You’ve probably noticed SKU numbers on products before, without realizing just how important these jumble of numbers and letters are for eCommerce businesses.
Research shows that 69% of consumers are less likely to shop with a retailer in the future if a purchase is not delivered within 2 days of the date promised – so you need to ensure your operations are as smooth as it gets.
SKU numbers stand as the salient heroes in this mission. If your eCommerce business is aiming for efficiency and growth, it’s important you learn and incorporate them into your logistics system.
In this comprehensive guide, we'll dive into the world of SKU numbers to understand how they can benefit your business and where you can get started in using them.
What are SKU Numbers?
SKU (also known as Stock Keeping Unit) is a unique identifier assigned to each product in a company’s inventory. Essentially, it's a code that helps businesses track inventory levels, manage stock, and streamline operations.
SKU numbers can vary in complexity, ranging from simple alphanumeric codes to more intricate combinations.
Finding SKU Numbers
SKU identification is crucial for seamless inventory management and order fulfillment. Typically, SKU numbers can be found in several key locations:
- eCommerce Websites: SKU numbers are often displayed alongside the product description on eCommerce websites.
- Product Packaging and Labels: Most products feature a barcode or printed number on their packaging or labels.
- Invoices and Receipts: Previous purchases may contain the SKU number on invoices or receipts, typically listed alongside the product name.
- Accounting Software: Business owners can access SKU numbers through accounting software's inventory management module, usually labeled as “Inventory,” “Products,” or “Items.”
- Sales Platform Account: eCommerce businesses can find SKU numbers in their sales platform accounts by navigating to the relevant section or module where product information is stored.
Benefits of SKU Numbers in eCommerce
The benefits of using SKU numbers in eCommerce fulfillment include:
- Streamlined Inventory Management
SKU numbers serve as the backbone of efficient inventory management systems. By assigning a unique identifier to each product, your business can easily track stock levels across multiple locations.
With SKU numbers, inventory managers can also quickly locate specific products within warehouses, reducing the time and effort required for stocktaking and replenishment.
- Enhanced eCommerce Fulfillment Efficiency and Shipping Solutions
Timely order fulfillment is essential for customer satisfaction. SKU numbers play a vital role in expediting this process. With SKU numbers attached to each product, warehouse staff can swiftly identify and pick items for orders. This helps your logistic provider (like us here at eShipper) minimize fulfillment errors and ensure accurate and efficient shipping solutions.
Additionally, SKU numbers enable businesses to implement advanced order routing and picking strategies, optimizing fulfillment workflows for maximum efficiency.
- Accurate Sales Reporting and Performance Analysis
SKU numbers provide businesses with insights into product sales performance and trends. By tracking the movement of individual SKUs, your eCommerce store can identify top-selling products, monitor demand fluctuations, and forecast future sales.
This data-driven approach empowers businesses to make informed decisions regarding inventory replenishment, pricing strategies, and marketing initiatives, ultimately driving revenue growth and profitability.
- Efficient Returns Management
In eCommerce, managing product returns is an inevitable part of the business. SKU numbers simplify this process by enabling businesses to track returned items back to their original inventory records.
By associating returned products with their respective SKU numbers, businesses can quickly identify the reason for the return, assess product condition, and ensure appropriate restocking procedures.
- Optimized Supply Chain Collaboration
SKU numbers facilitate seamless collaboration with suppliers, manufacturers, and logistics providers throughout the supply chain. By standardizing product identification, businesses can streamline communication and documentation processes.
Whether coordinating production schedules, arranging inbound shipments, or managing cross-border logistics, SKU numbers ensure clarity and accuracy, reducing the risk of errors and delays in your shipping solutions. Ultimately, your business will improve its operational efficiency.
- Scalability and Expansion Opportunities
As your eCommerce business grows, scalability becomes a key consideration. SKU numbers provide a scalable framework for managing a changing inventory portfolio.
Whether launching new product lines, expanding into new markets, or entering strategic partnerships, businesses can rely on SKU numbers to maintain order and organization during growth and expansion.
How to Create SKU Numbers for Products
Creating SKU numbers requires careful consideration, you have to ensure they are effective and scalable. Here's a step-by-step guide with examples:
- Identify Key Attributes
Begin by identifying the essential characteristics of your products that need to be reflected in the SKU. These attributes may include product category, size, color, style, material, or any other relevant specifications.
For example, if you're selling clothing, key attributes for a t-shirt might include size (S, M, L, XL), colour (Red, Blue, Black), and style (V-neck, Crew-neck).
- Establish a Format
Define a consistent format for your SKU numbers that incorporates the identified key attributes. This format should be intuitive and easy to understand, ensuring clarity and accuracy in product identification.
Example Format: [Product Category]-[Size]-[Color]-[Style]
Using the example of a t-shirt, the format could be: TS-[Size]-[Color]-[Style]
- Assign Codes
Assign unique codes to each product based on the established format, ensuring that no duplicates exist within your inventory.
Here are our example codes for the t-shirts:
TS-S-RD-VN (Small, Red, V-neck)
TS-M-BL-CN (Medium, Blue, Crew-neck)
TS-L-BK-VN (Large, Black, V-neck)
- Test and Iterate:
Test the effectiveness of your SKU numbering system by applying it to a sample set of products and processes. You are looking for clarity, consistency, and scalability. If there are duplicates, you’ll have to switch it up and make adjustments as needed to optimize efficiency.
Conclusion
By understanding the significance of SKU numbers and implementing effective strategies for their creation and utilization, businesses can streamline inventory management, enhance order fulfillment efficiency, and drive overall growth and success.
Now that you're equipped with the knowledge and insights needed to navigate the world of SKU numbers, take the next step towards optimizing your eCommerce operations.
If you need support in this process, as a logistics provider here at eShipper, we are well-versed in SKU numbers. Reach out today and let’s set up your business for future success and growth!
Frequently Asking Questions (FAQ)
A: While both SKU (Stock Keeping Unit) and UPC (Universal Product Code) serve as product identifiers, they have distinct purposes and formats.
SKU numbers are internal codes used by businesses to track inventory, while UPCs are standardized barcodes used for scanning at the point of sale. SKU numbers often contain additional information about product attributes, whereas UPCs are primarily designed for retail scanning and do not provide detailed product information.
A: When formatting SKU numbers, it's essential to establish a consistent and scalable system that reflects the unique attributes of your products.
Consider incorporating elements such as product category, size, color, and style into your SKU format to facilitate easy identification and organization. Avoid using overly complex formats that may lead to confusion or errors during inventory management.
A: While SKU numbers are typically unique to each product within a company's inventory, there may be instances where SKU reuse is appropriate. For example, if a discontinued product is replaced with a new version or if products are repackaged or rebranded, existing SKU numbers may be repurposed. However, it's crucial to maintain clear records and update inventory systems accordingly to avoid confusion and discrepancies.
A: The frequency of SKU updates depends on factors such as product lifecycle, inventory turnover rate, and changes in product attributes. Generally, SKU numbers should be updated whenever there are significant changes to a product's specifications, packaging, or pricing.
Additionally, regular audits and reviews of SKU numbers can help identify opportunities for optimization and refinement to ensure alignment with evolving business needs.
A: Yes, SKU numbers can be used across multiple sales channels, including eCommerce platforms, brick-and-mortar stores, with logistics providers, and third-party marketplaces.
However, it's essential to maintain consistency and synchronization across all channels to avoid inventory discrepancies and fulfillment errors. By integrating inventory management systems and utilizing centralized SKU databases, businesses can ensure seamless cross-channel operations and enhance overall efficiency.
