What Is an SKU Number? A Complete Guide

A stock-keeping unit (SKU) is an alphanumeric code that identifies a product and helps you track inventory for your retail business. The information your SKU includes is completely up to you—distinguishing it from a universal product code(UPC), a standardized 12-digit code manufacturers use to identify products. Depending on the type of inventory, your SKU number can include identifying information for everything—from department to style, gender, size, and color. You can create SKU numbers manually or automate the process with an inventory management orpoint-of-sale (POS) system.

At my store, we used an SKU system in which the first two letters of each SKU code corresponded to the type of product it was attached to, e.g., all of our shirts had SKUs starting with an SH, all of our pants had PA, jewelry JE, and so forth. The remaining digits corresponded to store location, size, and other relevant product information. With this custom identification system, it was easy to keep track of our products and label our goods.

Creating & Managing SKU Numbers

Follow the steps below and watch our video to create an SKU number system and management process that fits the unique needs of your business:

Step 1: Choose a Top-level Identifier

The first two or three digits/characters of each SKU should represent a top-level identifier. This can be a department, store category, or even a supplier. With this, a glance at an SKU number identifies the top-level merchandising group and location of any product in your store. You can also use this section to identify store locations if you run multiple stores.

Some retailers prefer to use the most general trait as the first identifier and then work down from there. For example, start with the identifier for jeans before getting into style and size.

Top-level Identifiers to Consider

Store or Location

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Department

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Step 2: Assign Unique Identifiers

最好使用middle section of SKU numbers to assign unique features, such as size, color, item type, or subcategory, to your product―whatever makes sense when organizing the products you sell.

To prevent user error, don’t use numbers that look like letters and vice versa when assigning your SKUs.

Unique Identifiers to Consider

Sales Channel

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Variant

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Subcategory

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Step 3: Finish With a Sequential Number

Using sequential numbering―like 001, 002, 003―for the final series of an SKU number makes setup easy and also helps you identify older versus newer items in a product line. In some cases, tying the final series of an SKU number to a supplier product number can be helpful too. Again, use whatever makes logical sense for the products you sell.

Step 4: Add SKUs to Your Inventory Management System

With your SKU number system set to go, it’s time to add your SKUs to the products in your inventory management system. You can add your SKUs and track inventory by hand in notebooks or by using spreadsheets, but it is far easier and more efficient to use a retail POS with inventory tracking.

As you can see in the images below, on Square for Retail, as you add products to your inventory catalog, each product page will have a field where you can add your custom SKU number. WithSquare, there is also the option for the software to generate your SKUs for you if you don’t want to spend time creating your own SKU system.

Step 5: Create & Print Barcodes Labels

Use ourbarcode generatorbelow to start printing your barcodes straight from your computer.