What is Stock Keeping Unit (SKU)

SKU (Stock Keeping Unit) is a unique identifier assigned to each product or product variant a retailer sells. It helps keep track of inventory by distinguishing items based on characteristics like size, color, or configuration.

Examples

Product Description Example SKU
T-shirt Men’s Black T-Shirt, Size Medium TS-M-BLK-001
Laptop 13″ Laptop, 16GB RAM, Silver LAP13-SLV-16G
Coffee mug White Ceramic Mug, 12oz MUG-WHT-12OZ
Sneakers Women’s Running Shoes, Size 8, Blue SH-WRN-8-BLU
Shampoo Moisturizing Shampoo, 500ml SHMP-MOIST-500ML

A brief history

SKU is a term that comes from inventory management practices developed in the mid-20th century, as retailers needed a better way to track growing product lines.

Instead of relying on broad product categories, they started assigning unique codes Stock Keeping Units to every item and variation.

This made it easier to manage inventory, speed up checkout, and restock efficiently. As commerce shifted online, SKUs remained essential for organizing product catalogs and syncing inventory across channels.

Good to know

Not all SKUs are created equal. Since businesses assign their own SKUs (unlike UPCs, or Universal Product Codes, which are standardized across the industry), the same product might have different SKUs at different retailers.

That’s why it’s important to create a consistent internal system for naming and structuring SKUs especially if you’re managing multiple warehouses, sales channels, or product variants. A clear SKU structure can make inventory tracking, reporting, and fulfillment much easier.

Know more

Frequently Asked Questions

How is an SKU different from a UPC?
An SKU (Stock Keeping Unit) is created by a business to track its own products internally, and it can follow any format the company chooses. A UPC (Universal Product Code), on the other hand, is a standardized barcode used across the industry for identifying products globally.
Who creates SKUs?
Typically, the retailer or manufacturer creates SKUs. They decide on the structure, often including abbreviations for attributes like size, color, or category to help organize and track inventory.
Do SKUs have to be unique?
Yes, within your system. Each SKU should uniquely identify a specific product or product variant so there’s no confusion when managing orders, inventory, or reports.
What’s the best way to organize SKUs?
Use a consistent, logical format, often a mix of letters and numbers that reflect key product traits (e.g., category, size, color). This makes SKUs easier to search, filter, and manage across your systems.