what is a sku

What is a SKU?

The simple SKU definition is that SKUs are a numeral and sometimes alphabetical sequence that helps businesses keep track of their inventory. Many retail stores and e-commerce companies utilize SKUs over the traditional barcode or UPC method. 

UPC stands for Universal Product Codes, meaning that there is no variation or distinction between the numbers. They are random. But with a SKU number, you can distinguish the product size, color, and brand name if needed. 

SKUs’ integration in the fulfillment and inventory management world caused an influx of e-commerce companies, more than we have ever seen before. They are now a vital part of every online, retail, or e-commerce business out there. 

Why Use a SKU?

So, what’s a SKU number? SKUs are known as a Stock Keeping Unit, which are unique to every company that uses them. It is a series of numerical and alphabetical sequences. The SKU’s meaning is that it can help retail and e-commerce businesses trace their products. Tracking business inventory helps these businesses keep track of products they need to order and what they have in store or warehouse. 

SKU took over barcodes or UPC because it was far more convenient and easier to manage. A rise of several companies regarding e-commerce use SKUs for its various businesses, including personalization of codes to keep all the employees and employer on one accord. 

The development of SKU has caused an intense surge in the e-commerce business in the past ten years. It makes it easier to calculate all of your inventory. It also makes keeping track of product shipment coming and going within the warehouse easier and more organized.

How To Make a SKU and How To Use Them? 

Creating a SKU does not require a complicated system or formula like one may think. It can seem confusing at first, but SKUs vary from business to business, because as stated before, SKUs are made unique and personal to every company and their products. The most critical part of creating a SKU is to make it unique to your business. 

Every business using SKUs should strive to make their SKUs easy to read and understandable to everyone within their company, from the employee in the warehouse to the company’s CEO.  

E-commerce businesses are now able to outsource their warehouse and fulfillment positions to third-party logistics companies. This reasoning is because even third-party warehouses utilize SKUs to keep all their products and inventory organized. 

The Overall Unique Benefits of SKUs 

In the past, stores and businesses used (UPC) or regular barcodes to track their products and manage their inventory. It worked for the time, but a few inconveniences made it harder to fulfill and handle their product list. This knowledge helped create the idea and prospects behind SKUs, also known as the stock keeping unit. 

In contrast to UPC, SKU barcodes are not universal. They are unique and vary between each business to better accommodate their needs and wants when managing and tracing products within their inventory. 

Services like Shopify can help you identify and develop your businesses’ own personalized SKU system to simplify your business runs and manage their products. 

Shopify, a famous e-commerce company, goes further to explain this as well. They state that this also benefits companies that carry similar products, like boots, yoga pants, or wallets.

SKUs make the life of retail employees and businesses much more manageable. They have revolutionized the industry and influenced many entrepreneurs to join the e-commerce market. 

Working with SKUs is now invaluable for many businesses, from the largest to the smallest. It simplifies fulfillment and inventory management on an entirely different scale. Learning what SKUs are and how they can help business owner propel their business forward and aid their employees in stocking and onboarding certain products much faster. 

How To Calculate the SKUs Needed? 

SKUs have also made it easier than ever to calculate what is in a business’s inventory. To compute all of this correctly, you need to be aware of all the variations you have of one product and create a personalized SKU for each one to keep track of it. 

For example, if you are a small clothing store that sells pants. You can separate them into categories based on color, style, and size. Let’s say you have two styles: straight leg and skinny, two colors: blue and black, and you carry sizes XS-XXXL., which means you have seven sizes available. 

You will then simply multiple all of the variations and factors within your products to see how many SKUs you will need. For the example given, you will multiply 2x2x7, which means you will need twenty-eight SKUs to label and mark every pair of pants within your inventory. 

The Rise of E-commerce & SKUs

E-commerce has been on the rise because of this relevant new idea of using SKUs over just barcodes and UPCs. E-commerce is known as electronic commerce or internet commerce.

With everyone purchasing things from Amazon or any other online store, e-commerce has had a significant surge in the past decade. SKUs help you trace the inbound and outbound logistics of what you sell and ship out. 


In the past, people used barcodes and UPC to try and trace all the products. It was more challenging because the information on these was not as individual and unique to each characteristic of the varying products. 

What is SKU? SKU numbers have made the organization and tracking of inventory much more simple for businesses and companies. The world of inventory and logistics can be quite hard, but it does not have to be anymore. With SKUs’ use, inventory is streamlined into a few simple steps to allocate all of a business’s products. 

At YourLogisticsCorp, we can fulfill any logistics need. We safely secure your inventory in a warehouse with our organized SKU shipping system to quickly and efficiently get your products from point A to point B with concern and care. We can help expand your business reach with our conveniently placed facilities. This also helps save shipping services costs, making it a great option for you and your customers.

If you’re looking for a fulfillment service that you can trust, request a quote today. 

I am an experienced logistics and supply chain executive with over 15 years in the global end-to-end logistics field, including retail, direct sales, and B2B. I leverage strong relationship skills, a team-oriented management style, and a focus on talent development to drive results and lead change for our internal team and clients alike.