What Is a Stock Keeping Unit (SKU)? Definition and Guide (2024)

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.

Companies issue their own unique SKU codes specific to the goods and services it sells. Two companies selling the same item, such as yoga pants, would likely issue two different internal SKUs.

The purpose of SKUs is to help companies more accurately and quickly account for every piece of their inventory. They are different from model numbers, but model numbers can be incorporated into a SKU if a company so chooses.

Where SKUs are used

You will typically find SKUS in use in:

  • Warehouses
  • Retail stores
  • Catalogs
  • Etailers
  • Product fulfillment centers

How SKUs are formed

Companies have their own systems for creating unique SKUs, but there is always a specific method involved.

The SKU for a pair of purple UGG boots in the Bailey Bow style in a size 7 might look something like this: UGG-BB-PUR-07.

Or a bottle of Tropicana orange juice, without pulp, in an 89-ounce plastic bottle might be issued a SKU that reads: TROP-NP-PLAS-89.

There is no set way to create SKUs, but companies that develop their own system will want to have a method that everyone follows and understands, so that it is easy to decipher the code. SKUs should be human readable, meaning that you don’t need any equipment to read and break down the code.

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SKUs and bar codes

SKUs are sometimes thought to be synonymous with UPC bar codes, but they are distinct. A SKU is an internal code that each business can create for itself, whereas a UPC is the same no matter who sells the product.

Stock Keeping Unit FAQ

What is an example of a stock keeping unit?

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 bar code. An example of a SKU is XYZ-12345. This would be the unique identifier for a specific product. If you want to create a bar code from your SKU code, try our free bar code generator.

What does SKU mean in manufacturing?

SKU stands for stock keeping unit, which is a unique identifier used in retail and manufacturing to keep track of inventory. It is a number or code that is associated with a particular product or item in order to help identify and track it.

How is an SKU created?

The SKU can be created by assigning a letter or number to each attribute of a product. For example, a t-shirt may have its SKU include a letter indicating the size and a number indicating the color.

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