What is a SKU (stock keeping unit)?

SKUs, or stock keeping units, are unique product codes that facilitate supply chain and inventory management for both online retailers and brick-and-mortar stores. The SKU architecture provides information on essential aspects of the product—color, size, style, price, etc.—and lists this information in order of importance. SKUs are intended to be unique to your brand, physical or online store, products, and customer base.

SKUs vs UPC codes

While UPC codes (universal product codes) and SKUs may look similar, they have different purposes. Universal product codes, or barcodes, are for external use and remain the same no matter who is selling their associated product, while SKU codes are used internally. While a SKU provides information on product traits, a UPC code identifies the item and its manufacturer. Additionally, SKUs are alphanumeric and between 8 and 12 characters long, while a UPC code is numeric and always 12 characters long.

SKUs and your inventory management system

One of the major ways your retail business can leverage the benefits of SKUs is by using them to accurately track inventory in real-time. This can allow you to assess your inventory levels more easily and know when you’ll run out of certain products so you have time to reorder. SKUs can also be a powerful tool for forecasting sales, increasing customer loyalty, and even leveraging cross-selling and upselling opportunities.