Retailers of all shapes and sizes use SKUs to track their inventory and to measure how sales are tracking. Also known a Stock Keeping Unit, a SKU can be used to help reorder products and it can help you measure how quickly products are selling. Due to this, they play a big role in helping companies make vital decisions on which products to keep on the shelves.
By definition, a stock keeping unit (SKU) is an unique number given to a product by a retail store to identify;
- Product Price
- Product Options
- The Manufacturer
When it comes to tracking inventory, retail stores use SKUs. These are important to helping you maintain a profitable retail business.
When using your accounting system or (POS) point of sale, a SKU is a series of numbers that tracks unique information related to the product. SKUs are not universal, they’re not universal product codes (UPCs) neither, meaning that all retailers have their own unique set of SKUs.
How Are SKUs Used?
The biggest retailer in the world (Amazon.com) uses SKUs in a number of different ways. We all can agree that a majority of Amazon’s growth has been driven by their online presence. Their website is a beautifully crafted work of art designed to sell, sell, sell.
Taking a closer look of their website, we can see that Amazon is using SKUs to determine what products they show to you. Can you imagine how powerful this would be in your business? We guarantee that it would make a huge difference. This is just one way stock keeping units are used.
Now, most POS systems are going to allow you to create a SKU architecture. You really have to think this out. Before you create SKUs for your inventory, think about what you’ll be tracking.
How Stock Keeping Units Can Help You
Let’s use a great example for this. Let’s say you have a clothing retail store. In this scenario, we’ll say you’re serving both men and women. You’re going to have multiple products for both genders, multiple colors, styles and materials. Each product, style, color and material is going to have unique SKUs. If they wouldn’t, it would be near impossible to properly track inventory and track your sales.
If you’ve been to a retail store yourself, you may have seen the importance of SKUs play right in front of you. Have you ever took a product to the counter but needed a different color or different size? The retailer can check their SKUs to find out if one is available, another important role SKUs play.
Did you know that SKU also plays an important role in advertising? It’s true and it’s a big important one as it deals with pricing. Price matching is very competitive in the retail space.
We know that a lot of retailers use newspaper and magazine SKUs versus using manufacturer’s model number. By doing this, retail shoppers weren’t able to determine if the product they’re looking at is the same one as they found in another retail store. Due to this, retailers don’t have to match their competitors’ pricing.
SKUs are important. Learning how they work and how they can help your company is equally important.
Ecommerce Platforms
Thanks to ecommerce platforms like Shopify, Magento and others, creating SKUs are simple (at least in theory).
Here at Thill, our order management software (OMS) integrates with all the popular ecommerce platforms, allowing you to track all your moving products.
For ecommerce business owners, ecommerce fulfillment is a vital core pillar in your business. With the right OMS and fulfillment partner, you can take your business to the next level. Order management software will track all of your products and allow you to make real-time decisions.
SKU management doesn’t have to be complicated, not when you have the right resources.
