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What Is a SKU Number and How Do You Generate Them?

As a business owner, it is critical to have SKU numbers for managing inventory and maximizing sales. But, what is a SKU number exactly? This article teaches you more about SKU numbers including how to generate them.

If you’ve ever shopped online or in a large retail store, you’ve probably noticed that each product has a unique code associated with it. This code is called an SKU number, and it’s used to track inventory and help businesses keep track of their products. 

What is a SKU number?

What is a SKU number? A SKU is a unique number that is assigned to an item in order to keep track of inventory levels. This number is typically eight alphanumeric digits long.

Products are given SKU numbers to identify them by certain product characteristics like price, manufacturer, color, style, type and size. Th

Product codes, or SKUs, are used to identify products based on their unique characteristics. This allows businesses to better tailor their inventories to the needs of both customers and suppliers.

Most stores are aware that product codes, or “SKU”, are important in keeping track of products, but few know why they are important. Product SKU codes are integral to the back-end of retail, helping to track and process inventory.

If you are running a business, you most likely have a product catalog, whether you’re new or a veteran, have a huge inventory of products, or run an e-commerce or brick and mortar store.

A product’s stock keeping unit (SKU) is a code used to identify it. A Universal Product Code (UPC) is similar to a sku, but is not as widely used.

Why are SKUs important?

SKUs are important for inventory management because they provide a unique identifier for each product. This helps to prevent overstocking or selling products that are out of stock, and ensures that customers can always find the products they need.

Can two products have the same SKU number?

A product’s stock keeping unit (SKU) is a unique code that identifies a product. No two items can have the same unique ID.

Even though a product may have the same bar code or EAN, the sku number is unique to that retailer. This makes it more accurate to track your inventory.

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With only a few clicks, you can integrate your online store with your physical store inventory. This eliminates the need for manual reconciliation of stocks, as everything will be synced.

How Do You Generate SKU Numbers?

You can generate SKU numbers in any way you want, but we recommend using your inventoryretail management system. This will make it easier for your staff to read and remember SKUs.

Cashiers who work in grocery stores often have to remember a lot of different produce SKUs in order to ring the groceries up faster. You can choose to use only numbers or letters – or do a combination of the two.

When choosing digits, you could choose randomly. However, it is better to choose digits with meaning.

You can refer to certain numbers by segmenting them out.

Sometimes, item categories can be assigned based on the first 2-digits of a SKU. The next 2-3 numbers can denote a sub-category, and the last 2-3 can indicate a unique ID.

One way to reference an inventory item is to specify a single category and combine it with a sequential set of numbers.

Here is an example of that small pet store’s website:

If you have a more complex inventory, you may want to include more information in your SKU. Here is a list of some aspects of an item that you could include: supplier, store location, department, variation, product type, size, and color.

Every type of product the store offers, from men’s to kids’ to ladies’, should have its own individual stock keeping unit (SKU).

To generate SKU codes, you need to first identify the different characteristics of your product. Each section of the SKU code represents a different characteristic, such as size, color, or style. You can then put these codes together in unique ways to demonstrate particular items. For example, a different men’s purple sweater than the one seen in the table above might be M223-02-002.

You can generate SKU numbers by using a combination of letters and numbers that are specific to your product. For example, the first 5 digits of any women’s purple sweater could be W223-02, or a pair of men’s green jeans could start with M606-51.

When a SKU number is put together in a logical way, it becomes easy for a sales associate to take the number and figure out what item it represents. This can be helpful in determining which items are selling well and which ones need to be reordered.

You Can Reuse SKUs

You can sell items with the exact same name, but make sure you don’t sell them for 3 years.

At the clothing store I worked at, we re-used product codes after several years. This was because customers would sometimes return items they had purchased years earlier. The tag and the product code on the garment corresponded to a new item.

The item in question still had its original tags and SKU number from 12 years ago. Upon inputting the SKU number into our system, it was revealed that the same SKU number is now being used for a different item.

How to Identify a Good SKU Number

The first digit of the item’s sku should always be the most important category for that specific item. This will keep all of your sku numbers uniform and easy to read.

With this, you start most broad and get more specific. Output: It’s the reverse of how you’d identify your hometown. You start with the most general information and get more specific as you go along.

Don’t Start Your SKUs With 0s

Don’t start your product numbers with 0s. Some data storage programs might interpret the 0 as “nothing” and you could end up with 12345 instead of 012345.

It’s always better to be safe than sorry.

Avoid starting with 0’s.

Do Beginning Your SKUs With Letters

Use letters to label your stock keeping units (SKU) to make them easier to identify in spreadsheets. This makes it easier for inventory tracking and distinguishing your different items.

Avoid Using Letters That Look Like Numbers

When writing, it is best practice to avoid using letters that could be confused with numbers or other letters. For example, the letters ‘I’ and ‘l’ can easily be confused.

Your employees will (often) have to manually type in product codes. You want to make this as quick and painless as possible for them.

If you don’t want to cut numbers and letters out of your system entirely, you should use sectioned SKU numbers where some sections are always uppercase letters and some sections are always numbers. This will make it easier for your staff to input SKUs by hand.

Your staff will be able to tell the difference between the letter ‘O’ and the number zero if they see it in the alphabetical section.

Don’t Use Any of the Manufacturer Numbers Within Your SKUs

In general, it’s recommended that stores create unique SKU numbers to avoid confusion. SKUs are meant to be unique to each business, so go ahead and make yours stand out.

One method of avoiding having to use any of the manufacturers’ numbers in your product codes is to have a formula for generating them. This will prevent confusion and ensure that your product codes are completely unique.

Don’t Overload Your SKUs With Meaning

It’s better to forsake some detail in the name of ease of memorability and fitting the number on your tags. When creating SKUs, be mindful of how much information you’re trying to include. Using too many SKU details can make it difficult to remember and use. It’s often better to choose simplicity over cramming in every last bit of data.

It’s better to forgo some product details for the sake of being memorable and making your tag fit.

When deciding how to split up your warehouse or retail store, choose a couple of key features and let item numbers do the rest. This will make it much easier to keep track of items.

If you need more than 3 pieces of information, keep the code for each piece of information as short as possible. For instance, if you have 9 separate vendor contacts, give them a 1-9 phone number, rather than an abbreviate 2-3 letter name.

SKU Numbers – Avoid Dashes and Periods

Symbols and punctation in your SKUs should be avoided when possible. Avoid using (“.”, “-“, “_” and “”)

It is best to avoid using characters such as periods and dashes when printing barcodes, as they may cause issues.


By following these tips, you can create SKU numbers that are easy to remember, input, and track. So what is a SKU number? It’s a simple code that helps businesses keep tabs on their inventory. By generating your own SKUs for your products, you can work more efficiently and avoid common mistakes.