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The Complete Guide to Stock Keeping Units (SKUs) and a Free SKU Generator Tool


As a retailer, whether you’re a beginner or have some experience, you’ve likely come across the term “SKU” (pronounced “skew”). You may have even used it in your business operations. However, you might be unsure about what a SKU is, how it relates to other product codes, and how to create one for your products.

In this comprehensive guide, we’ll demystify the concept of SKUs and introduce you to our free SKU generator tool. By the end of this article, you’ll be equipped to enhance your product management system with well-optimized and unique SKU codes.


Understanding SKU Numbers: What Are They?

SKU stands for “Stock Keeping Unit.” It’s a distinctive alphanumeric code assigned to a product to help retailers manage their inventory. SKUs can be generated manually or through a SKU generator tool.

Inventory management software and point of sale (POS) systems often include built-in features for generating SKUs. Additionally, some customer support channels may offer SKU creation assistance.


How Do SKUs Work in Inventory Management?

Imagine the frustration of ordering a product online, only to find out later that it’s out of stock or backordered. To prevent such disappointing experiences for customers, retailers use SKUs for efficient inventory management.

SKUs are unique to each retailer and are essential for organizing, locating, and referencing products for order processing, invoicing, and other sales-related activities.

By assigning a SKU to each item in their catalog, retailers can monitor product details, types, and inventory levels. This helps them identify when products are running low or occupying excess warehouse space.


Comparing SKU, MPN, ASIN, and UPC: What’s the Difference?

Product codes like SKUs, MPNs, ASINs, and UPCs are all used to identify products within a supply chain, but they serve different purposes:

  1. SKU (Stock Keeping Unit): Unique to each retailer, SKUs help track inventory on websites, stores, catalogs, and warehouses.
  2. MPN (Manufacturer Part Number): Created by the manufacturer, MPNs facilitate communication about products. It’s essentially the manufacturer’s version of an SKU.
  3. ASIN (Amazon Standard Identification Number): ASINs are Amazon’s version of SKUs, used to manage their extensive catalog and assist third-party sellers.
  4. UPC (Universal Product Code): A global identifier, UPCs are used to identify products across all markets. UPCs contain only numbers.

Where Are SKUs Used?

SKUs are used in various locations, including:

  • Warehouses
  • Product Fulfillment Centers
  • Online Store Dashboards
  • Online Marketplace Dashboards (Amazon, Etsy, eBay, etc.)
  • Brick and Mortar Retail Stores
  • Accounting Dashboards
  • Inventory Management System Dashboards
  • Invoices and Billing Statements
  • Receipts
  • Online and Offline Catalogs

SKUs are typically seen by retailers and their teams, not by customers, shoppers, or manufacturers.


The Importance of SKUs in eCommerce

SKUs are vital in eCommerce, especially as your product catalog grows. They help track products at different stages of inventory management, including inventory receiving, cross-channel sales, order fulfillment, and returns.


Best Practices for Creating SKUs

To create effective SKUs, consider the following best practices:

  1. Avoid starting SKUs with zero.
  2. Refrain from using spaces and special characters.
  3. Don’t include product titles in your SKU codes.
  4. Keep each SKU unique—don’t reuse.
  5. Create your own codes instead of modifying MPNs, ASINs, or UPCs.
  6. Use both numbers and letters in your SKUs.
  7. Keep SKUs concise, ideally between seven and twenty characters.
  8. Avoid using characters that look similar (e.g., ‘0’ and ‘O’).
  9. Include relevant information in your SKUs (e.g., size, color, brand).
  10. Start your SKU with letters to avoid confusion with UPCs.
  11. Consider including supplier information for returns, if applicable.
  12. For large catalogs, include storage location information in SKUs.
  13. Use a consistent algorithm for creating SKUs to ensure readability and understanding.

Try Our Free SKU Generator Tool

Now that you’re well-versed in SKUs, why not try our free SKU generator tool? Simply enter your product type, name, and up to three unique attributes to generate a custom SKU in seconds. Repeat the process for your entire catalog and export the list as a CSV file for your convenience. 

Use the generated codes to update your Shopify dashboard and other marketplaces for seamless inventory management.


In Conclusion

In this guide, we’ve explored what an SKU is, how it works, and how it differs from other product codes. We’ve also discussed where SKUs are used and their importance in eCommerce. With our 13 best practices for SKU creation and our free SKU generator tool, you’re ready to create your own internal product identification codes.

Whether you prefer manual or automated SKU creation, the key is to have a system that enhances your inventory management processes. With optimized SKUs, you’ll be better equipped to provide your customers with a smooth and satisfying shopping experience.