Do you ever feel like the only person in a meeting who doesn’t know what any of the acronyms mean? It can be a nightmare when you first start supplying to Walmart!
“Are we EDLP for BTS?”
“Will those SOTC items be available in LAG?”
“Our items are IOPD, but due to OTIF, our OSA is down.”
You’ve been there! It’s really not fair to single out Walmart. As much as they love acronyms, common ones used all across retail have become so familiar in our vernacular, it can be intimidating to raise your hand in a meeting and ask, “Wait, what does that mean?”
Part of learning at 8th & Walton means getting a handle on common terms throughout the industry. One common universal retail term that requires a deep dive is the SKU (pronounced “skew”). We’ll explain how the SKU is used and how it works to support and define your business.
What Is a SKU?
SKU stands for Stock Keeping Unit. It is a specific number assigned to a product by the retailer (not the supplier) to identify the price, options (brand, style, color, and size, etc.), and manufacturer of the individual item.
In talking about items in a store, you may hear buyers say, “Yes. We have that item. We carry three SKUs.” What they’re saying is they carry three varieties of the same item.
For example, if Betty’s Ice Cream Company has three flavors of ice cream in Walmart, that’s three SKUs. The store may have 15 cartons of chocolate, 16 cartons of strawberry, and 19 cartons of vanilla, but it still translates to three SKUs of the item.
Is a SKU Different Than a UPC?
A SKU and UPC number are very different. UPC stands for Universal Product Code. By its own definition, the UPC is a universal number. The UPC number on a tube of Molly’s Toothpaste will be the same at Walmart as it is in Kroger and Target. It also only tracks basic information.
The SKU, on the other hand, is unique to the retailer. It’s a series of numbers that can be set up to identify specific information about each product.
What Is the Purpose of Having a SKU Number?
Because SKU numbers are unique to the retailer, they are used to easily track inventory in the store. SKU numbers can be broken down into various categories and classifications for each item. Most POS systems allow retailers to create their own hierarchy and SKU number assignment.
With the rise of online shopping, the SKU number has found a new function in recent years. While browsing Walmart.com, you may be looking at a lawnmower. In reviewing the features, the screen will also populate with “similar items” or “items you may also like.” These other options will be close to or even complement the lawnmower you’re seeing based on the lawnmower SKU number.
For the retailer, another advantage of having a SKU number is advertising. Stores make a practice of “price-matching” competitors to win the business. By each retailer having a unique SKU number for identical items, they can better protect margins.
There are many retailers who elect to list the SKU in a local ad instead of the manufacturer’s model number. To the average shopper, we have absolutely no idea if the item we are looking at is the same one as in the other store. This prevents the retailer from having to match the price.
The SKU Keeping Profit and Loss in Check
Where are you getting the most profit in your store? Which items deserve a feature or more shelf space? These questions are easier to answer when backed up by data from the SKUs.
When you track the variations of a product with SKUs, you don’t just report on the main product line; you zoom in to the performance on the individual variation of the product. This method of reporting off the SKUs can tell you which product variants are your best sellers and which need adjusting.
The SKU performance report will show you Jamie’s Fuzzy Bears sell well, but the purple ones move three times faster than yellow ones; time to adjust the shelf space!
Then there’s the loss aspect of any business. Every business struggles with ways to track and identify inventory loss. In the supply chain, items have many opportunities to be damaged, go missing, or be stolen.
If your company SKU numbers are diligently categorized, it will greatly help narrow down where and how the item went missing. This will help your loss prevention team greatly minimize future opportunities for theft and fix errors in the supply chain.
Knowing More About SKUs and Item Setup
Still have questions about SKUs, setting up your items, or other acronyms at Walmart? Our experts are standing by to help!
Talk one-on-one with an adviser from 8th & Walton and let us do the heavy lifting for you!
FAQs
What is a SKU in a retail store? ›
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. If a product has different colors and sizes, each variation has a unique SKU number.
What is stock keeping unit SKU level? ›In the field of inventory management, a stock-keeping unit or SKU refers to a specific item stored to a specific location. The SKU is intended as the most disaggregated level when dealing with inventory. All units stored in the same SKU are supposed to be indistinguishable.
What does SKU stand for in Walmart? ›What Is a SKU? SKU stands for Stock Keeping Unit. It is a specific number assigned to a product by the retailer (not the supplier) to identify the price, options (brand, style, color, and size, etc.), and manufacturer of the individual item.
What is SKU stock keeping unit examples? ›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 many SKUs are in a retail store? ›Traditional retail grocery businesses have between 15,000–60,000 SKUs in their stores. Our reduced SKU assortment provides a more efficient shopping experience for customers, allowing them to get in and out quickly, and simplifies operations for our Retail Partners.
How to use SKU in retail? ›- You can reuse SKUs.
- The first 2-3 digits should represent the highest category.
- Avoid beginning the SKU with the number 0.
- Do begin your SKU with letters.
- Avoid using letters that look like numbers.
- Don't use any of the manufacturer numbers within your SKUs.
- Don't overload your SKUs with meaning.
Every product you sell needs a unique identifier—called a stock keeping unit (SKU)—that helps you differentiate one product from another. It's not enough to have one SKU for a t-shirt, for instance. Each variant of a product should have different SKUs.
What is the difference between SKU and stock? ›SKU (pronounced “skew”), short for stock keeping unit, is used by retailers to identify and track its inventory, or stock. A SKU is a unique code consisting of letters and numbers that identify characteristics about each product, such as manufacturer, brand, style, color, and size.
How do you create a SKU stock keeping unit? ›- Step 1: Start with a top-level identifier. ...
- Step 2: Assign unique identifier in the middle numbers. ...
- Step 3: Complete the SKU with a sequential number. ...
- Step 4: Input the SKUs to your POS or inventory management system. ...
- Step 5: Create SKU barcodes.
Can two products have the same SKU number? No. SKU numbers are unique to the retailer selling the products. However, two products could have the same barcode or UPC number.
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.
How does SKU work? ›A stock-keeping unit (SKU) is an alphanumeric code that identifies a product and helps you track inventory for your retail business. The information your SKU includes is completely up to you—distinguishing it from a universal product code (UPC), a standardized 12-digit code manufacturers use to identify products.
How do you find the stock keeping unit of a product? ›Typically, SKU numbers are listed on the product's packaging — usually above the product's barcode, as seen below. While the 12-digit numeric code on the bottom is the product's UPC (Universal Product Code), the alphanumeric code at the top is the SKU number (which is different from the UPC).
How do you manage SKU inventory? ›The best way to manage SKUs is to implement a simple format to ensure an easy-to-memorize structure. Avoid letters and numbers that could be mistaken for one another, and always use capital letters to prevent confusion. Group all of the similar products together, and keep SKU codes short.
What is the difference between product and SKU? ›The product is a generic definition of something that is made available in your store, such as "Shirt". Stock Keeping Units (SKUs) are the variations of this product. Products can vary by shape, color, size, among other characteristics.
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.
Is SKU the same as item number? ›A SKU is not the same as a product model number from a manufacturer or a UPC number. The SKU is created and assigned by you, the merchant, to identify and track your own inventory and should be constructed in a way that has meaning to you. In fact, most good retailers can identify their products by the SKU alone.
Who is responsible for the SKU number? ›Companies are responsible for creating SKU codes for their internal use at their convenience. UPC barcodes are assigned by the GS1. Companies are free to create SKU codes for the products of their own accord.
What is the best practice for SKU number? ›- 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.
Typically, SKU numbers are listed on the product's packaging — usually above the product's barcode, as seen below. While the 12-digit numeric code on the bottom is the product's UPC (Universal Product Code), the alphanumeric code at the top is the SKU number (which is different from the UPC).
What does a SKU look like? ›
It's usually 8 characters long and made up of letters and numbers. Retailers use different SKU numbers for different products based on their features like price, manufacturer, color, style, type, and size. SKUs are specific to a business and can be customized to meet the needs of vendors and customers.
Does every item have a SKU? ›Every product you sell needs a unique identifier—called a stock keeping unit (SKU)—that helps you differentiate one product from another.
What does SKU mean buy and sell? ›A stock-keeping unit, or SKU, is a unique code that a seller assigns to every type of item it sells. SKUs are also an important part of a merchandising structure, allowing merchants to arrange inventory in their stores or warehouses according to product SKUs.