If you’ve ever run an online store, managed a warehouse, or tried to figure out why your stock numbers don’t add up — you’ve probably bumped into SKU numbers. They’re everywhere in retail and ecommerce, quietly doing the heavy lifting behind every sale, return, and reorder. And yet, a surprising number of businesses still treat inventory tracking as an afterthought. 43% of small businesses don’t track their inventory at all or rely on outdated manual systems, and that blind spot costs them up to 11% of annual revenue.
In this article, we’ll break down what SKU numbers actually are, how they work in practice, where to find them, and why getting this right matters more than most people realize.
TL;DR
- A SKU (Stock Keeping Unit) is a unique alphanumeric code retailers assign to each product to track inventory.
- SKUs typically include 8–12 characters encoding product details like category, size, and color.
- They’re used for inventory management, order fulfillment, sales analysis, and loss prevention.
- SKUs differ from barcodes (scanning technology) and UPCs (globally standardized codes) – a SKU is your internal naming system.
- For ecommerce businesses managing high transaction volumes across multiple channels, automation tools like Synder can sync SKU-level data directly into accounting software, eliminating manual data entry and keeping your books accurate in real time.
What is a SKU number?
The abbreviation SKU is short for Stock Keeping Unit – a unique alphanumeric code assigned to each product in a retailer’s inventory. This code includes information about the distinctive features of a product. Retailers use SKU numbers for identifying and managing individual products.
The components of a SKU number vary from business to business, but typically include from 8 to 12 characters representing the product type, size, color, and its other unique features.
SKU number example
A SKU is a unique identifier for a specific product in a retailer’s inventory. SKU numbers are typically used to track and manage inventory and can vary widely in format depending on the retailer or organization’s specific needs. Here’s an example of SKU logic:
Let’s say you work for a clothing retailer, and you have a blue t-shirt in your inventory. The SKU number for this t-shirt might look something like this:
SKU: BT-2023-XL-NVY
In this example:
- “BT” could stand for “Blue T-shirt”, indicating the product category.
- “2023” might represent the year the SKU was created or the year the product was released.
- “XL” could indicate the size of the t-shirt (extra-large).
- “NVY” could represent the color of the t-shirt (navy).
Please note that SKU formats can vary widely, and different companies or industries may use different conventions for SKU numbers. The goal is to create a system that helps efficiently track and manage inventory.
Where to find SKU numbers
SKU numbers can typically be found in several places:
- Product packaging: Many products have their SKU numbers printed on the packaging. Look for labels or stickers with a combination of letters, numbers, and sometimes barcodes.
- Product labels or tags: Some items, especially clothing and accessories, have SKU numbers on tags or labels attached to the product itself.
- Receipts and invoices: When you purchase a product, the SKU number is often included on the receipt or invoice. It’s a helpful reference for returns or exchanges.
- Online retailer websites: If you’re shopping online, the product’s SKU number is often listed in the product description or details section. You may also find it on the order confirmation page or in your order history.
- Inventory management systems: If you work in retail or manage inventory, SKU numbers are stored in inventory management systems. You can search for SKU numbers within the system to locate specific products.
- Barcode scanners: Retail employees often use barcode scanners to quickly find products and their associated SKU numbers. Simply scan the barcode on the product, and the SKU information is retrieved from the system.
- Product manuals or documentation: In some cases, especially for electronics or appliances, SKU numbers may be mentioned in the product’s manual or documentation.
- Product listings in catalogs: If you’re browsing through a printed or online catalog, SKU numbers are typically associated with each product listing.
Remember that SKU numbers can vary in format and length depending on the retailer or manufacturer. If you’re having trouble finding a SKU number for a specific product, you can often ask a store associate or contact the manufacturer’s customer support for assistance.
Learn more about how to find SKU numbers.
Does every product need a SKU number?
Technically, no. Products aren’t required to have SKUs. But for any business managing more than a handful of items, operating without them quickly becomes a liability.
Without SKUs, tracking inventory manually is time-consuming and error-prone. You lose visibility into which product variants are selling, where stock is sitting, and when to reorder. This becomes even more complicated when you’re selling across multiple channels, say, Shopify, Amazon, and a physical store, where the same product needs to be consistently identified everywhere.
Small businesses with very limited product catalogs can sometimes manage without formal SKUs, especially if they sell unique, one-of-a-kind items. But even in those cases, some form of product identifier is useful for accounting purposes, particularly for tracking Cost of Goods Sold (COGS) and reconciling sales with inventory.
The moment your catalog grows, your channels multiply, or your transaction volume increases, a well-structured SKU system pays for itself quickly. It reduces fulfillment errors, speeds up stock counts, and gives you the data you need to make smarter purchasing decisions.
Who needs SKUs
SKUs (Stock Keeping Units) are a valuable tool for various businesses and organizations across different industries. Here’s a breakdown of who needs SKUs:
- Retailers: Retail businesses, whether brick-and-mortar stores or ecommerce platforms, rely heavily on SKUs and retail accounting practices. They use SKUs to manage and track their inventory, streamline the checkout process, and maintain accurate records of product sales and stock levels.
- Manufacturers: Manufacturers use SKUs internally to organize and manage their production processes. They may assign SKUs to components, parts, or finished products to track their manufacturing and supply chain operations efficiently.
- Wholesalers and distributors: Wholesalers and distributors utilize SKUs to manage large quantities of products from various suppliers. SKUs help them keep track of inventory, streamline order fulfillment, and accurately manage stock levels.
- Ecommerce businesses: Online retailers and marketplaces heavily depend on SKUs to manage their vast product catalogs. SKUs help them organize products, facilitate search and navigation for customers, and enable efficient order processing and shipping.
- Inventory managers: Professionals responsible for inventory management in various industries, including logistics, supply chain, and warehouses, rely on SKUs to track stock levels, monitor product movement, and optimize inventory turnover.
- Restaurants and foodservice: Restaurants, cafes, and foodservice establishments use SKUs to manage their food and beverage inventory. This helps them control costs, minimize waste, and ensure menu consistency.
- Healthcare providers: Hospitals, clinics, and healthcare providers use SKUs to manage medical supplies, equipment, and pharmaceuticals efficiently. SKUs assist in maintaining accurate stock levels and ensuring patient care is not disrupted due to inventory shortages.
- Manufacturing and assembly plants: Manufacturing and assembly plants use SKUs to track components, sub-assemblies, and finished products throughout the production process. SKUs aid in quality control and production planning.
- Artists and craftsmen: Even small-scale artists and craftsmen may use SKUs to track their inventory of materials and finished products. This helps them manage their creative endeavors more effectively.
- Event planners: Event planners and rental companies use SKUs to manage equipment and decor inventory for various events, ensuring they have the necessary items available when needed.
- Nonprofit organizations: Nonprofits that distribute goods and supplies use SKUs to manage their inventory efficiently, ensuring that resources are distributed to those in need effectively.
In summary, SKUs are valuable for a wide range of businesses and organizations that deal with inventory management, product tracking, and efficient operations. They are essential for maintaining accurate records, improving efficiency, and ensuring products or resources are available when needed.
How is SKU used in business?
Creating and assigning SKU numbers is a straightforward process. Businesses can create their SKU numbers or use software to generate them automatically. Once the SKU numbers are created, big and small businesses can use them for various purposes:
Inventory management
SKUs are primarily used for inventory management. They provide a unique identifier for each product, allowing businesses to track stock levels, restock products, and prevent overstocking or stockouts. Inventory managers can use SKUs to quickly locate products in storage facilities. SKU numbers help businesses effectively manage their inventory, and as a result drive more revenue. By using SKU numbers, businesses can quickly identify each product in their inventory and ensure that they have the right products in stock at all times. Additionally, SKU numbers facilitate stock replenishment, accurate product identification and categorization, and optimize your inventory operations.
Sales and checkout
In retail settings, SKUs are used during the checkout process. Cashiers can scan the product’s barcode, which typically contains the SKU, to retrieve pricing information and add the product to the customer’s bill. This speeds up transactions and reduces errors.
Order fulfillment
Ecommerce businesses and warehouses use SKUs to pick and pack orders accurately. When an order is received, the SKU helps identify the exact product to be included in the shipment.
Product Identification
SKUs are used to uniquely identify products. This is especially important when multiple products have similar names or descriptions. SKUs ensure that the right product is selected and shipped.
Stock replenishment
Businesses use SKUs to determine when to reorder products. When stock levels reach a certain threshold, automated systems can generate reorder alerts based on SKU data, helping businesses maintain optimal inventory levels.
Product categorization
SKUs often incorporate information about product attributes, such as size, color, or style. This categorization helps businesses organize and group similar products for reporting and analysis.
Reporting and analytics
SKUs are critical for generating reports and analyzing sales and inventory data. Businesses can assess product performance, track trends, and make data-driven decisions using SKU-level data.
Returns and exchanges
SKUs play a role in managing returns and exchanges. They help businesses verify the original purchase and ensure that the correct product is replaced or refunded.
Supply chain management
Throughout the supply chain, SKUs help track the movement of products from manufacturers to distributors to retailers. They ensure that products are correctly identified at each stage of the supply chain.
Online product listings
When selling products online, businesses often include SKUs in their product listings. This allows customers to search for and identify specific products easily.
Warranty tracking
In industries like electronics and appliances, SKUs are used to track products covered by warranties. This helps businesses provide efficient warranty services to customers.
Multi-location inventory
Businesses with multiple locations or warehouses use SKUs to synchronize inventory data across different sites, ensuring accurate stock levels and product availability.
Loss prevention
Retailers and businesses use SKUs to track and reduce inventory shrinkage (theft or loss) by comparing sales records to physical inventory levels.
On the whole, SKUs are versatile tools that streamline various aspects of business operations, from inventory management and sales to reporting and customer service. They provide a standardized and efficient way to organize, track, and manage products throughout their lifecycle.
Tools for managing SKU numbers
There are several software programs available to help businesses manage their SKU numbers. These programs can help with everything from assigning SKU numbers to tracking inventory levels.
If you’re running a multi-channel business, Synder is worth a close look. Built specifically for ecommerce and online businesses, it connects 30+ sales platforms, including Shopify, Amazon, Stripe, PayPal, and more and automatically syncs transaction data into your accounting software (QuickBooks, Xero, NetSuite, Sage Intacct, or Puzzle). Instead of manually importing data, Synder assigns the correct products to each sale using your SKU and product names, keeping your inventory records and books up to date in real time.
You can make use of Synder’s 15-day free trial or book a demo session to see how Synder can help you streamline your workflow. Automate your processes and work smarter, not harder!
SKU vs. barcode
SKUs and barcodes are closely related, but they serve different roles in product identification and day-to-day operations.
SKU
Purpose:
A SKU (Stock Keeping Unit) is an internal identifier created by your business to organize and track products across inventory, orders, and reporting.
Uniqueness:
SKUs are not standardized. Each business defines its own SKU structure, and the same SKU value can exist in different systems for different products.
Information:
SKUs are human-readable and often encode product attributes such as category, color, size, or model, making them useful for internal workflows.
Example SKU:
BT-2023-XL-NVY
Barcode
Purpose:
A barcode is a machine-readable visual symbol that allows systems to quickly retrieve a product identifier through scanning.
Uniqueness:
Barcodes themselves are not identifiers; they encode an underlying number such as a SKU, UPC, or EAN, depending on the use case.
Information:
Barcodes do not describe the product directly. They act as a scanning mechanism that eliminates manual data entry at checkout, in warehouses, or during fulfillment.
Example barcode:
A barcode encoding a SKU or UPC number
Key difference
A SKU is the product identifier your business uses internally. A barcode is the scanning technology that makes that identifier usable in fast, high-volume operations. In practice, a barcode is often assigned to a SKU, but the two are not the same thing.
SKU vs. serial number
SKUs and serial numbers are both used to identify and track products, but they serve different purposes and operate at different levels of detail.
SKU
Purpose:
SKUs are used for inventory management, stock tracking, and sales operations within a business.
Information:
SKUs often encode product attributes such as category, size, color, or model and are defined by the retailer or seller based on internal conventions.
Uniqueness:
SKUs are not globally unique. Different businesses can use the same SKU values for different products.
Example SKU:
BT-2023-XL-NVY
Serial number
Purpose:
Serial numbers are used to identify individual product units for warranty tracking, quality control, and after-sales support.
Information:
Serial numbers uniquely identify a specific item and may be linked to manufacturing details such as production date, batch, or location.
Uniqueness:
Serial numbers are unique per individual product unit, ensuring no two items of the same model share the same serial number.
Example serial number:
S/N: ABC123456789
Key difference
SKUs identify product types for inventory and sales management, while serial numbers identify individual units for traceability and lifecycle tracking. A single product model typically has one SKU but many unique serial numbers, each serving a different operational purpose.
SKU vs. UPC number
SKU and UPC (Universal Product Code) numbers are both used to identify and track products, but they serve different purposes and have different characteristics:
SKU
Purpose:
SKUs are used for internal inventory management and product tracking within a specific business, typically by retailers or manufacturers.
Uniqueness:
SKUs are not standardized and can vary between businesses. The same SKU value may be used by different companies for different products.
Information:
SKUs often include product-related information such as category, size, color, or an internal reference based on the company’s naming convention.
Example SKU:
BT-2023-XL-NVY
UPC number
Purpose:
UPC numbers are standardized identifiers used in retail and point-of-sale systems to enable fast and accurate product scanning at checkout.
Uniqueness:
Each product is assigned a unique UPC number, managed globally by GS1 to ensure consistency across retailers and markets.
Information:
UPCs are numeric codes that do not describe product attributes directly but act as a lookup key for product information in databases.
Example UPC:
123456789012
Key difference
SKUs are internal identifiers designed around a business’s inventory and reporting needs, while UPC numbers are globally standardized codes used for retail scanning and product identification across systems.
Best practices for managing SKUs
Managing SKU numbers can be a challenge, but there are several best practices that businesses can follow to make the process easier.
First, it’s important to keep your SKU numbers consistent. This means using the same format and structure for all of your products. It also means avoiding duplicate SKU numbers, which can lead to confusion and errors.
Second, you should update your SKU numbers regularly. As your inventory changes, you may need to add new products or discontinue old ones. Make sure your SKU numbers reflect these changes so that your inventory management is accurate.
Third, it’s necessary to keep accurate records of your SKU numbers. This means keeping track of which products are assigned which SKU numbers and making sure that the numbers are updated as needed.
Wrapping up SKUs
SKU numbers are a core building block of effective inventory management, helping businesses track stock accurately, organize products, and make informed replenishment decisions. By standardizing how items are identified, SKUs reduce errors in fulfillment, speed up checkout and inventory counts, and improve day-to-day operational efficiency.
When combined with modern inventory software, SKUs support automation through real-time reporting, low-stock alerts, and multi-location synchronization, allowing teams to scale operations while minimizing manual effort.
Read about how to create an effective inventory system.
FAQ
What does SKU stand for?
SKU stands for “stock keeping unit”. It’s a unique alphanumeric code assigned by a retailer to a specific product in their inventory to track and manage it efficiently.
Is a SKU number the same as a barcode?
No. A SKU is an internal code your business creates to identify and organize products. A barcode is a machine-readable visual symbol used to scan that code quickly at checkout or during stock counts. A barcode can encode a SKU, but the two are not the same thing.
Where can I find the SKU number for a product?
SKU numbers are typically printed on product labels, price tags, or packaging, usually near the barcode. For online purchases, you’ll find the SKU in the product description, your order confirmation, or your order history page. In retail stores, SKUs sometimes appear on shelf labels, not the product itself.
Can two different products have the same SKU number?
Within one business, no – each SKU should be unique to a specific product variant. However, two different businesses can use the same SKU for different products because SKUs are internal codes with no universal standard. That’s the key difference between a SKU and a UPC, which is standardized globally.
Do I need a SKU for every product in my inventory?
There’s no legal requirement, but for any business managing more than a handful of products, SKUs are strongly recommended. Without them, tracking inventory across multiple variants, channels, or locations becomes difficult and error-prone. For businesses selling on different ecommerce platforms, a consistent SKU system is especially important for accurate reporting, COGS calculation, and order fulfillment.
