Everything You Ever Wanted to Know About SKU Numbers - Vend Retail Blog (2023)

Everything You Ever Wanted to Know About SKU Numbers - Vend Retail Blog (1)

Quick take: Get a crash course on SKU numbers. This post will teach you:

  • What SKUs are and why they’re important.
  • The difference between SKU vs UPC vs Serial numbers
  • How to generate SKU numbers and how your POS system can help.

Have you ever looked at a price tag and wondered why on earth there are so many numbers and letters on it? What are they all for? One of those numbers sets is usually the SKU number (stock keeping unit). SKU numbers are unique to each store and allow the store to keep track of each item in inventory. SKU numbers can be anything you want to be but are most often about 8 alpha-numeric digits.

SKU vs UPC vs Serial numbers

There are quite a few numbers associated with products and inventory-keeping and it can be hard to tell what makes them all different. We know what a SKU number is, but what are the others and how are they different?

First, there’s the UPC number (universal product code). The UPC number is the twelve-digit number that runs along the bottom of the barcode and, as the name implies, is a universal number. That means anyone with a barcode scanner can read the number. It also means that the UPC is not unique to a store. If two companies are selling the same item, those items will have different SKUs, but the same UPC.

Next, there’s the serial number. Serial numbers are unique to each specific product and are most frequently used for electronics. (If you’ve ever had an issue with your laptop, you’ve probably encountered the serial number as you’ve given details to a help desk or customer service, for instance. It’s that number on the barcode tag on the bottom of your laptop.) Serial numbers are used to track the ownership information of an item. They can also be used to track warranty information.

What do SKU numbers mean to retailers?

SKU numbers are important for every store to use because they make life way easier. Each SKU is recorded within your internal tracking system (which is hopefully an inventory management system and not a manual spreadsheet). Once within your system, SKUs will make it possible for you to record loss easily, make smarter inventory decisions, track the exact location of each item, increase the accuracy of your inventory and warehouse activities, and for your employees to easily look up inventory to help your customers. When done right, a SKU number can even tell an employee what item should be attached to your SKU.

True story: When I was working retail, a woman once came in with a list of SKUs from the catalogue that she wanted to buy, but no other descriptors. Coincidentally, our inventory management system also chose that particular hour to go out. I was actually able to locate all 5 pieces she wanted to buy because our SKU numbers were well set up to direct me to the right items.

SKUs also enable some really amazing marketing activities. For instance, SKUs are what are used to generate suggestions for other items you might like on a site. They are also used to run product remarketing on a site like Facebook.

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At the end of the day, SKUs take your physical items and turn them into pieces of data a computer can easily track. You really can’t eschew SKUs.

How Do You Generate SKU Numbers?

You can generate SKU numbers any way you want, but it’s probably easiest to use your inventory/retail management system. The length is up to you, but do take into consideration that your staff will need to be able to easily read and even remember SKUs. (Grocery cashiers, for instance, often end up memorizing swaths of produce SKUs in order to be able to ring faster.) You can also choose to use only numbers or letters – or do a combination of the two.

When choosing digits, you could go totally random. However, it’s better to imbue your digits with some meaning. By that I mean, segment the digits out to refer to certain things. For instance, if you have an 8 digit SKU, the first two digits could refer to the item category, the second two digits could refer to sub-category, the third two could refer to item color, and the last two can be the unique identifier.

There are a number of ways this can be done. First, if your inventory is simple enough, you may only need to specify a single category and combine it with a sequential set of numbers to refer to the item. Here’s a visual example of how that would be put together for a small pet store:

CategoryCodeItemCodeSKU Number
Dog Toys10Tennis Ball01210012
Rodent Accessories20Hamster Wheel00520005
Cat Food30Salmon Bites00130001

The item codes should be created in a sequential order (thus, each new item you get in will just be assigned the next available number). The item codes can be reused in different departments, as well. So “012” could be used for Chicken Bites in the cat food department, even though it’s used for Tennis Ball in the Dog Toys department. (That Chicken Bites SKU, by the way, would be: ‘30012.’)

However, your inventory may get more complex. Here’s a quick list of the aspects of an item you might wish to put into a SKU:

  • Supplier
  • Store Location
  • Department
  • Variation
  • Item Type
  • Size
  • Color

Let’s look at how a clothing store with men’s, women’s and children’s clothing might want to create a SKU.

DepartmentCodeCategoryCodeColorCodeItem NumberSKU

Each section of the SKU tells a detail of the item and these codes can be put together in unique ways to demonstrate particular items. A different men’s purple sweater than the one seen in the table above, for instance, might be M223-02-002. You could also see that the first 5 digits of any women’s purple sweater would be W223-02, or that a pair of men’s green jeans would start with M606-51.

When a SKU number is put together this logically, it becomes easy to see how a sales associate might be able to take a number and figure out what item it represents.

SKU Number Tips

You can reuse SKUs.

Some people will tell you not to reuse SKUs ever — but the truth is, as long as you wait for a few years or so (after multiple total catalogue refreshes and completely selling all items attached to that SKU) you can certainly reuse your old SKU numbers.

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The store I worked for in college did this with no hiccups. In fact, the only reason I ever realized that they reused SKUs after a number of years is because one customer decided to return an item she bought 12 years previous and had never worn. The item still had the tags and the old SKU number, which corresponded with a new item when I typed it into our system.

The first 2-3 digits should represent the highest category.

Use the first few digits of the SKU number to represent what is the highest category of importance about the item to you, and work into the more unique features of the item. (And once you’ve locked your formula in, always write your SKUs in the same order.)

Think of it as the opposite of how you identify where you’re from. That is, when identifying your hometown, you start most specific and get more broad. I’m from Trumbull, Connecticut, in the United States, which is on the North American continent on planet Earth. A good SKU number goes the opposite direction, essentially identifying planet first and town last.

Avoid beginning the SKU with the number 0.

You shouldn’t start your SKUs with 0s, mainly because some data storing software may interpret that 0 as literally nothing. That is, when told to store the number “012345,” the software will read it as “12345.” It’s just best to avoid putting yourself in that situation altogether. (This tip is a solid data storage tip in general. Try to avoid starting data with 0’s.)

Do begin your SKU with letters.

Starting your SKUs with letters is an easy way to help them stand out in a spreadsheet filled with other numbers. It provides an easy visual cue that that’s the beginning of a SKU number, rather than a continuation of the number in the cell before it.

Avoid using letters that look like numbers.

It’s a good best practice to avoid using letters that can be confused with numbers or even other letters (‘I’ can look like ‘1’ and a lowercase ‘L’, for instance).

Your staff will (fairly often) have to type SKUs in by hand and you really want to make this process as quick and easy for them as you can.

If you don’t want to completely cut these numbers and letters out of your system, you should ensure that you use sectioned SKU numbers in which some sections are only ever [uppercase] letters and some sections are only ever numbers. IE, a SKU that looks like this: BLE-134. Your staff will know that ‘O’ is the letter and not a zero if they see it in the alphabetical section in that case.

Don’t use any of the manufacturer numbers within your SKUs.

In general, it’s recommended that stores avoid reusing the manufacturer numbers as or within their SKU numbers in order to prevent confusion. SKUs are meant to be unique to each business, so go ahead and honor that. Of course, the easiest way to avoid using any of the manufacturing numbers is to have a set formula (as mentioned in the previous section) for generating SKUs in place, rather than to approach SKU creation haphazardly.

Don’t overload your SKUs with meaning.

Finally, while you do want to infuse your SKUs with meaning, you don’t want to overload them. For instance — you don’t want to end up creating a 32 digit SKU because you wanted to get every last piece of detail you could into the number. It’s better to forsake some detail in the name of ease of memorability and fitting the number on your tags.

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So pick which 2-3 aspects of items matter most for you when dividing up your warehouse or store floors and then let the item’s specific identifying number at the end of the SKU do the rest of the lifting.

And if you really need to fit more than 3 aspects of detail in, keep the individual codes as short as possible. For instance, if you work with nine manufacturers, assign them a single digit 1-9, rather than abbreviating their name into a 2-3 letter code.

Avoid using dashes and periods.

While you can technically include certain symbols and punctuation marks in your SKU numbers (e.g., “.”, “-“, “_” and “/”), it’s best to avoid them. Characters like period and dashes may cause issues when printing barcodes.

Using SKUs to seamlessly sell on multiples channels

Everything You Ever Wanted to Know About SKU Numbers - Vend Retail Blog (2)

Another advantage of having a solid SKU number system is that it makes it easier to sell on multiple channels.

A growing trend retail today is the rise of “See what’s in store” a capability that lets retailers showcase their in-store inventory on the web, so cusotmers can browse their catalog before heading to the store.

You can use a solution such as Pointy, a Vend add-on that allows you to display your in-store products on Google without manually re-entering your inventory data. Once you’ve created a Google My Business account and verified your business, all you have to do is connect Vend and Pointy, and your stock will automatically be displayed on your Business Profile on Google Search and Maps when consumers search for your business name or, potentially, for a product that you have in stock.

Vend Tip

Vend seamlessly connects with Pointy from Google. Setting up is easy and included free for all Vend POS users: once you’ve integrated Pointy with your Vend store, your products will appear automatically, with no work required.

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Getting started is easy:

1. Connect Pointy to your Vend account.

2. Your products will appear automatically, as long as you’re using universal product codes (UPCs).

3. Once you’re set up, shoppers in your area will be able to see your in-store products right in Google Search, boosting your foot traffic and sales.

4. When you sign up, you’ll get free Google Ads credit to help get your products in front of even more people!

Learn More


SKU numbers are a surprisingly powerful tool that all retailers have at their disposal. By turning your products into numbers, you can track your inventory and make smarter merchandising decisions. You can also make life easier for your floor staff. SKUs really are a win-win.

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What is the best practice for SKU number? ›

Top tips for creating SKUs
  • Ensure that all of your SKUs are unique. ...
  • Keep your SKUs short. ...
  • Try to avoid using characters which can be easily confused with others. ...
  • Don't start SKUs with a zero. ...
  • Don't use symbols such as @%* unless they are absolutely critical in describing the product.
Mar 16, 2022

How do I organize my SKU numbers? ›

How to create SKU numbers?
  1. Step 1: Start with a top-level identifier. ...
  2. Step 2: Assign unique identifier in the middle numbers. ...
  3. Step 3: Complete the SKU with a sequential number. ...
  4. Step 4: Input the SKUs to your POS or inventory management system. ...
  5. Step 5: Create SKU barcodes.
Apr 19, 2022

What can you do with a SKU number? ›

A SKU, or Stock Keeping Unit, is a unique number used to internally track a business' inventory. Retailers use SKUs to track their inventory and sales, which can provide analytical data that are beneficial to have in order to develop relationships with your vendors and customers.

How do I choose a SKU for my product? ›

SKU Number Tips
  1. You can reuse SKUs.
  2. The first 2-3 digits should represent the highest category.
  3. Avoid beginning the SKU with the number 0.
  4. Do begin your SKU with letters.
  5. Avoid using letters that look like numbers.
  6. Don't use any of the manufacturer numbers within your SKUs.
  7. Don't overload your SKUs with meaning.
Dec 22, 2021

What are the 3 SKU best practices? ›

Here are three SKU best practices for you to consider:
  1. Make your SKUs easy to understand. ...
  2. Arrange words according to importance. ...
  3. Don't use letters that look like numbers, spaces, accents or symbols.
Apr 19, 2018

What is the SKU management strategy? ›

SKU management helps companies identify, track, and organize their retail inventory using customized, 8-digit alphanumeric codes. SKU management is an essential part of a more extensive inventory management strategy.

Can I generate my own SKU? ›

SKU stands for 'Stock Keeping Unit. ' It is a unique alphanumeric code that identifies a product to help retailers keep track of their inventory. SKUs can be created manually or using a SKU generator. Most inventory management software and point of sale (POS) system options provide a built-in method to generate SKUs.

What are example SKU formats? ›

Example SKU formats

The digits, separated by hyphens, refer to brand, style, and size. For example, she uses the SKU 4225-776-3234 for pants that are brand 4225, leg style 776 (boot cut), and size 32x34 (waist and length).

What is SKU structure? ›

A stock-keeping unit (SKU) is a scannable bar code, most often seen printed on product labels in a retail store. The label allows vendors to automatically track the movement of inventory. The SKU is composed of an alphanumeric combination of eight-or-so characters.

Why do I need a SKU to sell on Marketplace? ›

When you move from selling individual items online to selling multiple products across multiple online marketplaces, you will want to start using SKU Codes. By including a SKU Code, it is easy for you to ship the correct item to your customer and always have enough of your most popular items available.

Why is marketplace asking for a SKU? ›

SKU (or Stock Keeping Unit) is a unique number that can be used internally to track a business?? Inventory. … These are unique to your business and can be customized to answer the most common questions your vendors or customers have about your merchandise.

What is an example of SKU in retail? ›

A Stock Keeping Unit (SKU) is a unique identifier for a product, typically assigned by a retailer or manufacturer. It is used to track inventory and is typically associated with a product's barcode. An example of a SKU is XYZ12345. This would be the unique identifier for a specific product, such as a T-shirt.

How do you create good inventory item numbers? ›

Keep item numbers short, but not so short that they could be mistaken for other numbers (i.e., quantities). 4 to 8 characters will suffice for most organizations. Do not load item numbers with meaning; do not try to use the item number to describe your product.

What is SKU for unique items? ›

A SKU, which stands for Stock Keeping Unit, is a unique identifier for each of your products that makes it easier to track inventory. SKUs are vital tools for retailers and wholesalers, allowing them to identify products and monitor stock levels across systems and channels.

What is the difference between product code and SKU? ›

While many use the terms “SKU” and “UPC” interchangeably, they are actually very different. First off, an SKU (stock keeping unit) is strictly for internal use. A UPC (universal product code) is affixed to a product wherever it is sold in the retail market place. An SKU is the smallest unit of product or service.

What is SKU prioritization? ›

SKU rationalization is the process of determining which products should be kept, retired, or improved based on the myriad of factors that contribute to performance. Sometimes referred to as SKU optimization, this process enables organizations to refine their product portfolios to improve their financial outlook.

What is a smart SKU? ›

2. Smart SKUs. In this approach, a SKU is generated based on the different attributes of the product. The most common approach for Smart SKUs is to concatenate style name, color name and size name. Example: delancey-white-xs.

Can you turn a SKU into a barcode? ›

Depending on your format, any alphanumeric SKU can be used as a barcode (What is a SKU number?). You can accomplish this by simply changing the font you are using to a barcode font. Alternatively, you can use online websites, barcode generators that will generate barcodes for you simply by entering your data.

How much does SKU cost? ›

Price Range

From $14.99 per month.

Do you need a barcode for SKU? ›

SKUs can have barcodes associated with them, but they are not a requirement. Typically, a business will create barcodes for their SKUs if they want to speed up inventory management processes by using a barcode scanner to automatically update information in an inventory management software system.

Is there a SKU database? ›

Retail Velocity is a data provider offering Point-of-Sale (POS) Data, Stock Keeping Unit (SKU) Data, and Retail Sales Data. They are headquartered in United ... GrowByData is a data provider offering Product Data, Ecommerce Data, Pricing Data, and Stock Keeping Unit (SKU) Data.

How many numbers should a SKU be? ›

SKU stands for “stock keeping unit” and — as the name suggests — it is a number (usually eight alphanumeric digits) that retailers assign to products to keep track of stock levels internally.

What is the difference between UPC and SKU? ›

An SKU is an alphanumeric code for internal use and is unique to individual retailers or manufacturers. On the other hand, UPC codes are universal and can be used to identify a product no matter who is selling it later on, making it useful for external use.

What is a SKU matrix? ›

The SKU Matrix allows for the dynamic creation of Product Options without the need for having to manually specify each attribute.

What is the standard format for SKU? ›

Example SKU formats

The digits, separated by hyphens, refer to brand, style, and size. For example, she uses the SKU 4225-776-3234 for pants that are brand 4225, leg style 776 (boot cut), and size 32x34 (waist and length).

Can I create my own SKU? ›

SKU stands for 'Stock Keeping Unit. ' It is a unique alphanumeric code that identifies a product to help retailers keep track of their inventory. SKUs can be created manually or using a SKU generator. Most inventory management software and point of sale (POS) system options provide a built-in method to generate SKUs.

Which is the design principle for SKU? ›

Design Principles SKUs

Stay between 8 to 12 characters. Create easy-to-understand structure. Never use zero or special characters in the code like @, #, &, !. The code's first character must be the supplier's or brand's first letter.

What are the different types of SKU? ›

There are 6 different types of SKUs: standard, component, assembly, bundle, collection and virtual. Assemblies, bundles, and collections are made up of several different standard SKUs and components.

What is a SKU example? ›

A Stock Keeping Unit (SKU) is a unique identifier for a product, typically assigned by a retailer or manufacturer. It is used to track inventory and is typically associated with a product's barcode. An example of a SKU is XYZ12345. This would be the unique identifier for a specific product, such as a T-shirt.


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