3 Secrets for Amazingly Simple SKU Creation

What is a SKU anyway? 

SKU stands for “Stock Keeping Unit”. It’s basically an alphanumeric product code that helps you track and search your inventory.

The SKUs that you create are important for not only your company but also for any company that works with or handles your product (think about any manufacturer, warehouse, or shipping and fulfillment companies you work with). For this reason, it’s important that every SKU you create is easy to understand, consistent, and very specific.

Likely, your fulfillment partner handles thousands of different products. The easier your SKUs are to understand, the easier it will be for them to handle your products. This helps them to avoid mis-ships and to more accurately keep inventory. In the end, this leads to happier customers, a healthier relationship with your fulfillment partner, and accurate inventory reporting that allows you to efficiently restock.

In other words, less headache and more bang for your buck.

Even if your company is small now and for the time being, your employees are the only people who will deal with your product, it’s best to start off right. Carefully creating SKUs now, will assure that you are prepared for growth and don’t need to revise your entire system later when it starts causing problems.

I’ll walk you through the most important things to remember as you create SKUs for your products.

Essential Elements of a SKU

1. Easy to understand

Someone that knows nothing about your company or your product should know what the product is just from reading your SKU

If you use a string of numbers for your SKU, as your range of products grows and diversifies, you will need a key to translate the SKUs into something understandable. That wastes time! By keeping it simple, you are eliminating an opportunity for a mis-ship and you are saving time for everyone who uses your SKUs. Time is money!  

GTS5L           VS.          GrnTshrtOwlLarge

It may be longer, but even a brand new employee on their first day will understand which product you are referring to.   

2. Specific

Avoid using vague descriptive terms. Down the road, these can lead to trouble.

Being specific allows your company room to expand and grow. It also makes staying organized natural, which is especially important when you need all your focus on the more vital aspects of your business.    
Example: Let’s say you sell a book. Instead of just using the word “Book” in your SKU, use the title (or some easily identifiable simplification/abbreviation of it). Being more specific will help you avoid any confusion if you later sell another book.

This means that EVERY product needs its own SKU!

Whether it be apparel or dietary supplements, the concept is the same. Your SKUs should be as clear and specific as possible. Yes, that means each size and color of your product should have its own unique SKU. If you have all the sizes under the same SKU it becomes impossible for an inventory tracking system to give you accurate information about your inventory. This leads to problems with orders and unhappy customers. 

It may seem excessive, but your customer will thank you when the red, size Large t-shirt they ordered is in stock and swiftly delivered to their doorstep.   

3. Consistent

Even if it takes some getting used to in the beginning, it will become second nature and save you time and effort in the end.

Once you have begun creating your SKUs, it is important to BE CONSISTENT! Stick to the system you’ve created and it will be a cinch to understand and create new SKUs. A simple and specific SKU creation system is more efficient and cost-effective than trying to wing it. If you're not prepared to stick to your SKU creation plan, you’ll only end up with a confusing mess that requires a decoder to read.

Save confusion now and prepare for future growth by getting things right the first time around.
SKU creation doesn't have to be intimidating or time-consuming. If you keep it simple, specific, and consistent, you'll save yourself (and your shipping department) countless headaches. If you still have more questions about specifics, go check out this list of SKU Creation Best Practices to help you iron out the details.


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