The importance of SKUs in e-commerce
Post by Expandly on 6th June 2019
When working in eCommerce, there’s an awful lot of lingo to learn – from FBA and dropshipping to PPC and point-of-sale. But, perhaps the most important lingo of them all is SKU – the three letter acronym that has the power to transform your eCommerce store’s efficiency, reporting and profitability. So crucial are SKUs, that we’ve dedicated a whole blog to the importance of SKUs.
What are SKUs
SKU stands for ‘stock keeping unit’ – an alphanumeric code given to a product that identifies its most important characteristics (such as department, colour, size, etc.) SKUs are different from universal product codes (UPCs) because they are unique to you and your store.
Why are SKUs important
SKUs are believed necessary for everyone selling online; regardless of your size, the number of products you hold or type of customers you sell to. What makes them so important?
SKUs offer an easy way for you and others to identify products across all of your systems and sales channels – no matter how many you have or how many variations are involved.
Being able to distinguish individual products and variations quickly makes warehouse management easier (it’s why the warehousing industry invented SKUs in the first place). SKUs help to keep your warehouse organised and help your staff quickly identify products for efficient picking, packing and stocktaking – saving time and avoiding errors.
SKUs are also crucial for a successful inventory management system, allowing you to track your stock throughout the order process and trigger reorders. SKUs also open up the world of inventory management software, enabling you to automate your stock keeping and stock replenishment – far better than walking around the warehouse with a clipboard and manually eyeballing your stock levels.
The use of SKUs also makes selling the same product across multiple sales channels easier. Not only do you have a consistent way to identify and track the product (even if you’re using a different title or description), but your multi-channel management software can also use SKUs to merge and update stock quantities – preventing you from overselling.
Using SKUs also generates better and more informative reports. You can begin accurately tracking stock levels, sales, shrinkage, slow-moving stock and more, right down to individual variations, across all of your online marketplaces and shopping carts.
Listing on Amazon
Finally, some shopping channels (such as Amazon) require SKUs. If you don’t already use SKUs, Amazon will automatically create them for you, but since this will have no relevance to your warehouse or other sales channels, it’s far better to create your own.
What does this all mean
Ultimately, the use of SKUs boils down to:
Increased time – you save time from having an efficient and effective identification system, which leads to quicker picking, packing and shipping for your customers.
Increased profits – this increased efficiency allows you to reduce your warehousing staff or process more orders – increasing your profits.
Better cash flow – better inventory management and tracking allows you to identify underperforming products and variations – giving you the data to invest money into faster moving and higher performing stock.
Improved performance – knowing which products aren’t performing so well also allows you to look into the reasons for underperformance and put measures in place to overcome them.
While certain platforms such as Amazon automatically create SKUs for you, it’s far better to create your own meaningful SKU system that can be replicated across all of your sales channels and stores.
Useful tips for SKU creation:
– Keep SKUs relatively short (between 8-12 characters is best);
– Use letter and number combinations while avoiding special characters and letters that can be mistaken for numbers;
– Follow a logical and understandable format that identifies different characteristics and can be replicated across all products and variations.
For example, when selling a blue pair of speedos (because it’s that kind of weather), you might use the SKU:
04 = swimwear department, M = male, SP = speedos, BLU = blue, MED = medium.
Other colours and sizes might have the SKU:
You’ll notice that it’s quick and easy to identify the item – even though the description might be “Striking blue male swim shorts” on eBay and “Speedo swimming trunks – various colours” on Amazon.
You might want to include other identifier information such as the brand, product number, or warehouse location. The choice is yours.
How to add SKUs to Expandly
Adding SKUs to your products in Expandly is easy.
Adding an SKU to a new product
To add a SKU to a new product, enter the SKU number on the product details page.
Adding an SKU to variations
To create SKUs for different variations, select “create SKU for variations” on the variation page, and Expandly will automatically do this for you, following your SKU identification system.
Pushing SKUs to other sales channels
To add an existing product SKU to other sales channels, import the product into Expandly and then push to your other sales channels.
Adding SKUs in bulk
SKUs can also be added to products in bulk using the CSV uploader.
To find out more about Expandly and SKUs, book yourself onto a free live demo.
Expandly multi-channel management software makes adding SKUs to your products easy – no matter how many different sales channels you use. And it gets even better, with the ability to list, manage orders, update stock levels, print shipping labels and send sales orders to Xero – across all of your online marketplaces and shopping carts.