SKU Numbers for Small Business: The Ultimate Guide

SKU numbers are the unique identifier or barcode that every product has. They help retailers keep track of their inventory and manage returns in case a company needs to offer an exchange on defective products. SKUs also help consumers find the right item quickly, eliminating confusion as well as helping them feel confident that they’ve chosen what is best for them at any given time.

The “sku number generator” is a tool that allows users to generate random SKU numbers. It is the ultimate guide for small businesses, who want to create their own SKU codes.

A stock keeping unit (SKU) is an alphanumeric identifier that identifies a product and aids inventory management in a retail setting. SKU (stock keeping unit) numbers may be generated manually or with the help of inventory management or point-of-sale (POS) software. SKU numbers, as well as the product’s universal product code (UPC) and other information, appear on the product label.

A POS system may help you manage SKU numbers by making it simpler to monitor them and automating the inventory management process, saving you time and money. Square is a free retail POS that includes capabilities like bulk uploading inventory lists, recognizing sales patterns, and managing SKUs. To get started, go to Square and sign up for a free account.

Square should be visited.

What Is an SKU (Stock Keeping Unit) Number?

A SKU number is a one-of-a-kind collection of numbers used by shops to identify their stock. Because SKU numbers may include both letters and digits, they provide a great deal of versatility, making it simple to develop a system that’s completely customized to your requirements. Retailers might provide identifying information for anything from department to style, gender, size, and color, depending on the kind of product.

UPC Codes vs. SKU Numbers

SKU number and UPC (universal product code) are terms that are sometimes used interchangeably. They do, however, have somewhat distinct meanings, and merchants may find UPCs less easy to use. UPCs, for example, might seem arbitrary, but SKU numbers can be designed in a fashion that makes sense for your company, such as utilizing letters to distinguish various divisions.

The following are the key distinctions between an SKU number and a UPC code:

Why Are SKU Numbers Important to Retailers?

SKU numbers may assist firms in tracking items in an inventory management system, speeding checkout, and increasing revenues by reducing human inventory mistakes. A SKU number may also give the information needed to make educated purchases.

A well-thought-out SKU numbering system helps in the planning and management of numerous key aspects of your business:

The Look of the Store and the Shopping Experience

SKU numbers help you plan and arrange your business so that customers and employees can locate what they’re looking for quickly. You may organize and discover items on your sales floor and in storage facilities by tracking them by item category, department, collection, or vendor.

SKUs also enhance store merchandising and provide customers an enticing, well-organized experience, which leads to increased sales. You may lose track of where things are in your area if you don’t have SKU numbers, resulting in confused employees, disgruntled customers, and, worst of all, lost revenue.

Customer Service and Checkout

Customer service and checkout are made easier and more error-free with a simplified SKU system. Using SKU numbers to track items in a POS system like Square for Retail guarantees that your inventory and pricing are always accurate.

Purchases ring up with the right price when clients check out, and your on-hand inventory is instantly lowered to reflect sold products. In addition, if a client can’t identify an item, an SKU search in your POS may immediately disclose stock status and assist employees in rapidly finding it and closing the deal.

Profits and Inventory Management

After shoplifting and staff theft, inventory management problems are the third leading source of profit losses in most retail organizations. These losses are the result of a variety of administrative and data entry mistakes, which may build up over time and have a significant effect on your bottom line. Many of these lost earnings scenarios may be avoided by using an SKU number system to track inventories. SKU numbers, for example, allow you to:

• Organize your warehouse and keep track of any overstock in preparation for future orders.
• To minimize short shipments, check in and control inventory shipments.
• For an inventory spot-check, use your supplier code to retrieve inventory counts for only one source.
• To view all sales for Flare-leg items over a period of time, run a sales report based on one item type code, such as Flare-leg.
• Obtain a replenishment order report for a single store’s department.

4 Steps to Creating SKU Numbers

Let’s look at a simple four-step methodology for establishing SKU numbers now that you know why they’re vital. The architecture is the same whether you use a manual method or a POS to monitor inventory. You may use whatever rationale works for your business to blend numbers and letters in your SKU numbering system. To design a system that matches your company’s specific requirements, follow these steps:

1. Use a top-level identifier to begin SKU numbers.

A top-level identification should be represented by the first two or three digits/characters of each SKU. This might be a retail category, a department, or even a supplier. Any product in your store’s top-level merchandising group and location may be determined by looking at its SKU number. If you have more than one shop, you may use this area to indicate retail locations.

2. Assign Unique Identifiers Using the Middle Numbers

Use the middle area of SKU numbers to add unique qualities to your product, such as size, color, item type, or subcategory, as needed for arranging the items you offer.

3. Add a sequential number to the SKU

Using sequential numbers for the last series of an SKU number, such as 001, 002, 003, simplifies setup and helps you distinguish between older and newer goods in a product line. Tieing the last series of an SKU number to a supplier product number might be useful in certain instances. Again, whatever makes sense for the things you offer should be used.

4. Incorporate SKUs into your point-of-sale or inventory management system.

You can generate SKUs and maintain inventory by hand in notebooks or spreadsheets, but utilizing a retail POS with inventory tracking is significantly simpler and more efficient. A POS like Square, in general, allows you to input as much—or as little—product data as you wish to monitor. To get started, most small businesses just need to input the following information:

• Name of the item
• Category of the item
• Description of the product
• The item’s kind
• Pricing
• SKU number
• Any necessary modifications, such as new sizes or colors

With this information in hand, you can quickly manage your sales and inventories in one simplified system. Furthermore, every transaction updates your inventory, ensuring that you always know how much of each SKU number you have on hand.

Square is one of our preferred point-of-sale systems for small and developing companies. The basic POS is free to use, but the Retail POS costs $60 a month and comes with full inventory management tools and detailed reporting. You may also add new features as your business grows.

Examples of SKU Numbers

Let’s look at some more instances of this SKU number framework method in action now that you know how to produce SKU numbers.

Simple Top-Level Identifier Example 1: SKU Number

To handle inventory in a convenience shop, here’s a basic numeric SKU number system that employs only one top-level identification in a six-digit SKU. The first two digits reflect each of the store’s product categories. The following four digits are part of a numerical sequence. This technique works and is easy to input and maintain in any POS system as long as you don’t have more than 99 departments or 9,999 goods in each department.

An example of an SKU number for a convenience store

A alternative system with additional identifiers is required if you want an SKU number to transmit more information about each item, as seen in the example below.

Example 2 of an SKU Number: A Versatile 2-Identifier System

An eight-digit SKU number system that employs two IDs to designate a top-level category and an item type for each product is shown below. This sort of SKU system allows employees to quickly identify crucial facts about any product. As a result, it’s a highly useful SKU number system for retailers like fashion boutiques that contain item kinds that straddle many categories, such as styles or materials.

An example of an SKU number for a fashion boutique

The first two digits in this sample indicate the top-level category for this fashion shop, which includes goods such as Jeans, Blouses, and Dress Pants. The following two digits designate other item categories, such as straight-leg, flare-leg, sleeveless, and short-sleeve, among others. The last four digits are in order.

Note that your item types do not have to be category-specific using this method. Consider the following scenario:

01120000 = Flare-leg Jeans (01). (12) 09120000 = Flare-leg Flare-leg Flare-leg Flare-leg Flare-leg Flare-leg Flare-leg Flare- (12)

Flare-leg (12) is a style that can be found in both Jeans and Dress Pants, therefore it may be used in more than one category.

Include a Supplier Identifier in SKU Number Example 3

It might be useful to have supplier information associated with your SKU number. In fulfillment warehouses, where items are kept and monitored by the supplier rather than merchandised in a mix as in a retail shop, this SKU number system is extremely useful. This two-identifier, 10-digit SKU number system can cover all the bases if you display or store items depending on brands or suppliers.

Example of an SKU Number in an Ecommerce Store

Staff can simply ascertain the supplier and item type of any product SKU number they meet with this sort of alphanumeric SKU number system. It’s also simple for new and seasonal employees to comprehend and remember since it’s alphanumeric. This system, like Example #2, employs item categories that span several providers, such as:

Bentley Plastics (BP), Large Tumbler (BP063-0001) (063) Tervis Tumbler (TT), Large Tumbler (TT063-0001) (063)

Consider Other SKU Number Identifiers

We looked at how common top-level identifiers like category and supplier may be combined with item type codes to build flexible SKU number systems in the examples above. However, they are only a handful of the numerous possible identities. Other IDs that may be relevant in your operation are listed below.

Identifier for a store or a location

You may use a Store Identifier to organize things by sales outlet if you have many stores or sell certain items only online, at fairs, or at markets. This makes it easy to manage sales by location or outlet, as well as inventory numbers by shop. Even if you don’t now sell in many areas, if you believe you may in the future, provide a placeholder for this identification in your SKU structure so you don’t have to rebuild your system.

Identifier for Department

Departments are broad top-level identifiers that help you keep track of merchandising and shop location. A Department Identifier may be used to quickly determine where an item will be stored or displayed on the sales floor. You may separate sales records by department to discover troublesome sections of your shop if you utilize a department identifier in your SKU number. If a department has consistently poor sales, it may be necessary to relocate that sector, change your store’s traffic flow, or increase your highlighted displays in that area.

Identifier for Variation

If you offer items in a variety of colors or sizes, a Variation Identifier may be quite useful to both buyers and salespeople. It also makes it simple to keep track of which colors and/or sizes are the most popular. Here’s an example of how simple it is to add a variant identifier to one of our test SKUs:

Jeans (01), Flare-leg (12), Medium, 01120001M (M) Dress Pants (09), Flare-leg (12), Large = 09120001L (L)

Identifier for the subcategory

This level might be a little fiddly for small merchants, but if you want to manage inventory and sales at a finer level, you can add a Subcategory Identifier to your SKU. For example, if you have a Candy category, you may give subcategories like Candy Bars, Lollipops, and Boxed Chocolates a number identifier.

Suggestions for Establishing an SKU Numbering System

Consider the following suggestions when designing an SKU numbering system for your company:

Maintain a straightforward approach. It’s tempting to incorporate too much information in SKU numbers since they’re so simple to modify for your company. Choose two to three features that you wish to convey in your SKU number system to avoid having very lengthy SKUs. Keep the individual codes short if you want more than three features.

Let’s start with the most significant characteristic. Decide which of these high-priority features is most essential to you and place it at the start of each SKU number after you’ve identified them. Some shops like to start with the most general attribute and move down from there, such as starting with the identifier for jeans before moving on to style and size.

SKU numbers should not begin with a zero. A zero at the start of a number is often misinterpreted by computer software as nothing. As a result, the SKU 01120001M might be misread as 1120001M. Prevent starting any of your SKU numbers with a zero to avoid misunderstanding caused by this sort of issue. Many companies get around this by including a brand or supplier identity at the start of the SKU number, as seen in example #3 above.

Avoid using letters that may be mistaken for numerals. It might be tempting to utilize all of the letters of the alphabet since SKU numbers are alphanumeric. To minimize misunderstanding, you should avoid employing characters that look like numerals. For example, the letter “O” may be mistaken for a zero, whereas a capital “I” resembles a one.

Don’t simply re-use the numbers from the manufacturer. It may seem simpler to just utilize the manufacturer’s number or include it in the SKU when developing an SKU number scheme. However, having a bespoke SKU formula designed to match your company’s specific demands is no longer an option.

Conclusion

SKU numbers allow you to organize, monitor, discover, and identify inventory in a way that makes sense to you and your team. SKU numbers, when used correctly, may help you merchandise your sales floor, better service consumers, and increase sales. Having a well-thought-out and well-maintained inventory management system may help your company become more effective and lucrative.

When you combine a meaningful SKU number system with a POS like Square, you’ll have all the tools you need to successfully manage your inventory and sales floor. Retailers can put SKU numbers and data to work using Square’s simplified, user-friendly inventory management and reporting solutions. To get started, go to Square and sign up for a free account.

Square should be visited.

You Might Also Enjoy…

Related Tags

• manufacturer part number generator
• are sku numbers universal
• sku guide
• sku number on receipt
• sku generator etsy