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Key highlights 

  • SKUs are unique alphanumeric codes that simplify inventory management and improve customer satisfaction. 
  • They enable precise product identification, making searches and order fulfillment faster and more accurate. 
  • SKUs streamline inventory updates across multiple sales channels, reducing errors. 
  • They provide valuable insights into sales trends, helping businesses forecast demand effectively. 
  • SKUs integrate with tools provided by Bluehost WordPress Commerce Solution to enhance operations and scalability. 

Introduction: What is an SKU? 

Imagine running an online store with hundreds of products, each with multiple variations. How would you keep track of them all? That’s where stock keeping units or SKUs, come in. SKUs are unique identifiers that help businesses organize, track and manage their inventory efficiently. These codes are the backbone of many successful retail operations, making it possible to optimize eCommerce store performance and sales. 

SKUs don’t just simplify inventory management; they also enhance customer satisfaction. Imagine a customer searching for a specific product on your eCommerce website. SKUs help the system distinguish between a blue T-shirt in size M and a red T-shirt in size L. Thanks to these unique codes, the search process is smooth, leading to higher chances of conversion.  

Types of SKUs

Multi-brand retail business SKU

In multi-brand retail, SKUs help distinguish products from different brands and keep inventory organized and easy to manage. Each product of every brand is assigned a unique SKU that considers several attributes such as brand, type, size and color. For instance, a clothing retailer selling several brands could use SKUs reflecting these details to make tracking inventory and reporting on sales easier. 

Consider a retailer dealing in several lines of clothing, each with different styles and sizes. They might create a SKU for a men’s denim jacket from Brand X, size M, in blue. For this product an SKU example for retail would look like: BX-DJK-BLU-M. Broken down: 

  • BX: Stands for Brand X. 
  • DJK: Product type, denim jacket. 
  • BU: This means blue in color. 
  • M: Stands for medium, the size. 

This structured process allows retailers to analyze their performance brand by brand or in different product categories. This also pinpoints best-selling and underperforming items and assists in data-driven decisions on what products to restock or promote. 

Single brand DTC business SKU 

Direct-to-consumer businesses may have fewer SKUs than multi-brand retailers, but this concept is nevertheless crucial in their inventory and order management. For example, consider a skincare company that has its main product categories as moisturizers, serums and cleansers. These are further sub-categorized with the use of various attributes such as size, formula and fragrance to give them unique SKUs. 

Suppose this skincare brand launched a new line of lightweight moisturizers that hydrate; for one 50ml lavender-scented, a potential SKU could be: SK-M50-LAV. Breakdown: 

  • SK: Short for the category of product, Skincare. 
  • M50: Product type and size, moisturizer, 50ml. 
  • LAV: Abbr. for lavender – indicates the fragrance. 

By using this SKU system, the brand ensures their online store shows all available product variations. This makes inventory management easier and increases the chance of customers getting exactly what they want. 

Application of SKUs 

Inventory management 

SKUs create structured inventory management systems to track stock levels, identify trends and prevent overstocking or understocking. Well integrated Inventory management systems help businesses maintain a clear overview of their inventory. This ensures timely restocking and efficient use of storage space.   

To get started, you need to understand how to create SKUs that fit your specific inventory needs. Whether you’re selling products across multiple channels or focusing on a single category, creating a consistent and easy-to-understand SKU format is essential. Tools like Tools like Multichannel Inventory Management (Ecomdash) in Bluehost WordPress Commerce Solution make it easy to implement and manage SKUs by centralizing inventory data and automating stock updates across platforms. This system ensures businesses can meet customer expectations during holiday sales or other high-demand periods, without delays or missed opportunities. 

Order fulfillment and shipping 

Accurate SKUs streamline order fulfillment by enabling quick and precise product location, minimizing delays and errors. This not only ensures precise shipping but also enhances customer satisfaction, building trust and loyalty over time. Multichannel Order Management (Ecomdash) from Bluehost WordPress Commerce Solution takes this 

If you’d like to improve upon this by automating the process across various platforms, Multichannel Order Management (Ecomdash) tool from Bluehost WordPress Commerce Solution can be a good option. Whether fulfilling a single order or managing a bulk shipment, it ensures that every step, from picking to delivery, runs like clockwork. 

Product categorization and search optimization 

SKUs enhance product categorization, making it easier for customers to find items quickly and accurately, especially in extensive inventories. By organizing products with detailed attributes, SKUs enable businesses to create filters and refine search results, offering a seamless shopping experience. For instance, a customer searching for a “blue cotton shirt, size M” can easily locate the exact item they need thanks to the precise categorization provided by SKUs. 

Sales tracking and analytics 

SKUs provide detailed insights into sales trends and performance by tracking which products are moving quickly and which may require additional marketing focus. For example, businesses can use SKU data to identify seasonal trends, such as an increase in demand for winter clothing as the seasons change. Reporting tools like Ecomdash’s analytics, integrated with Bluehost WordPress Commerce Solution, help businesses forecast demand, plan effective restocking schedules by analyzing inventory levels and identify opportunities for growth. These allow businesses to analyze historical sales data, track inventory turnover rates and optimize pricing strategies to remain competitive. 

Improved customer experience 

Your own SKU system will enable faster searches and more accurate recommendations, transforming the shopping experience into something truly seamless. Whether browsing online or shopping in-store, customers can rely on well-organized SKUs to guide them directly to what they need.  

This level of organization not only reduces frustration but also fosters trust, making customers more likely to return. For businesses, the payoff is immense—higher customer satisfaction, enhanced loyalty and the kind of efficiency that keeps operations running smoothly every day. 

Multi-channel selling 

Companies internally create SKUs to maintain consistency across multiple sales platforms, simplifying operations and ensuring accurate product tracking. For instance, businesses selling both in-store and online can assign the same SKU to a product, ensuring it is easily identifiable across all channels. This unified system reduces errors, streamlines inventory updates and allows businesses to quickly track stock levels regardless of where the sale occurs.  

Integration with eCommerce platforms 

SKUs seamlessly integrate with eCommerce platforms, centralizing inventory management, sales tracking and reporting across multiple channels. This integration not only reduces manual errors but also ensures real-time synchronization of inventory data, making it easier to manage stock levels and product availability.  

For example, you can use WordPress plugins like YITH WooCommerce Ajax Search and YITH Catalog Mode to integrate them into your daily operations. These plugins are used to create dynamic search results based on your SKU categories, making it easier for customers to find exactly what they’re looking for.  

The YITH WooCommerce Ajax Search leverage SKUs to improve search functionality and user satisfaction with faster, more accurate search results. The YITH Catalog Mode plugin refers to SKUs to display products specific to customer needs.  

The integration of these plugins with Bluehost WordPress Commerce Solution provide advantages over other solutions like Shopify, Square and TrueCommerce. Shopify might require additional plugins for similar capabilities, adding to costs and complexity, while Square’s basic inventory management lacks these advanced features without custom development. TrueCommerce on the other hand focuses more on B2B integration than consumer-friendly product display. 

Feature Bluehost WordPress Commerce Solution Shopify Square TrueCommerce 
Built-in SKU management Yes, with plugins like YITH for enhanced search and catalog control Requires third-party apps Basic integration Specialized, potentially complex setup 
Cost efficiency Included in hosting plans Additional app costs Variable based on plan Can be costly for small businesses 
Ease of use User-friendly customization Good, but can be complex with add-ons Simple for basic needs Designed for larger scale operations 
Integration flexibility High, works with multiple sales channels seamlessly High, but might need more setup Limited to Square ecosystem High but with a learning curve 
Customer support for SKU management Dedicated support for all commerce tools Support varies by app Basic support Enterprise-level support 

SKU vs. other retail codes 

SKU vs. UPC code 

SKUs are unique to each business and tailored to internal needs, while Universal Product Codes (UPCs) are standardized globally for product identification. 

SKU vs. GTIN codes 

Global Trade Item Numbers (GTINs) ensure consistency in international trade, while SKUs focus on internal inventory management and customization. 

SKU vs. barcode 

Barcodes visually encode SKU data, making it scannable for inventory systems, while SKUs provide the detailed information behind the barcode. 

How SKUs work 

How SKUs are used in sales and customer service 

Sales teams use SKUs to locate products quickly, while customer service teams rely on them for resolving inquiries and processing returns. For example, a representative can use an SKU to retrieve product details instantly. 

How SKUs are used in marketing and forecasting 

Marketing teams analyze SKU data to identify top-performing products and optimize promotions. Forecasting future demand becomes more precise, helping businesses plan inventory effectively. 

How to create SKUs 

How to generate SKU numbers 

Understanding how to create SKUs is crucial for their effective implementation in business. SKUs typically combine attributes like category, brand, size and color. For example, “TSH-BLU-M” might represent a blue medium t-shirt. Logical and consistent patterns make SKUs easier to interpret and use. 

Best practices for creating SKUs 

  • Keep it simple: Avoid overly complex codes. 
  • Use a consistent format: Standardize how attributes are represented. 
  • Avoid special characters: Stick to letters and numbers. 
  • Make them intuitive: Ensure SKUs are easy to understand without a key. 

SKU examples for retail 

Below are some SKU examples for retail scenarios to give you a clear understanding of how they look like. 

For a sports equipment retailer: 

  • SHOE-RUN-M9 for men’s running shoes size 9. 
  • BALL-SOC-STD for a standard soccer ball. 

For a cosmetics brand: 

  • LIP-MAT-RED for a matte red lipstick. 
  • FND-LIQ-MED for a medium shade liquid foundation. 

In a bookstore: 

  • BK-FIC-MYST for a fiction mystery book. 
  • BK-NF-HIST-978 for a non-fiction history book with the ISBN ending in 978. 

Implementing SKUs in your business 

How to get started with SKUs 

SKUs act as a helpful guide to eCommerce inventory management. Assigning an SKU to each product gives them a clear identifier leading to reduced errors. When starting to implement SKUs you should start small and refine your system as needed. 

Training staff on how to use SKUs 

Train your team on SKU usage for inventory tracking, sales and customer service. Hands-on exercises and clear documentation reinforce best practices. 

Integrating SKUs with sales channels 

Sync SKUs with your eCommerce platform and other sales channels to ensure consistency. Platforms like Amazon and eBay benefit from accurate SKU integration, reducing errors. 

Best practices for inventory management with SKU code 

Keep it consistent 

Consistency in your SKU format is essential for smooth operations. Create a standardized template that includes key product attributes like category, size, color or brand. For instance, an SKU for a medium-sized blue T-shirt could follow the format TSH-BLU-MED. By adhering to a clear and logical structure, you’ll make it easier for employees and software systems to understand and organize your inventory. Consistency also prevents errors during order fulfillment and stock reconciliation. 

Make regular updates  

As your inventory grows or changes, it’s important to revisit your SKU system to ensure it still meets your needs. For instance, if you add new product categories or subcategories, update your SKU framework to include these distinctions. Regularly auditing your SKU codes can help you avoid duplication or confusion, especially when retiring old products or adding seasonal items. Set a periodic schedule, such as quarterly or semi-annually, to keep your system in top shape. 

Consider UPCs for simplicity

Universal Product Codes (UPCs) are an option for small businesses starting out, as they are easy to implement and widely recognized. However, UPCs are not tailored to your specific inventory needs, which can limit their usefulness as you expand. Unlike custom SKUs, UPCs lack the flexibility to include unique product details, which may make managing a diverse or growing catalog challenging. For scalable operations, transitioning to a custom SKU system offers more control and adaptability. 

Final thoughts 

SKUs are the backbone of efficient retail and eCommerce operations, quietly driving success behind the scenes. By putting SKUs to work, you can transform complexity into clarity, refine operations and deliver exceptional customer experiences. 

Ready to streamline your eCommerce operations? Explore Bluehost’s tools to discover how our solution can transform your inventory with efficient SKU management. 

FAQs

Can SKUs be used across different sales channels? 

Yes, SKUs can be used across various sales channels like your website, retail stores or third-party marketplaces. They help you keep track of inventory, streamline operations and ensure consistency, making it easier to manage stock regardless of where the sale happens. 

How are SKUs different from barcodes? 

SKUs are unique alphanumeric codes created by a business to identify products internally, while barcodes are standardized codes that can be scanned electronically for global recognition. SKUs are used for internal inventory management, whereas barcodes are primarily used for point-of-sale transactions and logistics. 

Can I use SKUs for forecasting demand? 

Absolutely! SKUs provide detailed insights into product performance. By analyzing SKU-level sales data, you can identify trends, predict future demand and plan inventory, accordingly, reducing the risk of overstocking or stockouts. 

What is the difference between SKUs and UPCs? 

SKUs are custom codes businesses create to organize inventory, while UPCs (Universal Product Codes) are standardized and assigned by GS1 for universal product identification. SKU is unique to your business, whereas UPC for the same product will be used for global identification and retail sales. 

  • I’m a web hosting and WordPress enthusiast dedicated to helping you enhance your online presence. I love making tech simple and accessible for everyone with my writing.

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