations and thus, four SKUs. A manager can input each code into inventory management software and find out:

  • the name of the product and its characteristics (weight, color, etc.);
  • the packaging of the product;
  • the location of the product in the warehouse or store;
  • the quantity of the product in stock;
  • sales statistics.

The principle of SKU is similar to the barcode system, but instead of symbols, numbers are used. SKUs are usually expressed in numerical form and consist of several digits. However, depending on the implemented system, the code may change, and letters may also be used. Often, SKUs match the product's article number that customers see on the store's website. This is why managers ask customers for the article number of the product they are interested in during consultations to provide answers to their questions.

SKU is actively used by sellers and suppliers because the system helps to organize the company's work. With the help of identifiers, managers can quickly find all the necessary information about a product and provide it to customers. The employee won't have to search for the product's location on the warehouse shelves by themselves, they can simply input the code into the software and find out that the product is on the second shelf of the first rack. The use of SKUs is essential for the normal operation of companies with a large number of items in their product catalog. Otherwise, work will be chaotic, and products will simply be lost.

SKU not only helps inform customers but also facilitates other processes in the company. The identifier helps conduct an inventory of products in the warehouse. The manager will always receive information about the stock and movement of products in real time. Products won't get lost in the warehouse, and the company can update information about them at any time. Additionally, SKUs help collect sales statistics and calculate income for each separate item. The company will find out which product was the most profitable and which one, on the contrary, was not of interest to buyers.

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