SKU is basically the abbreviation of “Stock Keeping Unit”, which are codes that help track price, product, and manufacturer information on inventory.

To ease the management processes of their inventory, retailers often use SKUs, which are numbers assigned to each product. When a cashier scans an item at the register, it is SKU that is being used to generate information on what was sold, when, and for what price.

SKU systems are highly important because running a sizable sales operation would be impossible without them. Without an SKU, the store would never be able to know how much of any item is in stock or when the stock is about to expire. By working out the SKU, the sales operation manager can then decide when to mix up products on the shelves to generate better sales.

Each retailer will use a different set of SKUs to run the operation. Unlike barcodes, SKUs differ from one store to the next. When an SKU is broken down according to the store scheme, there will be an exact description of the item in question.

Websites also use the SKU system to offer recommendations. For example, Amazon analyzes the SKU of each item viewed or bought by a visitor to determine which other ones to recommend next. Over time, Amazon gathers a massive stockpile of information on the items that would most likely be bought by any particular customer. Hence, observing how visitors browse the inventory can help provide invaluable data on how to process it more efficiently.

Each store should create its own SKU based on how many categories of items it plans to sell. Furthermore, the SKU should be optimized to track significant details on items, such as color, size, and so on.

Using SKUs instead of model numbers in marketing materials has an unintended benefit since customers often don’t know what model they’re looking at. Instead of being able to accurately compare prices, customers have to come visit the store, in which case they are much more likely to buy an item on offer.

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in General Marketing Definitions
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