Stock keeping unit definition | stock keeping unit examples
What Is a Stock Keeping Unit (SKU)? 2022:- The stock keeping unit (SKU) is an alphanumeric code that allows businesses to maintain inventory, measure sales by product and category, create store layouts and flow, and improve customer experiences. Retailers create these codes depending on characteristics that are essential to them.
Beyond identifying a product, stock keeping units provide a variety of purposes. It’s critical to understand what these codes are and how to create one. You should also learn about some of the other ways they’re used so you can design your inventory management system and customer experiences accordingly. What Is a Stock Keeping Unit (SKU)? 2022
What Is a Stock Keeping Unit?
A stock keeping unit (SKU) is a unique identification for a retail item. Retailers develop their own codes based on the qualities of their products. SKUs are usually divided into classifications and categories. For example, a home improvement store might have several sections, such as hardware or lawn and garden, and their SKUs might be organized by number or letter to designate products as categories within the lawn and garden area. Stock Keeping Unit (SKU)
Note: SKUs, unlike UPCs (universal product codes), are not universal. This means that each retailer’s item has its unique set of SKUs.
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How a SKU Works
SKUs are used to distinguish products from one another. Without classifying sales and inventory by make, model, kind, color, size, or any other distinguishing characteristics, it would be difficult to keep track of them.
Consider the situation where a retailer for a new locally owned lawn and garden store needs to come up with SKUs in order to start their inventory procedures. They may give mowers the letter A, with A1 denoting riding lawnmowers and A2 denoting push mowers. The following set of alphanumeric codes will be a color indicator, followed by a size indicator. B2 may therefore be assigned to red mowers, while B3 could be assigned to black mowers.
The mowers could then be categorized further based on their deck sizes. 011 would be assigned to 42-inch mowers, whereas 012 would be assigned to 36-inch mowers.
After that, the SKU is recorded into the inventory management system, which is linked to the POS system. The store can then use thorough reporting to keep track of inventories and sales. Retailers can also create data on their customers, sales, and inventories using an SKU system. What Is a Stock Keeping Unit (SKU)? 2022
What Are SKUs Used For?
The SKU is used for more than just identifying products and keeping track of inventory. You’ll be given information that can be evaluated to determine the profitability and efficiency of your retail business based on the data you’ve gathered.
Analysis
SKUs enable retailers to acquire data that allows them to analyze product popularity or see seasonal and cyclic sales trends in their various client categories. This data allows them to stock inventory that corresponds to consumer behavior trends.
Inventory Management
An SKU system’s primary function is inventory management. Retailers may manage inventory levels, turnover, and flow using one SKU. They can use the information acquired from sales to define inventory levels and periods, which can act as triggers for launching or terminating inventory orders. Stock Keeping Unit (SKU)
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Customer Assistance
An SKU system’s primary function is inventory management. Retailers may manage inventory levels, turnover, and flow using one SKU. They can use the information acquired from sales to define inventory levels and periods, which can act as triggers for launching or terminating inventory orders. Examples of Stock Keeping Units
Advertising and Marketing
The use of SKUs in advertising is a relatively new practice. With everyone comparing pricing in the competitive online retail scene, an SKU helps your inventory to appear unique and allows you to identify marketing strategies that are driving sales based on the product identifiers. Many shops use their SKU instead of the manufacturer’s model number to advertise their products.
This makes it more difficult for a customer to find the exact model at a competitor’s store, while also reducing the likelihood of competitors matching price plans based on the same data. It may also aid in reducing the number of consumers who visit stores to compare pricing for things they intend to purchase online. Examples of Stock Keeping Units
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Product Recommendations
These codes are also used by businesses to improve customer experiences on their online sales platforms. Amazon.com, for example, can use SKUs to select things to display as “suggestions” when you are shopping. Each product has been given a unique SKU with all of its identifying characteristics. When you look at a blender, the buying platform may show you additional blenders comparable to the one you’re looking at. Examples of Stock Keeping Units
Important Points to Remember
- SKUs are inventory identification codes.
- Tracking, inventory management, and sales trend research are some of the applications.
- Retailers create SKUs to fit their merchandising structure and inventory management procedures.
- To improve shopping experiences, SKUs can be used to design store layouts and arrange inventory.
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