Understanding SKU formats
SKU, or Stock Keeping Unit, forms the foundation of your store’s inventory management system. From order fulfillment to product recommendations, a great deal of your store’s operations depends on effective use of SKU formats.
Given the importance of this unit to your store’s success, we’ll do a deep dive into SKUs in this guide. By the end of this article, you’ll learn:
- What is an SKU and why is it important
- How SKU differs from UPC, EAN, and other product codes
- How to create your own SKU formats
SKU - also pronounced as skew - is a code used to identify products and their variants in any retailer’s inventory. This code can be made up of any combination of letters, numbers, and characters. While customers might see the SKU printed on an invoice or on your store’s product descriptions, this code is meant entirely for internal tracking purposes.
Since SKUs are meant for internal use, there is no standardized format for creating them (although certain formats have come to be accepted as best practices). You can use all letters, or you can just use numbers - it’s all up to you.
For example, all of these are valid SKU formats:
Consequently, SKUs will differ from seller to seller. You can buy the same product from two different retailers and it will likely have different SKUs.
Although SKUs can be used in a variety of ways (which we’ll discuss later), the core purpose of this code is to identify products quickly.
You might not be able to tell whether a product is black of blue by looking at the packaging alone. But adding a color code to the SKU - BLK for black, BLU for blue - will help you figure out the color at a glance.
Understanding SKU Formats
Since SKU formats are not standardized, you can add or remove any details to them as necessary. What you choose to include (or exclude) will depend on the characteristics of the product and what you want to track.
To better understand this concept, let’s look at two examples:
This SKU has 5 parts separated by hyphens. While these might look like a random string of numbers and letters, they hold a lot of meaning:
- NK: Identifies the brand - Nike
- BS: Stands for Basketball Shoes - the product type
- M: Identifies the gender - Men
- US9: Identifies the size - US size 9
- BL: Identifies the color - Black
If you were a multi-brand retailer, you might find it prudent to track all these details. It would help you understand what product, brand, and variant was selling more.
However, if your store has limited products and variants, your SKU might not be as complicated.
In this second example, we’ll consider the SKU format for a hypothetical store - Ecwid Cookies - that sells cookies and cakes:
Let’s break down this SKU:
- EW: Identifies the brand name - Ecwid
- COK: Identifies the product type - Cookies
- CC: Identifies the variant - Chocolate Chip
You can add to this SKU as your store grows. You might start selling cookies in packs of three sizes - Small (S), Medium (M), Large (L). In that case, you can simply expand the SKU to include size information, like this:
It’s important to understand that SKUs are only meant for internal use. While there are certain formatting best practices, you should use a format that’s intelligible to you and your employees.
Why Use SKUs?
You might be wondering: why even bother with SKUs? Why can’t you simply use complete product names or descriptions?
While this tactic can work for a small store, as your inventory grows, it will become increasingly harder to identify the right product.
Imagine a situation where a customer wants to exchange a red XL-size t-shirt with a blue L-size tee. All your t-shirt stock is kept in the same warehouse. Unless you open every package, you might not know which t-shirt is red, which is blue. Moreover, you might not even know whether the t-shirt is for men or women.
Unless you’re very careful, you’re liable to send the wrong product to the customer - never a pleasant thing for any E-commerce store!
SKUs make product identification much easier. Instead of hunting for the right color and size, you can simply refer to the SKU format. If you’ve chosen the correct format, you should be able to see size, gender, and color right on the SKU itself.
Essentially, SKUs act as shorthand. Instead of writing Men’s Blue T-shirt with pocket in XL size, you can simply write M-PT-XL-BLU, where:
- M: The gender - male
- PT: The t-shirt type - pocket tee
- XL: Product size - XL
- BLU: Product color - blue
Identifying products is not the only reason to use SKUs. There are also several other benefits such as:
- Inventory tracking: Creating unique SKUs for every product and variant tells you how many quantities of each variant you have in stock, what’s selling, and what you need to order more of.
- Faster shipping: Whether you’re using a warehousing/shipping partner, or doing it yourself, using accurate SKUs will help you find the right product for shipping. This is particularly important if you have products with a lot of variants and sizes (such as clothes).
- Automated inventory management: If you use SKU barcodes, you can simply scan each item and update its quantity in your inventory automatically. Say, when a shipment goes out, scanning the SKU barcode will automatically reduce the quantity in stock by one.
- Better customer service: Asking customers for names or descriptions when resolving their queries can lead to misidentification. Maybe the customer got the name wrong, or maybe you have multiple similarly named variants. By asking for SKUs instead, you ensure that your customer service reps always have the right product.
- Better product recommendations: To offer customers better product recommendations, you need to know what they’ve ordered in the past. The only way to do this accurately is by using SKUs.
Even if you’re a small store owner, using SKUs from the get-go is highly recommended. It will help you track sales better and will make it much easier to grow your store in the future.
📖 Further reading:
🗂️ Related Ecwid apps:
- Manage inventory with Google Sheets (free)
- Orderhive: Multi-channel Inventory and Order Management
- ShippingEasy: Shipping, Inventory and Customer Marketing
How Does SKU Differ From UPC, EAN, and ISBN?
The SKU is not the only identifying string on a product label. Depending on the product or region, the label might also have other numbers such as:
- UPC (Universal Product Code)
- EAN (European Article Number)
- ISBN (International Standard Book Number)
These numbers are usually a part of the barcode. Scanning the barcode gives the user (such as a cashier at a retail store) information about the product and its price.
Here’s how these these numbers differ from SKU:
|Format||Alphanumeric||Numbers only||Numbers only||Numbers only|
|Length||Any||12 digit||12 or 13 digit||10 or 13 digits|
|Used for||Any product||Any product||Any product||Books and publications only|
|Use type||Varies from store to store||Same for every product across stores||Same for every product across stores||Same for every product across stores|
The key thing to remember is that UPC, EAN, and ISBN are standardized for the same product. That is, a single product will have the same UPC/EAN/ISBN code regardless of where it is sold.
In contrast, SKU changes from store to store. Two stores selling the same product might have different SKUs, but their UPC will be the same.
For most products, you’ll have both SKU and UPC/EAN/ISBN printed on the same label. Which of the latter you use will depend on the product and the region (UPC, for instance, is mostly used in the US, while ISBN is only used for books).
📖 Further reading:
🗂️ Related Ecwid apps:
In Ecwid, SKU are not mandatory, but you can assign a unique SKU to each product to keep track of items in your catalog. The SKU field is on each product editing page in your Ecwid admin so you can easily add, edit or remove SKU for products.
How you choose to go about creating SKUs is up to you. For a small store, you can create them manually. If you have a lot of products and variants, you can take advantage of automated SKU generators.
Before you can do that, however, you need to settle on an SKU format.
How to Choose an SKU Format
As we mentioned earlier, there are no hard rules for creating SKUs. You can use simple sequential numbers (which is also the default SKU format in Ecwid stores), alphanumeric codes, or even a string of letters. What matters is that the SKU is intelligible and includes all the specifications you need to track.
Having said that, there are a few best practices for SKU formats that you should follow.
SKU Best Practices
- Choose alphanumeric formats: SKUs made up of letters only can be misread as part of the product description. Numeric SKUs can be confused with other numeric codes such as UPC or EAN. Alphanumeric SKUs stand out and thus, can be easily identified as the SKU.
- Use more than six characters: If you have limited inventory, you might be tempted to use short, 4-5 character-long SKUs. However, such short SKUs limit your ability to expand inventory later. They can also be confused with quantity, price, weight, or other product specs. Something longer than 6-8 characters gives you enough room to include all the necessary information.
- Use 1-3 characters for each attribute: An SKU is meant to relay key product attributes succinctly. As such, compressing every attribute to 1-3 characters is a good practice. You can use the first 1-3 characters (such as M for Male), create an acronym for longer terms (such as ‘RS’ for ‘running shoes’), or use something that is naturally intelligible (such as BLK for Black).
- Never use spaces: SKUs are meant to be read by a computer. Because of quirks in programming languages, many software tools struggle to understand spaces. If you absolutely must use a space in your SKU, use a hyphen (-) or underscore (_) instead.
- Avoid special characters: While you can technically use special characters (such as “@$%^#”) in your SKUs, they can confuse users. The ‘@’ character, for instance, can be misread as an email address, while the "/" character can be read as a date. Stick to letters and numbers only for the best results.
- Avoid confusing numbers and letters: The number "0" and the letter "O" can be difficult to make out on some fonts. Similarly, letters such as "I", "L" and the number "1" can be unintelligible at times. If possible, avoid using these letters.
- Always use uppercase letters: Most of the legibility issues with the letters "I", "L", and "O" can be solved simply by using uppercase letters. As a standard practice, always use uppercase only in your SKUs. Never mix lowercase and uppercase letters.
- Use serif or monospace fonts: Another way to avoid legibility issues is to simply use serif and monospace fonts. The small stroke at the end of each character (called the serif) on these fonts makes it easy to make out different letters.
Use the cascade system
One of the challenges in creating SKU formats is figuring out how to organize all product attributes.
For example, if you had to create an SKU format for 6-inch red ceramic coffee mug, you could use the following:
Both of these convey the same information, but the order of the attributes is different.
To figure out the right order, you can use the cascade system. Under this system, the broadest attributes (such as brand or product category) go first, while variant-specific details go last.
For example, if you’re running a large store, you might sell products under several categories such as Electronics, Apparel, Shoes, etc. Each of these might have subcategories such as Headphones, Jeans, Running Shoes, etc. And under each subcategory, you might have different brands, and each brand will have several products.
In the Cascade System, the biggest category will be the first attribute in the SKU, followed by the subcategories and the brand. Core product details go next, followed by specific attributes.
For example, if you have a product - Sennheiser HD280 Black Headphones With Detachable Cord, your SKU would look like this:
This SKU can be divided into three parts:
- 1st part mentions the product category (EL - Electronics) and subcategory (HP - Headphones)
- 2nd part specifies the brand (SE - Sennheiser) and product name (HD280)
- 3rd part specifies the variant details such as color (BLK - Black) and key attribute (DC - detachable cable)
That is, you move from broad to narrow as you move from left to right.
Note that the hyphens used in the above SKU are optional. They make the SKU easier to read but can also make it unnecessarily long.
Step-By-Step Process for Creating SKUs
Armed with all this information, you can start creating your SKUs manually.
Here’s how to do it:
Step #1: Choose the right length
One of the more common mistakes new E-commerce sellers make is using SKUs that are either too long or too short. The former ends up being too long to understand, while the latter limits how much information you can relay, especially as your store grows.
In general, the more products your store has, the longer the SKU. Including category and subcategory information - as shown in the above example - can greatly add to the SKU length.
You’ll want to stick to a length between 6-12 characters. Amazon, despite its millions of products, uses just 10 characters in its SKU (called ASIN). In some categories such as electronics, however, you might have to use longer SKUs to relay all crucial information.
Keep in mind that you can always add attributes to the SKU as the store expands, especially category/subcategory information. As in the above example, you can simply append ELHP to the SKU if you want to specify the category (Electronics) and subcategory (Headphones).
Step #2: Identify key attributes
The length of your SKU will depend greatly on the number of attributes you want to track. On average, every attribute will take 2 spaces. Thus, with a 12-character long SKU, you can track 5-6 attributes.
Consider your product inventory and ask: What are the key attributes for each product?
For example, clothing might have the following attributes:
- Gender or age (Male/Female, Boys/Girls)
- Type (t-shirt, jeans, jacket, etc.)
Thus, a blue Gap women’s denim in size L might have the following SKU: GP-JN-F-L-BLU.
Every category will be different. You will have to figure out what information you really want to track, and what can be ignored. A good way to approach this exercise is to ask yourself what information will help you understand your customers better.
For example, if you’re selling laptops, tracking the processor is key. This will help you understand whether your customers are power users (who might use higher-powered processors) or casual users (who opt for entry-level processors).
Step #3: Create attribute codes
SKUs only work when they are standardized across your entire inventory. If one person uses BLK for the color black, and another uses BLA, you’ll run into tracking issues.
To solve this problem, create attribute codes for all the attributes you want to track across your product line. Every SKU should use these codes, regardless of the product or category.
For example, you might have the following attribute codes for colors:
You’ll use the same color codes for every product in your inventory, from shoes and t-shirts to electronics. Thus, a black men’s tee and a pair of black Bluetooth headphones would both use BLK to specify the color.
Do this for all the attributes you need to track. Keep this document available to everyone who deals with SKUs in your business. This will ensure that you use the same codes even if your employees change.
Step #4: Create your SKUs
With all the information you gathered above, you can finally start creating your SKUs.
For a small store, you can easily do this manually. Add all your products to a spreadsheet. List their key attributes, then combine them to create the final SKU, keeping in mind the Cascade System we discussed earlier.
Here’s how you can organize your spreadsheet:
|Product||Attribute #1 (Brand)||Attribute #2 (Category)||Attribute #3 (Gender)||Attribute #4 (Color)||Attribute #5 (Size)||Final SKU|
|GAP men’s gray t-shirt, XL size||GP||TS||M||GRY||XL||GPTSMGRYXL|
|Nike blue women’s running shoe, US size 7.5||NK||RS||F||BLU||US75||NKRSFBLUUS75|
|Levi’s men’s black denim jacket, M size||LV||JK||M||BLK||M||LVJKMBLKM|
In your Ecwid store, you can add or change the SKU on the Products page.
- Go to the Products page under Catalog in your Ecwid admin.
- Click +Add New Product or choose a product from the list.
- Enter an SKU in the SKU window.
If you have a lot of products, manually creating SKUs can be tedious. You might also end up making mistakes, especially when dealing with a large number of variants.
You can fix this by using inventory management software. OrderHive, on the Ecwid app store, lets you import all your product listings and generate SKUs for them based on a set of rules. You can learn more about OrderHive here.
📖 Further reading: