SKU – Stock Keeping Unit
A unique identifier for each product variation. The basis for precise inventory management.
In practice
An SKU is the product's DNA. Without organized SKUs, you don't know what's selling, what isn't, and what to reorder.
Common misconception
'SKU equals barcode.' A barcode is a standard external identifier. An SKU is an internal identifier you define yourself.
How to fix it
SKUs in chaos? (1) use uniform naming: category-product-variation, (2) export to a spreadsheet and organize, (3) don't delete old ones — mark them inactive.
Example
A clothing store: 400 products × 5 colors × 5 sizes = 10,000 SKUs with no naming convention. 3 days of organizing cut stuck inventory costs by 23%.
Priority
Set an SKU naming convention before uploading the first product.
Related terms
Keep learning. Metrics that touch the same area:
- Inventory ManagementOperationsTracking, ordering, and maintaining inventory. Too much means cash tied up. Too little means stockouts.
- FulfillmentOperationsThe entire process from receiving an order to delivery: pick, pack, label, ship.
- StockoutOperationsA product unavailable for shipping. Immediate lost sales plus damaged trust.
- DropshippingOperationsSelling without holding inventory — a supplier ships directly to the customer. Low margin (5-20%), no quality control.
- Lead TimeOperationsThe time from ordering with a supplier to receiving inventory. Critical for calculating the reorder point.
- MOQ – Minimum Order QuantityOperationsThe minimum quantity a supplier requires. Affects cash flow and risk on new products.
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