What is SKU and how to set it up
What is a SKU?
SKU stands for “Stock Keeping Unit.” It is a number or short abbreviation that retailers use to identify their products.
How to create a SKU?
You can always randomly generate number and letter combinations when coming up with SKUs but we strongly recommend against going with this approach. SKUs are much more useful and easier to use when they can be read as a description of the product, identifying many of the product’s most important characteristics.
Any parameters you use to identify your products can be abbreviated in the form of letters and numbers that enable you to easily distinguish one product from another. You can create it based on:
- Product name
- Category
- Location
- Date
- Any other specified parameters
For example, consider in the table below how the ending SKU clearly identifies the location, category, and product.
| Product name | Category | SKU |
| Cheeseburger | Hamburgers | yuzu-burgers-cheeseburger |
| Cheeseburger Special | Specials | yuzu-specials-cheeseburger |
Here is an example of a business with two locations and different product availability:
| Location | Product name | Category | SKU |
| Copenhagen | Taco Trio | Specials | copenhagen-specials-taco_trio |
| Stockholm | Taco Special | Specials | stockholm-specials-taco_special |
Here is en example of a company running two businesses with completely different product availability:
| Business | Product name | Category | SKU |
| Ed's Diner | Breakfast Special | Specials | eds_diner-specials-breakfast |
| Ed's Café | Apple Pie | Cakes | eds_cafe-cakes-apple_pie |
Best practices
- Try to stick to one SKU naming formula for all products
- We recommend the formula location-category-product_name
- Keep them easy to read and understand
- Try to avoid starting a SKU with a zero (Excel will edit out the beginning zero if you put it in a spreadsheet, creating a lot of hassle and headache).
- The best SKUs have easily identifiable attributes and qualities.