Learning Center  |  5 Minute Read

What Is an SKU and
Why Is It Important?

If you are a new business owner and just started selling products, you might have heard the word SKU used a lot. So, what is an SKU and why is it important?

SKU Definition: Short for Stock Keeping Unit is a unique identifier a business uses to track its inventory.

SKU is a crucial term for inventory management, and it should be defined correctly to ensure your business runs smoothly.

There isn’t a set definition for SKU, unlike UPC. But, you must use an approach that makes things less complicated, and your employees can easily understand the SKU’s data and determine it by just looking at the code. Here are some characteristics of SKUs:

  • Alphanumeric
  • Typically between 8 and 12 characters 
  • Contains components of a product – color, style, brand, gender, type, and size
  • Unique for each business

Further Reading

Learn more about how to create SKUsDo’s and Don’t for best practices.

Benefits of SKUs: speed, insights, and efficiency

Searching SKUs
Filtering products by SKUs in Brahmin Solutions


Tracking Inventory

A well-designed SKU will allow you to improve your inventory control. Giving each product unique SKUs, you can quickly locate stock, orders, shipments, supplier information, sales forecast, and more.

Import your SKUs to a cloud inventory management system and track inventory as it is received, moved, and shipped.


Better Insights

Managing large quantities of inventory can be difficult for a small business owner. Assigning a unique SKU to every product variation means the quantity of on-hand products is readily known and also giving you deeper insight into your business.

For a fast-growing business, in particular, it is great to have insights on hand so that you can make better sales and marketing decisions.

By analyzing your sales and costs associated with each product, you can quickly identify which products are performing better or worse. Knowing this information allows you to make decisions like discounting your inferior performing products or bundling your poor performing products with other better-performing products to boost your sales.


Improve customer satisfaction

The ability to set a unique code for each variant will allow you to track the on-hand quantity of each product variant readily. It will also make both your sales team and customer service team quickly locate products. 

Using SKUs, you can set reorder points like Min and Max, allowing you to know when new inventory should be purchased. Setting these reorder points will let you have sufficient stock to meet the demand of your customers and also cut down on extra holding costs. 


Connecting with eCommerce Platforms

If you are selling your products across multiple online stores, having one standard code will allow you to link all your channels with your inventory software. 

SKU eCommerce Linking
Brahmin Solutions products linked with Shopify products via SKU

By connecting all your channels, your inventory software can provide all your channels real-time updates. 

Consider SKUs for your business

SKUs may seem complicated, but they don’t have to be if you follow a simple naming structure. They are a fundamental part of inventory management, and successful inventory management contributes to a successful business.

If you are looking for an operations platform that allows you to manage orders, inventory, warehouses, 3PLs, production processes, and more, check out Brahmin Solutions. Track your best sellers, reorder automatically, and have access to your business insights in real-time. Request a demo and talk to one of our business experts.

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