Stock Keeping Unit
A stock keeping unit (SKU) is a brand's internal code for one distinct sellable item, with a separate SKU for each variant such as size or color.
Why it matters for ecommerce brands
SKU count is one of the biggest drivers of warehouse complexity and inventory cost. Every SKU needs a location, a barcode, a reorder plan, and its own safety stock, so adding variants multiplies work even when sales stay flat. Clean SKU codes also keep sales channels and the 3PL in sync. For example, a shirt in 5 sizes and 6 colors is 30 SKUs. If each needs 50 units of safety stock, that is 1,500 units held just as buffer. Cutting slow size and color combinations frees that cash.
Common questions
- What is the difference between a SKU and a UPC?
- A SKU is an internal code a brand or retailer creates to track its own products and variants. A UPC is a standardized 12-digit barcode number licensed through GS1 that identifies the product across all retailers.
- How should SKU codes be structured?
- Keep them short, readable, and unique, with a consistent order such as product, then color, then size. Avoid characters that are easy to confuse, like O and 0, and never reuse an old code for a new product.
- Is a SKU the same as a product?
- No. One product can have many SKUs, one for each variant such as size or color. Each SKU is a separate item to store, count, and replenish.