Inventory
What is a SKU?
A SKU (stock keeping unit) is a code you create to identify each distinct product you sell, down to the variant: a medium black tee and a large black tee get different SKUs. SKUs are internal to your business, unlike barcodes such as UPCs, which are globally registered. Consistent SKUs make inventory counts, reordering and per-product reporting possible.
What a SKU is for
Every sellable variant gets one SKU. It's used to:
- Track stock for each variant separately, so you know you have 12 medium blacks and 0 larges.
- Pick and pack the right item, especially when a 3PL or staff fulfill orders.
- Report sales and margin by product, including comparing variants.
- Connect systems: Shopify, your inventory tool, your 3PL and marketplaces can all match on SKU.
SKU vs UPC vs GTIN
| SKU | UPC | GTIN | |
|---|---|---|---|
| Who creates it | You | Assigned through GS1 | Assigned through GS1 |
| Unique where | Within your business | Globally | Globally |
| Format | Any letters and numbers you choose | 12 digits (North America) | 8, 12, 13 or 14 digits |
| Used for | Internal inventory and operations | Retail scanning | Retail and marketplace catalogs, Google Shopping |
A UPC is one type of GTIN (Global Trade Item Number). Others include EAN (13 digits, common in Europe) and ISBN for books.
Google Shopping uses GTINs to match your products to its catalog. See the guide to what a GTIN is.
How to create SKU numbers
A good SKU is readable, consistent and never reused. A common scheme builds it from segments, broadest first:
CATEGORY - PRODUCT - COLOR - SIZE
| Product | SKU |
|---|---|
| Organic tee, black, medium | TEE-ORG-BLK-M |
| Organic tee, black, large | TEE-ORG-BLK-L |
| Fleece hoodie, grey, medium | HOOD-FLC-GRY-M |
| Ceramic mug, white | MUG-CER-WHT |
| Canvas cap, navy | CAP-CNV-NVY |
Rules that save trouble later:
- Start with letters, not zeros. Spreadsheets drop leading zeros, turning 00123 into 123.
- Avoid confusing characters, such as O vs 0 and I vs 1, and skip spaces and special symbols.
- Keep segments a fixed length where you can, so SKUs sort neatly.
- Don't encode things that change, such as price or supplier.
- Never reuse a retired SKU for a different product. Old reports and orders will get mixed up.
Setting SKUs in Shopify
In your Shopify admin, each product and variant has fields for a SKU and a barcode, alongside its inventory details. According to Shopify's help center, the barcode field accepts identifiers such as GTIN, UPC, EAN and ISBN, while the SKU is your own code for tracking stock.
To add SKUs to many products at once, use Shopify's bulk editor or a product CSV export and import: fill in the SKU column, then re-import.
Contribution Margin per SKU CalculatorWhat a single SKU actually contributes after COGS, shipping, and fees.Once every variant has a SKU, you can compare profitability product by product. The calculator above shows what each SKU contributes after its variable costs.
Want this handled automatically?Forecast demand and know exactly when to reorder, before you stock out or tie cash up in overstock.Try Verve AISKUs and inventory accuracy
SKUs make the rest of inventory management possible:
- Stocktakes compare counted vs expected quantities by SKU. See how to run a stocktake.
- Reorder points are set per SKU, because each variant sells at its own pace.
- Bundles and kits are built from component SKUs. See how to make a bill of materials.
To use SKUs on Google Shopping, you'll also need GTINs for products that have them. See the Google Merchant Center setup guide.
FAQ
What does SKU stand for?
Stock keeping unit. It's a code a business creates to identify each distinct item it sells, down to size, color or other variant.
Is a SKU the same as a barcode?
No. A SKU is your own internal code, which you make up. A barcode usually encodes a GTIN such as a UPC or EAN, a globally unique number registered through GS1. One product can have both.
Do I need SKUs on Shopify?
They're optional, but strongly recommended once you have variants, multiple locations, a 3PL or a marketplace channel. Without them, inventory counts, reorders and per-product reports get messy quickly.
Can two products share a SKU?
They shouldn't. Each sellable variant needs its own SKU, so stock and sales can be tracked separately. Reusing SKUs causes miscounts and wrong items being picked.
How long should a SKU be?
Long enough to be unique and readable, short enough to type and scan easily. Many stores use 8 to 12 characters split into a few segments.