Stock Keeping Units (SKUs)

What are stock keeping units (SKUs)?

A stock keeping unit (SKU) is a unique alphanumeric code assigned to a product by a retailer or manufacturer to track inventory and sales. Unlike a barcode or UPC, which is standardized across retailers, an SKU is specific to a business and helps manage stock efficiently. Think of it as a digital fingerprint for each product variation—color, size, or model—making it easier to organize, search, and reorder items.

Retailers use SKUs to prevent stockouts (running out of popular items), streamline checkout processes, and analyze sales trends. A clothing store might assign different SKUs for a black medium-sized shirt versus a green large-sized one. By tracking the sales of their shirts, the business can identify trends to make better decisions about how much of what color shirt to buy and when. The clothing store may find that they need to order more green shirts in March to meet the increased demand from St. Patrick’s Day. This level of detail ensures accurate inventory tracking and a better customer experience.

Key Points

SKUs are unique, business-specific codes that track product variations like size, color, or model for efficient inventory and sales management.
Using SKUs helps with inventory accuracy and streamlines operations and customer experience by preventing stockouts and simplifying reordering.

Where to find an SKU number

SKU numbers are usually found on product labels, price tags, or within a retailer’s inventory management system. If you’re shopping online, SKUs are often listed in the product description for internal tracking. Businesses create their own SKU structures, typically incorporating categories, brands, or product attributes to make identification easy.

To give an example, an electronics store laptop’s SKU might look like “LT-HP-15-256GB”. This number references the item’s brand, size, and storage. By looking at the SKU, it tells us that it is a 15-inch HP laptop with 256GB storage. If you’re a merchant, you can check your SKU in your point of sale (POS) system or product database. Understanding SKUs helps businesses reduce miscounts and increase reordering and inventory efficiency.