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Ecommerce - Using SKU to Effectively Manage Inventory

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An Internet Millionaire's Secret Formula To Sell Almost Anything OnlineIn today’s eCommerce practice, applying a practical labeling system is crucial to manage inventory successfully in eCommerce. A lot of eCommerce owners never think of this before, especially when they have more and more products to sell online, they should ask themselves — what do I want to know right away when I sold a product? — a good well-developed SKU ID system will help to answer the question.



What’s the difference between SKU and UPC?

First of all, SKU and UPC are two very different labeling system. An SKU – Stock Keeping Unit – is a unique code to a company, therefore a same product should have different SKUs if sold by different companies. On the other hand, an UPC – Universal Product Code – is affixed to a product, no matter which company sells it, it stays the same.

Today, we focus on the topic of using SKU id system to effectively manage eCommerce inventory.

Why SKU is important to Manage Inventory?

SKUs are used to efficiently track the numbers of individual variants of products or services sold by a company.

An SKU is usually human readable, the code includes specific details about a product such as product manufacturer, size, color, date purchased etc. Each variation of products should have its uniqe SKU. Since an SKU can store a lot of useful product information, this code alone can help eCommerce owners have a much better control over inventory.

What should be included in an SKU?

If you need to know when the product was purchased from the suppliers, you can add YYMMDD into your SKU code. Maybe you want to indicate where the item is stored, for example, office, bookshelf, closet, attic or warehouse etc, then name each location with a letter or a number, so that you can instantly understand the exact location for a product. You can choose to include more attributes such as color, size, style, manufacturer, cost, condition and more.

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If you sell on Amazon, you can include up to 40 characters in an SKU. But keep in mind that Amazon has its own ASIN (Amazon standard identification number), which is a unique set of ten alphanumeric characters, for receiving, putting away or picking products.

SKUs can be a powerful aid in inventory management, but only if you put in the effort to accurately classify your products. Once you pick an SKU code according to the rules you set, it can’t be changed in Amazon. You are not recommended to change SKUs often anyway.  So plan ahead how you would like to classify your products thoroughly.  All your efforts will pay off when you can easily sort through your database on any of a specific attributes, and thereby be able to manage your inventory with high efficiency.

Let’s make an example:

AAA Model style
B Manufacturer
C size
D style
F color
G location
DDMMYY date acquired

An SKU id like this will let you know right away the model style, color and size etc so that you can pick and pack an order faster; you can also reorder right away from the manufacturer if the inventory runs low.

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