What is a SKU and how to use it?

May 5, 2022

If you own a business selling products, you've probably heard the term SKU thrown around a lot. But what does it mean and, more importantly, what can you do with it? In this blog post, we'll break down SKUs for you and show you how to put them to use.

What does SKU mean?

A SKU stands for Stock Keeping Unit. It is a code that is used to identify a product in your inventory. SKUs are typically assigned by warehouses or fulfilment centres like Zendbox, and are used to track products as they move through the supply chain. 

SKUs can be numeric or alphanumeric, and usually include information about the product such as the size, colour, or style. For example, a fulfilment centre might use SKUs to track different sizes of the same product, so that they can easily locate and ship the right item to the intended customer. You can think of a SKU as a unique identifier for a specific item in your inventory. When you create an order fulfilment strategy, you will need to consider how to track and manage your SKUs.

Calculating your SKUs

To calculate the number of SKUs in your inventory, it’s important to consider the different variants of your products. If you sell t-shirts in multiple colours and sizes, for instance, you will have a different SKU for each combination of colour and size. Let’s say you have 10 t-shirt designs, and each design is available in 4 colours and 3 sizes. You would have a total of 120 SKUs (10 designs x 4 colours x 3 sizes).

Why are SKUs important?

Understanding and managing your SKUs is an important part of operating a successful eCommerce business. By knowing how to identify and track your SKUs, you can ensure that your products are always available to your customers and that you are able to effectively manage your inventory. After all, under or overstocking your products can eat away at your bottom line and potentially damage your brand’s reputation if customers are unable to get their hands on their favourite items. Read about our Inventory Analysis tool to find out how you can avoid situations like this. 

If you’re looking to outsource your fulfilment process to a 3PL provider, get in touch. We’ve helped hundreds of eCommerce businesses make sense of SKUs, set up their inventory, and prepare their products for sale as part of our premium fulfilment solution.

James Barber
Chief Operations Officer at Zendbox

With an in-depth knowledge of the eCommerce space, James has extensive experience managing logistics across various sectors, including food and drink. His expertise sees him support online retailers in sustainably delivering products that drive repeat custom, boost revenue, and promote growth.

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