eCommerce

What is a SKU code? How to create SKUs, examples & differences with other systems

Mariluz Sampalo

Mariluz Sampalo

Jul 25, 2022

what is sku, use skus in your labels and logistics tasks

Inside this article

  • iconSKU code meaning: what does SKU mean?
  • iconImportance of SKU codes
  • iconSKU code examples
  • iconHow do I create a SKU code or SKU system? Best practices
  • iconSKU numbers vs. UPC
  • iconSKU numbers vs. EAN numbers
  • iconSKU numbers vs. IAN numbers
  • iconSKU codes and other systems
  • iconFAQ
  • iconConclusions
  • Have you heard about SKU codes? If you have recently started your journey into online retail you may not know exactly what SKU codes are, how you can create SKU codes, or have even seen an SKU code example.

    Find out what SKU codes are, what they look like, how you generate SKU codes, and the difference between SKUs and other identification codes like UPC, EAN or IAN.

    SKU code meaning: what does SKU mean?

    SKU codes —also known as stock keeping unit codes— are a combination of letters and numbers that are created for the identification of a specific product.

    Stock keeping units work as a product identifier. They can also be used to measure and manage stock levels in the warehouse.

    SKUs help manufacturers, suppliers, and other agents organize inventory and optimize & speed up a series of tasks.

    person scans an sku code to check availability in the warehouse

    Importance of SKU codes

    SKU codes are important because they can help online stores:

    • Minimize the number of errors generated during the picking and packing
    • Speed up the picking and packing of products
    • Provide a more accurate overview of the number of items in the warehouse
    • Maximize warehouse resources, ensuring an optimal stock level
    • Give insights about what sizes or colors are the most and least sold
    • Ensure more traceability throughout the supply chain

    SKU code examples

    A SKU code for a black T-shirt of size S can be TSH-000-S. The same T-shirt in a different size can be TSH-000-M. If the T-shirt is white and size M, the SKU code can be TSH-FFF-M.

    Item First Identifier (Model) Second Identifier (Color) Third Identifier (Size) SKU
    Black T-Shirt Size Small TSH 000 S TSH-000-S
    White T-Shirt Size M TSH FFF M TSH-FFF-M
    Red T-Shirt Size Large TSH FF0000 L TSH-FF0000-L

    How do I create a SKU code or SKU system? Best practices

    Stock keeping unit codes tend to be automatically generated through an ERP system.

    To generate a SKU code, you should consider different attributes such as product type, size, and color.

    To create SKU codes in a sensible and sustainable way for your sales volume, consider the different attributes you want to include in your SKU (product type, color, size, etc.) and the level of specificity. The more details you include in your SKUs, the easier it will be to identify the goods.

    After this has been set, you can configure your software system to take the first three letters of the product name (i.e. TSH for T-shirts), followed by the color (i.e. 000 for black) and the size. Don't include special characters, and make your SKU codes as simple and logical as possible.

    If you sell different types of black T-shirts, this example will be too generic and you will need to include more details to avoid creating duplicate SKUs.

    If the SKUs aren’t unique, errors and confusions can happen in the picking and packing process, causing shipping issues later on.

    SKU numbers vs. UPC

    SKUs are typically used in internal processes: product production, order processing, and shipping. UPC codes (Universal Product Code) are standardized and used both inside and outside the company’s facilities.

    UPC codes are purely numerical (12 digits), while SKU numbers may include letters as well as numbers.

    SKU UPC
    Alphanumerical Numerical
    8-12 characters 12 digits
    No barcode Include barcode
    Non standardized Standardized

    SKU numbers vs. EAN numbers

    SKUs are used in internal processes, while EANs (European Article Number) are standardized and used both inside and outside the company’s facilities. While SKU and EAN numbers have a similar function, they can look different.

    EAN numbers can include barcodes, while SKU codes don’t. EAN numbers combine the country code (in the form of letters) with numbers. They are standardized at a European level.

    SKU EAN
    Alphanumerical Alphanumerical (country code)
    8-12 characters 13 characters
    No barcode Include barcode
    Non standardized Standardized

    SKU numbers vs. IAN numbers

    SKUs are used in internal processes, while IAN numbers (International Article Number) are standardized and can be used internally as well as outside the company’s facilities. While SKU and IAN numbers have a similar function, they can look different. IAN codes are made up of 13 characters that include a country code and product code. They are internationally standardized.

    SKU IAN
    Alphanumerical Alphanumerical (country code)
    8-12 characters 13 characters
    No barcode Include barcode
    Non standardized Standardized

    SKU codes and other systems

    SKU UPC EAN IAN
    Alphanumerical Numerical Alphanumerical (country code) Alphanumerical (country code)
    8-12 characters 12 digits 13 characters 13 characters
    No barcode Include barcode Include barcode Include barcode
    Non standardized Standardized Standardized Standardized

    As you can see, the main difference between SKUs and other identification systems such as UPC, EAN and IAN are: the fact that they are standarized, while SKUs aren't, and that SKUs don't include a barcode.

    Implementing the use of SKU codes in your online store requires a software system to automatically create these codes, since doing it manually involves a considerable investment of time and resources.

    An example of this type of software would be an ERP system that not only creates these SKU codes, but also monitors production tasks, classification, inventory management, and other tasks related to order processing such as picking and packing.

    To further streamline these processes, use Outvio and make your post-checkout operations run smooth, reducing the workload in departments such as customer support and warehouse, and increasing the speed and efficiency in your online store.

    Optimize warehouse management with our tips on warehouse design and building a warehouse network.

    FAQ

    Can two products have the same SKU number?

    No, SKU codes are unique identifiers for a product. This means that, if there is any difference between two products (size, color or model), they will have different SKU numbers.

    What is a SKU number?

    A SKU number is a unique code that helps businesses track inventory internally. SKU numbers are 100% dependant on the retailer, but there are some common practices to follow, such as lenght, characters to use, and so on.

    Are SKUs and barcodes the same?

    No, barcodes are for external use while stock keeping units or SKUs are for internal use. SKU numbers are chosen by the business, while barcodes should be assigned from an external source, following certain criteria.

    Conclusions

    Now that you know what SKU codes are, what they are used for, how to generate them automatically, and the advantages that come with using SKUs, you have likely decided whether or not a SKU system makes sense for your business or if it’s better to stick to UPCs, EANs, or IANs.