Whether you're a long standing e-commerce store or a new one, there are a few things that you know are important to maintaining organization within your store. This is true for e-commerce or brick-and-mortar as well. No matter the medium, no matter the length of time in business, there are a few things to which all stores should adhere. In this case, if you have any sort of inventory that you're moving, having a SKU system in place is one of those things to which you should adhere.

What is a SKU?

First, things, first. If you weren't already aware, a SKU (pronounced "skew"), or stock keeping unit, is generally an alphanumeric identifier unique to your store. Essentially, its most basic function is to track inventory internally, which makes it pretty important. As I said, a SKU is unique to your store in the sense that it is going to help identify your own products in your own special way. A SKU is not to be confused with a model number or a Universal Product Code, or UPC. While a UPC is universal to virtually every retailer that's selling a given item, your SKU is only internal.

Your SKU should not match the UPC since the UPC is always numerical. Your SKU should be alphanumerical in order to best identify your stock. For example, say you sell skincare. If you're trying to identify an anti-aging moisturizer that comes in a 12 ounce jar, a decent SKU might be AAMOIS12Z. A unique SKU would differentiate between an acne-prone skin moisturizer in an 8 oz jar (ACNMOIS8Z) or a vitamin-c serum in a 10 oz jar (VITCSER10Z). Having all of these unique identifiers is a sure fire way to keep track of your inventory.

Why are they important?

Having a SKU system in place is important for a multitude of reasons. Two of the biggest reasons are tracking inventory and customer service. There are few things more frustrating for a customer than wanting to order an item only to find out that is out of stock and the store has no idea when it will be back in stock. Customers can, and will, take their business elsewhere if they run into too many problems when it comes to your site and inventory levels. Inventory can make or break a customer's experience. Keeping a weather eye on inventory and ensuring customer satisfaction will help the customer help you.

Having a SKU system can also help with sales forecasting and help you determine at which point to reorder certain items. In some instances this is helpful not only for you, but also for you customers. I was once browsing online for a bathing suit. I came across one I liked, but was going to wait and think about it. Well, that was until I saw a bright red text that read: LOW STOCK ALERT! Items remaining: 3. That settled it. I bought it right then and there. Imagine how many abandoned carts you can avoid by allowing consumers to be aware of the low availability of stock in real time!

In a perfect world, that site would already have anticipated the bathing suit being low on stock and would have had some more on order. I never went back to check, but if they were aware of inventory in real time, I'm sure they had some on order. This could be your store. If customers are aware of how efficient you are with keeping track of inventory, they might be more willing to trust you with their purchases.

Utilizing SKUs are also important because they can help with your profits. If you don't want to forecast that an item is low on stock on the page, you could also do an email blast to consumers who either browsed the item or left it in their carts. Telling a consumer that products are low on stock might encourage them to purchase the item since so many consumers fear missing out on something they liked. Additionally, you could use the inventory tracking to recommend other products to a consumer based off of what they're already viewing.

All in all, it's a win-win to have a SKU system in place.

Things to Remember

Now that you understand what SKUs are and why they could potentially help your business, it's time to go over a few do's and don't's when it comes to generating SKUs. As with most anything in the world of e-commerce, you have to dot your i's and cross your t's in order to secure success and maximize efficiency.

Do

Begin your SKU with a letter

UPCs are solely numerical. If you were to start your SKU with a number, there's a possibility that it could be confused with a UPC which could be identifying a totally different product and you don't want that. Your SKU is going to be different than a UPC in essentially any case. We don't want any wires being crossed when going over these numbers. Having a letter at the beginning will help your SKU be more identifiable in a spreadsheet as well.

Don't

Begin your SKU with a zero

SKUs are put into spreadsheets. Anyone who uses Excel knows that if you enter something into the spreadsheet that begins with zero, the zero will be deleted unless you format it specifically not to do so. In the event that the spreadsheet needs to be transferred and the formatting is lost, so are the zeros. This will alter your SKU and, by extension, your inventory which is obviously a no-go. If you insist on using a number at the beginning of your SKU, which is not recommended but still doable, just make sure it isn't a zero.

Do

Use alphanumerical coding to generate a SKU

Again, the idea is to eliminate the possibility that your SKU will be confused with a UPC. The best way to do that is to include both numbers and letters. It's not the end of the world if you don't use both, but it's the best way to an optimized SKU.

Don't

Use special characters or spaces in your SKU or similar characters

Honestly, there's absolutely no need to use special characters in your SKU. This isn't a password for anything. Chances are it will get eliminated in a spreadsheet, get confused for a function in a spreadsheet, or cause confusion in terms of description (because that's what your SKU ultimately does). Additionally, you'll want to reduce the use of number that look like letters and vice versa. For example, zeros look a lot like capital o's when you're just skimming something. The same goes for g vs 9, l (either lowercase L or capital i) vs 1 and so on. You can use either or, or neither, but do not use both. Don't make things harder for yourself.

Conclusion

The use of SKU is not a terribly complicated process. If done correctly, the only thing it will do is help you. There's really no right or wrong way to generate them, simply recommendations. You can certainly generate them by hand, but if you're having trouble doing this, there are SKU generators out there. Once you've selected a SKU generator, use the same one basically forever. This will eliminate the possibility that a SKU will be reused. It will also keep them relatively uniform in the way they're generated so that you have some consistency in your system. There's much ado about SKUs, but they really aren't that hard to use.