Stock keeping units are called SKUs. These are essentially numbers and letters that enable users to find, identify, and track a unique product line’s stock levels. For example, you will see a unique barcode in amazon stranded inventory behind every product. We offer all the answers you need to know about them and why they are important to businesses here.
What is SKU code?
When we talk about inventory management, we speak of SKUs. A product’s characteristics are determined by the numbers and letters it contains. Color, size, manufacturer, and type of product, which makes it easy to identify its location and availability. SKU Code is typically has 8-12 characters and some form of meaning incorporated into the formula. In addition, since spreadsheet software such as Excel will discredit your SKU if you start with a zero, you would be causing yourself more stress.
Why is an SKU essential?
It is simple and effective to find a product using a product’s SKU not only within an online store, but also within a business’s inventory. A blue t-shirt from two companies could have a similar SKU, assuming that both items are sold online. The company having that SKU can therefore track its movement and manage its inventory through this application. If you need inventory forecasting software for your business requirements, checkout Inventooly.
In addition to shortening product descriptions, SKUs act as a shorthand when inserted into spreadsheets or SKU systems. Every business needs to manage its inventory, and SKUs simplify the process of identifying which product is which. The amount of stock you have, how that product differs from others, and how you differentiate it from others.
5 ways you can use SKU for your business needs
1. Keeping track of inventories accurately
You can use SKU numbers to monitor your inventory because they can be used to track different characteristics of your products. Even across multiple stores, you can view your stock levels and the availability of specific items. Because your inventory system will likely be integrated with your supplier’s system, reordering can be streamlined. Using the same identifier across stores will allow you to keep all of your systems up to date. This will make supply chains and logistics more efficient.
If you have accurate inventory tracking, you will be able to maximize your cash flow with excellent inventory management.
2. You Can Predict Your Sales
In order to identify your brand’s urgent issues and opportunities, you can view inventory levels using SKUs in real time. So, you can adjust orders in the future if you are overstocking slow-moving items. By keeping enough inventory of your best-sellers, you can avoid low inventories. By identifying the most popular items, you can promote them via online promotions, to help move them quickly. In addition, trying to maintain a balance between top-sellers and other items will help you meet the needs of your customers.
3. Enhance customer loyalty and satisfaction
Customers can be predicted as to which products they will likely order again by using SKU codes. If you are aware of this, you can assure that these products are readily available so that buyers will not see out-of-stock messages. Customers will feel appreciated and will be loyal to your brand.
Customers in the United States go to other websites to buy out-of-stock items when they come across out-of-stock items online. In contrast, only half of those buyers will change brands or look for substitutes on the same online store. Approximately 15% of those buyers will delay their orders or cancel them. By regaining sales from buyers who failed to find what they wanted, retailers could gain $22 billion in profits.
4. Product suggestions that are relevant
Your SKU list lets you suggest similar products when your store has out-of-stock items. If you sell online, you can suggest alternative products. Based on the SKU of the item that a customer intends to purchase, you can upsell or cross-sell other items that may be useful to them. The probability of upselling existing customers is between 60 and 70%, and the chance of gaining new customers is between 5 and 20%.
SKUs are not just for making money, but also for adding value to your customers through upselling and cross-selling. In the long run, you can expect them to return for more of your product if you provide a wonderful and straightforward buying experience.
5. Providing better service to customers
You must know your products inside and out if you work in sales. You must understand the differences between one product and another. In a physical store, you can organize your inventory so you can find items quickly. If you are selling online, you can ship your products promptly. When your staff knows where the products are, they can decrease customer waiting times. Customers can also make informed buying decisions when your staff knows where the products are.
6. Minimize shrinkage
Different product suppliers may be involved with your retail business. By keeping track of SKUs, you will be able to track products as they arrive. In addition to knowing how many items are arriving at your warehouse, you can report missing items, suspected mishandling, or potentially theft if they are discovered to be missing.
7. Analyzing behavioral patterns
SKU analytics provide you with a comprehensive overview of your inventory, as well as insights into your customers’ behavior. Using this information, you can plan the assortment of goods available to your customers based on the items they tend to buy together. The profitability of product lines can also be determined. You can also measure outstanding inventory and inventory turnover can be calculated.
A SKU helps you manage inventory and foster a better customer experience. However, it’s not the only reason why you should use it.
How to Create SKU Numbers
You can create SKU numbers for your products if they don’t already have them. Avoid using your supplier’s SKU, as this may cause problems down the road. Inventory management software such as Inventooly makes it possible for you to generate unique SKU numbers.
How to Create SKU Codes Quickly
- If you create your own SKU structure, you should remember the following:
- A step-by-step guide to creating a SKU number
- Please use between 8 and 12 characters
- A letter should be added to the SKU number
- Your letters and numbers should represent an important characteristic of your products
- SKUs should not be stuffed with meaning
- Don’t start your SKU with zero
- It is best to avoid confusing letters such as L, I, or O with numbers
- Use an easy-to-understand format
- SKUs should not be re-used
- Dots or dashes can be used as separators
- Keep your text free of spaces and slashes
Creating a SKU number includes the following basic steps
1. You can choose the SKU identifiers that you want to use
To structure your SKU number, you need to determine which product attributes you want to track. Various options are available to choose from, such as size, color, style, type, brand, or other criteria.
2. The top-level identifier should be assigned
Your SKU should have 2 identifying characters at the top. You can use them, for example, to identify the store location if you have multiple stores.
3. Increase the number of product characteristics
In the next two to eight characters, you can identify specific brand, color, style, and size characteristics. If you want to avoid confusion, use letter codes to identify suppliers.
4. The sequence number should be the final element
In order to differentiate between new and old inventory, the last two to three characters should be sequential numbers. The SKU for a red t-shirt from the same brand, of the same size, will help you decide which product to launch first.
Conclusion
Utilizing SKU numbers makes it easier for you and your staff to organize, track, find, and identify inventory. You can maximize sales by properly merchandising your floor, serving your customers, and creating SKU numbers. By using an inventory management system like Inventooly, your business can operate more efficiently and profitably.
Also read: 5 Customer Experience Mistakes That Destroy Your Business
