A SKU, or stock keeping unit, is the code you use to identify one version of one product in your inventory. A good system makes ordering, counting and selling quicker. A poor one leads to mix-ups, duplicate listings and an inventory nobody trusts. The time to design it is before you have a few hundred products.
What a SKU is, and is not
A SKU is your internal code. It is not a barcode, although a barcode can carry it, and it is not the global product number (GTIN, UPC or EAN) issued by GS1 for retail sale. One product can have several SKUs, one for each variation, such as a colour or size. Each SKU should identify exactly one thing you stock.
A simple structure
A readable SKU is built from parts in a fixed order, for example category, product, colour and size: TSH-POLO-RED-M. The category TSH is a t-shirt, POLO is the style, RED is the colour and M is the size. Anyone in your business can read it. Keep the order the same for every product, and use the same abbreviations everywhere.
Rules that save trouble later
- Make each SKU unique. Never reuse a SKU, even after you discontinue a product.
- Keep it short. Eight to sixteen characters is usually enough, and short codes are easier to type and read aloud.
- Use only letters, numbers and hyphens. Avoid spaces and symbols, which cause problems in spreadsheets and software.
- Avoid look-alike characters. The letter O and the number 0, or I, L and 1, are easy to confuse.
- Do not encode things that change. Prices, suppliers and storage locations change, and the SKU must not.
- Use capital letters. One style avoids case-sensitivity problems.
Variants multiply quickly
A single t-shirt style in 4 colours and 5 sizes is 20 SKUs. Add a second style and it is 40. This is why you need a structure from the start. Naming each variant by hand invites inconsistency, so generate them from your rules. Our SKU generator creates every combination of colours and sizes in one go.
Running numbers or meaningful codes?
You can number products simply, such as 10001, 10002, or build meaningful codes as above. Running numbers never run out of logic and need no abbreviations, but you must look up what each one means. Meaningful codes are readable but need discipline when products multiply. Many businesses combine both, such as TSH-POLO-0042-RED-M, where the number identifies the style.
Plan for growth
Leave room in each part. If you have 8 categories today, assume there will be more. A three-letter code allows plenty of combinations. Write down your convention on a single page, with the list of category and colour codes, so that anyone adding a product follows the same rules.
Watch out for spreadsheets
Spreadsheet programs may remove leading zeros from codes that look like numbers, turning 00123 into 123, or convert long codes to scientific notation. Format the SKU column as text before you paste or import. It is a small step that prevents a common and confusing error.
SKUs, supplier codes and barcodes
Keep a separate column for the supplier's own product code and one for the barcode number, and link them to your SKU. Your SKU stays the same even if you change supplier. If you sell through marketplaces, check their rules on SKU length and characters before you finalise yours. Our barcode generator turns a code into a scannable label for internal use.
Changing an existing system
If your current codes are a mess, changing them is possible but disruptive, because order history, listings and reports all refer to the old codes. Create a mapping table from old to new, switch over at a quiet time and keep the old codes searchable. For a small catalogue it can be worth the effort, and for a large one, plan it carefully.
How SKUs connect to the rest of your inventory
Once every item has a clean SKU, stock counts, reorder points and sales reports all become simpler. See reorder points and safety stock and inventory turnover. This guide is general information, so adapt the structure to your own products.
