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What is an SKU in E-commerce? [2024 Update]

1.5 Minutes

In this article, we will cover exactly what is SKU in e-commerce, its importance and provide examples for better illustration. Read on to learn more. 

what is sku in ecommerce
Source: vendhq.com

What is an SKU in E-commerce?

In e-commerce, an SKU (Stock-keeping Unit) is a unique alphanumeric code assigned to products for precise identification and efficient inventory management within online stores.

Example: A book's SKU might be its ISBN, like "8120725247.”

Why are SKUs important in E-commerce?

SKUs (Stock-keeping Units) are used in various ways in e-commerce to streamline operations and enhance the customer shopping experience. We will explore some of these benefits below.

Product Identification: 

SKUs serve as unique identifiers for each product in an online store. They help differentiate similar products, such as different sizes or colors of the same item.

Inventory Management: 

E-commerce businesses use SKUs to monitor and control their inventory effectively. Each SKU corresponds to a specific product, allowing for accurate tracking of stock levels, restocking, and order management.

Order Fulfillment: 

When customers place orders, SKUs are essential for ensuring the correct products are picked and packed. This minimizes errors and reduces the likelihood of shipping the wrong items.

Search and Navigation: 

SKUs contribute to organized product listings on e-commerce websites. Customers can use SKUs to search for specific items or navigate through product categories more efficiently.

Data Analysis: 

SKUs play a pivotal role in gathering sales data. E-commerce businesses can analyze SKU-specific sales performance, identify popular products, and make data-driven decisions regarding pricing, promotions, and product additions or removals.

Supplier Communication: 

SKUs provide a common language for ordering and restocking products when working with suppliers or manufacturers. This simplifies communication and reduces the risk of misunderstandings.

Inventory Optimization: 

E-commerce businesses can use SKUs to implement inventory optimization strategies. By tracking SKU-specific sales patterns, they can adjust stock levels, reduce carrying costs, and improve overall inventory efficiency.

Product Bundling: 

SKUs are useful for creating product bundles or kits. Businesses can group related items under a single SKU which makes it easier for customers to purchase complementary products together.

sku ecommerce

E-commerce SKUs Explained

Here's an example of an SKU (Stock Keeping Unit) for a T-shirt product in an e-commerce store:

Product: Men's Classic White T-Shirt

SKU: MCT001-WHT-S

In this example:

"MCT001" could represent a unique identifier for the product. It might stand for "Men's Classic T-Shirt 001."

"WHT" signifies the color of the product, which is white.

"S" indicates the size of the product, in this case, small.

We hope that this article has now left you with a better understanding of what SKU is in e-commerce and how important it is to optimize your inventory.

If you enjoyed this article, you might also like our article on the meaning of SKU on Etsy or our article on how to find SKU numbers.

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