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FundamentalsReviewed September 5, 2026

What is SKU?

Stock Keeping Unit

A SKU, or stock keeping unit, is a code a business creates to identify and track each distinct product it sells, including each size, color or other variation, so it can manage inventory and sales accurately.

How SKUs work

Each variation gets its own code. A t-shirt in red, size medium has a different SKU from the same shirt in blue, size large. Inventory systems, online stores and warehouses use these codes to track stock and fill orders.

SKU versus UPC

A SKU is created by each business for its own use, so the same product can have different SKUs at different stores. A UPC is a standard barcode number that stays the same for that product everywhere it's sold.

Creating a simple system

Good SKUs are short and readable, using letters and numbers that stand for things like product type, style, color and size, such as TS-CREW-RED-M. Avoid spaces and characters that can confuse software.

Why SKU matters

Clear SKUs prevent overselling, picking errors and messy reports. They also matter for online sales, since shopping feeds, marketplaces and inventory tools rely on consistent product codes.

Ending the wrong-size shipments

A small apparel brand used product names instead of SKUs, and packers often shipped the wrong size. Giving every size and color its own SKU and printing it on shelf labels cut shipping mistakes and made stock counts accurate.

Common mistakes

  • Reusing SKUs

    Giving a new product an old product's SKU scrambles sales history. Retire old codes instead of recycling them.

  • Overly long codes

    Long, complex SKUs are hard to read and type. Keep them short and consistent.

  • Starting with zero

    Some spreadsheets drop leading zeros. Start SKUs with a letter to avoid errors.

Where we work on this

Related terms

Full glossary
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Dropshipping

Dropshipping is a way of selling products online where the store never stocks the items. When a customer orders, the store passes the order to a supplier, who ships the product directly to the customer.

Paid Media

Product Feed Optimization

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Unit Economics

AOV

AOV is total revenue divided by total number of orders over a given period: the average amount a customer spends per transaction.

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Google Merchant Center

Google Merchant Center is a free Google tool where online stores upload and manage product information, like titles, prices, images and availability, so their products can appear in Google Shopping ads and free product listings.

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WooCommerce

WooCommerce is a free, open-source plugin that adds an online store to a WordPress website. It handles products, carts, checkout, orders and inventory, while you keep full control of the site and its hosting.

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Print on Demand

Print on demand, or POD, is a way of selling custom-designed products like t-shirts, mugs, posters and phone cases, where each item is printed only after a customer orders it, usually by a third-party printing partner who also ships it.

Applied, not theoretical

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