What is an SKU?

An SKU (ang. Stock Keeping Unit), is a key term in the world of e-commerce. In short, it is a unique identifier for each product or service available for purchase. It is not just a string of characters, but often a compendium of information that differentiates similar products based on attributes such as size or color.

This article is particularly important for those who are just starting a business and will be generating their first SKUs, as once created, codes are difficult to change in later stages of development and can cause many problems!

The Difference Between SKU and EAN

Although both SKUs and EANs serve to identify products, they are two distinct systems with different applications. An SKU (Stock Keeping Unit) is an internal code used by companies to track their inventory and manage stock. It is specific to a given retailer and can be tailored to the company's needs. Conversely, an EAN (European Article Number) is an international product coding system that allows products to be uniquely recognized worldwide. The primary purpose of the EAN is to facilitate retail trade, and it is commonly used in stores and other points of sale. In summary, while an SKU is a more flexible, internal product identification system, the EAN is an industry standard that enables product identification on a global scale.

How to create an effective SKU dode

A well-designed product SKU code is key to effective inventory management in a store or warehouse. An optimal SKU should be primarily unique, consistent, and easy for staff and computer systems to identify. A crucial feature of a good SKU is also a specific number of characters between 8 and 12, allowing for quick product identification while being short enough to avoid errors during data entry or reading.

However, while short and simple SKUs are beneficial for smaller enterprises, businesses operating on a large scale often face the challenge of more complex coding systems. The broader the assortment, the more product combinations are needed, leading to longer and more complex SKUs. In practice, this means that companies planning to grow and expand their offerings must be prepared for their SKUs to become more complex over time. While such long codes may be harder to remember or communicate, they are necessary for effective management of a wide range of products.

Structure of an SKU

An SKU is not only a tool for identifying a product in the inventory system but also a powerful organizational tool. It can be designed to store more information than just the type of product and its size. When considering what to encode in an SKU, it is worth thinking about various aspects of the product that may be relevant for inventory management, sales, and marketing.

What to code in an SKU?

Production date or series: This can be useful for products with a limited shelf life, e.g., to track specific series of defective product batches. Example: tshrt-nb-s-0323 (where "0323" means March 2023).
Supplier or brand: If a store sells products from various suppliers or brands, identifying the supplier in the SKU can help in sorting and sales analysis. Example: nike-tshrt-nb-s (where "nike" means the Nike brand).
Product Category: This can be considered for large stores with a wide range of products. Example: men-tshrt-nb-s (men-tshrt - men's t-shirt, nb - in blue color, s - in size S).
Place of Production: For companies selling products made in different locations, adding the place of production to the SKU can be valuable. Example: tshrt-nb-s-pl (where "pl" means Poland).
Product Variants: Beyond colors and sizes, many products have other variants, such as material, pattern, or features. Example: tshrt-nb-s-cot (where "cot" means cotton).

Using a more complex SKU structure allows for easier product management, faster identification of sales trends, and better tailoring of marketing and sales strategies in the future. However, it is important not to overly complicate the SKU structure so that it remains understandable for employees and efficient in daily use.

Character usage rules in SKUs

Proper formatting of SKUs is a key aspect of effective e-commerce system management. Some characters, such as commas, often associated with listings or separating values, are not recommended in SKUs. The reason? They can cause errors in databases or during import and export processes. For the same reason, many punctuation marks are discouraged. For example, the system might read a comma as a data separator, leading to errors in interpreting product information. Letters O and I are easily confused with numbers 0 and 1, so it is also recommended to avoid them. Leading zeros in SKUs are also not recommended, as they might be mistakenly omitted during data entry. As a separator, it is best to use a hyphen "-", but avoid other special characters.

Disallowed Characters:

special characters: ! " # $ % & ' () * + , .
: ; < = > ? @ [ \ ] ^ _ ` { | } ~ /|
letters easily confused with numbers: I O

space
uppercase letters: A B C D E F G H J K L M N P Q R S T U V W X Y Z
polish characters: ą ć ę ó ż ź
german characters: ä Ä ö Ö ü Ü ß
french characters: à â ç è é ê ë î ï ô ù û ü

Recommended characters:

numbers: 0 1 2 3 4 5 6 7 8 9
lowercase letters: a b c d e f g h i j k l m n o p q r s t u v w x y z
hyphen: - (as a separator)

White spaces and capitalization in SKUs

Avoiding spaces in SKUs is an important rule. White spaces, such as spaces, tabs, or newline characters, can be problematic in e-commerce systems. In many cases, they are removed or cause errors. In the context of SKUs, white spaces at the beginning and end of the code are usually eliminated, and spaces in the middle can lead to inaccuracies.

The case of letters in SKUs also matters. Although it may seem trivial, the difference between uppercase and lowercase letters can affect the uniqueness of an SKU. For example, "productA" and "ProductA" will be treated as two different codes due to the difference in capitalization.

International standard

Expanding to renowned marketplaces such as Allegro or Amazon presents a great opportunity for many sellers to increase their reach and improve sales performance. However, with such a step come new requirements, and one of the key ones is proper SKU management.

These marketplaces have their own, strictly defined guidelines for SKUs. These guidelines are designed to ensure unambiguity, consistency, and ease of product identification across the entire platform. Introducing products to the market with ambiguous, duplicate, or non-compliant SKUs can lead to complications, such as incorrect listings, difficulties in order management, or customer service issues.

Therefore, when starting cooperation with such platforms, it is not worth trying to bypass existing rules. It is better to comply with the established standards and ensure that your SKUs are in line with the platform's guidelines. This will make the integration process smoother and significantly reduce the risk of potential problems in the future.

Best practices for creating SKUs

Proper SKU management is a crucial element for the effective functioning of any business, regardless of its scale. For medium-sized enterprises striving to optimize processes and manage inventory efficiently, adopting certain SKU creation principles is essential.

Here are some best practices for creating SKUs that can help shape the ideal structure:

Clarity and consistency: Each SKU should be created according to a consistent scheme.
Uniqueness: Ensure that each product has its own unique SKU.
Conciseness: Avoid overly long codes that can be difficult to remember and cause errors.
Descriptiveness: The SKU should reflect the product's characteristics, such as color, size, or brand.
Avoid special characters and white spaces: Avoid using special characters, spaces, or other white spaces that can cause problems in computer systems.
Standardization: Regardless of the number of suppliers or manufacturers, create a unified SKU system for the entire assortment.
Systematic grouping: Group similar products together, making them easier to identify.
Avoid linguistic nuances: Avoid words or phrases that can be confusing in different languages or cultures.
Documentation: Always maintain up-to-date documentation of the SKU system so that new employees can easily understand and follow the established rules.
Flexibility: Create SKUs that are adaptable to the evolving assortment and changing business needs.

Summary

Regardless of the company's size or the number of products, adhere to one established SKU coding format for all products.

Adjust your SKUs to meet the requirements of international trading platforms if you plan to expand to these markets.

Regularly review and update your SKUs to ensure they are current and in line with the current assortment.

Ensure your team knows and understands the SKU coding system to avoid errors in product management.

Proper management and creation of SKUs are essential for effective functioning in e-commerce. Unique, consistent, and easily identifiable codes not only facilitate internal company work but also improve customer experiences by making it easier for them to identify and purchase products. Investing time and resources in optimizing the SKU system is worthwhile to reap maximum benefits.

SKU code - The secret to effective product management in eCommerce