| As a rule of thumb, let your SKUs identify product traits, while the UPCs identify the manufacturer (first six numbers), item (next five characters), and check digit (last number). (The check digit is formulated by adding and/or multiplying multiple digits in the code to show that the UPC code is valid.) Show
SKU vs. barcodeA barcode is the batch of black lines that retailers scan when completing a customer’s purchase. The term barcode is often used in place of UPC, meaning that the two are interchangeable. Unlike SKU numbers, which are unique to a business or seller, barcodes are assigned to all like products regardless of where they are sold. SKUs also accompany barcodes. 🤓 What does one barcode say when he bumps into another? SKU me. How to use SKUs to grow your retail business
1. Track inventory accuratelySKUs distinguish product traits, so they are helpful tools in tracking the health of your overall inventory—namely, availability. By using your SKU data to keep an eye on product statuses, you can pinpoint when exactly to order new products. This is referred to as a retailer’s reorder point. 💡 PRO TIP: To prevent stockouts, set in Shopify admin to get low stock notifications. These ensure you have enough lead time to replenish a product’s inventory before quantities reach zero. With accuracy comes efficiency and productivity. When you can inventory manage in real time, you better understand the evolving needs of your business. 2. Forecast demand and salesAccurate inventory numbers also mean better and more accurate sales and demand forecasting. As a result, it’s easier for you to answer questions like:
Keeping a pulse on these moving parts of your retail store helps establish you as a reliable merchant to your customers and vendors. If your SKU data highlights low-selling stock, don’t immediately eliminate those products. Some customers may still purchase those products, so decrease your inventory instead. A 2008 Walmart initiative called Project Impact is a prime example of what not to do: the company kept its highest selling products, removed the lowest sellers, and added in pricier items. The result? A quick decline in sales because customers looked to other retailers. However, there is a solution that involves your SKU architecture. According to the Harvard Business Review, consider how customers are purchasing your products. “Most of the time customers don’t buy products; they buy a bundle of attributes,” authors Marshall Fisher and Ramnath Vaidyanathan write. “Think about the last time you bought a TV. Did you say, ‘I want TV X’? Or did you think about screen size, resolution, price, LCD versus plasma, and brand?” By structuring your SKU numbers to communicate the attributes customers want to know about your products, you can strategically analyze your inventory to forecast demand and satisfy customers. 3. Amplify your biggest profit generatorsYour SKU architecture highlights your most sought-after items — the least desired ones, too. Aside from knowing your reorder points and what products to axe, your SKUs can also help you get creative with your highest-selling items. Data surrounding your biggest profit generators can inspire in-store product displays and visual merchandising decisions as well as strategic marketing campaigns that help turn over that popular stock even quicker. 4. Boost customer loyalty and satisfactionSince SKU numbers can be used to anticipate reorder points, they can also help your customer always find the product they need. This leads to a shopping experience with little to no stockout issues — resulting in increased brand loyalty and satisfaction among shoppers. Additionally, when a product does go out of stock (which is inevitable in the retail world), your customers might be more willing to be patient rather than taking their business elsewhere. 💡 FURTHER READING: Learn how you can cultivate more customer loyalty with a loyalty program. 5. Offer customers new suggestions—and increase salesSKU product data isn’t valuable just for inventory management and sales analysis. It can also be applied on the sales floor. For example, if a product is out of stock, your retail team can use their SKU knowledge to direct your customers to similar products. Alternatively, if a product is in stock for your customer, your associates can suggest related products to complement their purchase. This is often utilized on ecommerce websites, too. When you browse products online, retailers often display similar items you may like. This is likely done through a retailer’s SKU architecture, where they’ve applied an algorithm to provide suggestions with similar characteristics or features. Getting started with SKU numbersSKUs aren’t a one-size-fits-all for retailers, and the more you tailor your SKU architecture to your and your customers’ specific needs, the more you’ll help your business succeed. By understanding what’s important for you, your vendors, and your customers, you can craft a SKU architecture that allows you to efficiently manage your inventory and easily scale your retail business. This post was originally written by Jen Hasty and has been updated for freshness and accuracy by the Shopify team. Take the guesswork out of SKUs and restocks Only Shopify helps you make smarter inventory purchasing decisions. See your most profitable and popular items, generate SKUs, forecast demand, get low stock alerts, and create purchase orders without leaving your POS system. Email addressStart free trial SKU numbers FAQWhat is a SKU number?A SKU, or Stock Keeping Unit, is a unique number used to internally track a business’ inventory. Retailers use SKUs to track their inventory and sales, which can provide analytical data that are beneficial to have in order to develop relationships with your vendors and customers. How does a SKU work?SKUs are alphanumeric, and should provide information on the most important characteristics of a product — price, color, style, brand, gender, type, and size, for example. This information in the SKUs should also be placed in order from important to least important — or in other words, the most needed information to the least Why is SKU important?SKU numbers are important because they ensure you inventory is accurately tracked, and help you pinpoint when exactly to order new products so your merchandise never goes out of stock. Are SKU and barcodes the same?While stock keeping units or SKUs and barcodes are similar, they are not the same. A barcode is different from a SKU by the way it is assigned to a product—SKU numbers are unique to a business or seller, and barcodes should be assigned to all like products regardless of where they are sold. How do I get an SKU for my product?If you use a point-of-sale system, most will allow you to create a SKU architecture within it. If you don’t have one and have a smaller inventory, you can actually create it by hand and on an as-needed basis. Can two products have the same SKU number?No. SKU numbers are unique to the company selling the product, however two products could have the same barcode or UPC number. About the authorAllie Decker Allie Decker is a Senior Content Marketing Manager at Shopify. When she's not writing, you can find her reading, traveling, playing the piano, or rewatching Schitt's Creek. Topics: Inventory Management Grow your retail businessGet exclusive behind-the-scenes merchant stories, industry trends, and tips for creating standout brick-and-mortar experiences. |
