What is a SKU? (and why it matters for your store)

Open any serious stock sheet and you will see a column called SKU. It looks technical, but it solves a daily problem: knowing exactly which item you mean.

The meaning

SKU stands for stock keeping unit. It is a short, unique code you assign to one specific version of a product that you stock and sell. If two items differ in any way that matters for stock, such as size or colour, they get different SKUs.

It is for your own use. Customers rarely see it. You see it when you count, pack, reorder and track sales.

A worked example

Say you sell a kurti. It comes in three sizes, S, M and L, and two colours, mustard and maroon. That is one product but six versions you actually hold on a shelf:

• Mustard S
• Mustard M
• Mustard L
• Maroon S
• Maroon M
• Maroon L

Each one is a separate SKU, because you may have four of one and none of another. If you only counted "kurti", you would not know that you cannot fulfil an order for maroon L.

A simple naming pattern

You can use any code you like. There is no mandatory format. A pattern that works for many small sellers is:

product short code, then colour, then size, separated by hyphens.

For the kurti above, you might write KUR-MUS-S, KUR-MUS-M, KUR-MUS-L, KUR-MAR-S, KUR-MAR-M and KUR-MAR-L.

A few habits make a code easy to live with:

• Keep it short. Three letters for each part is plenty.
• Use only capital letters, numbers and hyphens, so it is easy to type and read on a packing slip.
• Make it readable by a person: you should recognise it without a lookup.
• Never reuse a code for a different item, even years later.
• Do not put prices or dates in it, since those change.

SKU naming convention examples for variants shows more patterns, and mistakes to avoid when creating SKU codes covers what goes wrong.

Why it matters

• Stock accuracy. You know how many of each version you hold and can spot what is running low.
• Fewer wrong parcels. A code on the shelf label and on the order lets the person packing match them quickly. See how to avoid sending the wrong item.
• Better reordering. Sales by SKU tell you which size or colour moves faster, so you do not reorder blindly.
• Cleaner records. When you export orders or keep a spreadsheet, codes are easier to sort than long names.

SKU, product ID and barcode

They are not the same thing. The SKU is your own code. A barcode is a scannable code that may represent a standard product number. A product ID is usually what software creates internally. SKU vs product ID vs barcode: what is the difference explains it.

Getting started

List your products and their variants in a sheet. Decide your pattern. Write the code on the shelf, box or bag where each item sits. Then use it consistently when you create your catalogue. If you use Varchas, setting up SKU codes for a small store walks through it.

You do not need to get it perfect on day one. You need to be consistent.