Understanding Product SKU for Online Business - Dropshipping Blog

How to Create SKUs for Your Products?

understanding product SKU

If you’ve ever been interested in eCommerce and online selling, you must have heard the term SKU. Be it while looking at the product details on a page or analyzing your competitor’s inventory more closely, SKUs are an important aspect of physical inventory. However, understanding product SKU can be a little challenging if you don’t know where to start.

SKUs are fundamental to all your physical inventory. And chances are you are already using them for your products even without realizing. But, since it is a standard term used in ecommerce, you must know about it. Understanding product SKU helps in streamlining not only your inventory but also making the entire ecommerce process more efficient. 

Product SKUs tell a lot of details about the product. Be it on Amazon or any other ecommerce website, chances are that you will find them written on the product detail page. This is because SKU is technical information regarding the product. They are also different for different product ranges.

One might confuse SKUs with barcodes. However, the fundamental difference between a SKU and barcode is that a product SKU is readable by the human. And we all know that a barcode is not!

So, if you’re more interested in understanding product SKU, you’re at the right place. Read on more to find out everything about product SKUand how they can transform your ecommerce business. 

Understanding Product SKU

Just like  barcode, a product SKU is a unique identification code for the product. It is assigned to a product so that it can be tracked more easily in the business. The idea is that product SKUs have some unique qualities and conventions, that make identifying the product much easier. 

Understanding product SKU is important especially when you’re selling multiple products. For example, you might be selling a Kurti for women on your online store. This Kurti might be available in multiple colour options such as Blue, Orange, Red, White, Black and more. On the other hand, these Kurtis will also be available in different size options such s Small, Medium, Large, XXL, etc. for the customers. The point is that every combination of the size with a colour will be as good as a unique inventory for you. This means that small black Kurti will be separate from Red XXL Kuti, yet all of these belong to the same product category.

Understanding product SKU is important because you need a standardized convention to identify your products in a better manner. Just by taking a look at the unique code, you must come to know about the product category, the size and colour options and any other details associated with it.

Therefore, most online sellers allocate a SKU to their products. Since barcodes are not readable by humans and inconvenient to track, product SKU does the job. Therefore, instead of bringing a machine to read the details or any other tool, the human can just read the SKU and come to know about the details of the product. In addition to this, SKUs offer several advantages to the seller and the ecommerce business on the whole. 

A SKU doesn’t just need to have numbers. In fact, it can be a unique combination of alphabets and numbers. For example, B07XP7MSWG can be a product SKU. In this, the first few characters can help identify the product category, middle characters can help identify the colour option and similarly the last few can identify the size. There can be several other aspects regarding a product that need special identification. A SKU can have all that information.

Why is Understanding Product SKU Better than Barcodes? 

We understand that while running an ecommerce business, you might already be using barcodes. Whether you’re an individual seller or a large business, barcodes must be helping you and your staff monitor inventory as it comes and leaves your warehouse. While this is perfectly fine, this process has challenges of its own. And this is what makes understanding product SKU even more fundamental.

If you’ve ever seen barcodes you would know that it is nothing but a pattern of parallel lines. These lines are separated with designated spaces and their thickness also varies depending upon the information they are carrying. But, there is a fundamental problem with the barcode. No human can read it. You need a special machine to read the barcode and then interpret the details present on it. 

On the other hand, when it comes to SKU, the case is the opposite. A product SKU is very much in human readable form because it consists of alphabets and numbers. But, apart from the readability, you must wonder why you should use SKUs instead of barcodes?

Technically both barcodes and SKUs serve the same purpose for a business. The only difference is that barcodes can be changed for different products especially if you are reselling. So, if 10 different sellers are reselling your products, they would change the barcode suiting to their business. On the other hand, this is not the case with SKU.

SKUs remain unique for your business throughout. In other words, they tend to nullify the changes made in the barcode of the product by resellers, marketplace owners, product catalogues and more. 

understanding product sku

Quick Reasons why Product SKUs are a Win

  • Readable by Humans
  • Alphanumeric to accommodate variety of details
  • No machine or tool required to read
  • Unique to your business

Importance of Product SKU for Your Online Business

With SKU by your side, you lie at advantage in many situations. Not only does it reduce the burden of work in eCommerce, but also helps you stay efficient 24 * 7.  Take a look below for understanding product SKU better-

Tracking Inventory

First and foremost of all, SKUs make tracking inventory much easier. They are used for tracking inventory across multiple channels. So, you might be selling the same product on different channels, but SKU can help you track everything much easily. They establish convenience for your ecommerce store.

Easy Identification of Details

By looking at the product SKU, you can identify the details very easily. For example, you might be selling the same product in different sizes and colour options. While the underlying product in this case is the same, it is the details that have changed. Product SKU helps in identifying these changes without any hassles.

Convenient Sorting

Another important reason understanding product SKU is important because it helps in easier sorting. Whether you’re grouping your products into different categories or sorting auction reports, SKU can be a lifesaver. 

Effective Selling

This is for sellers selling their physical products on multiple channels. Depending upon the type of platform, there are chances that you will rename a product or add other details to the title. However, this will create a difficulty in identification of the product. But with product SKU by your side, you will know that it is the same product being sold by different names on multiple channels.

Creating SKUs for Your Products

Now that you must have developed an understanding of product SKU, let’s help you create them. Creating product SKU might seem a little confusing, but not if you do it the right way!

Create a Unique SKU

Remember to create a unique SKU for every product line. This will help you identify which of the products you are selling at the current time. Don’t reuse your SKUs to create confusion. 

Keep Your SKU Short

Your SKU must be under 30 characters. Make sure they are easily readable by you and your team. Too long SKU can be again difficult to understand. While too short ones can be difficult to cover the details. 

Never Use Space 

Don’t add space to your characters while creating yoru SKU. remember that you are creating a unique code and not a title for a product. Adding space can create unnecessary confusion. 

Use Relevant Details

Don’t just add your product title to your SKU. use other details such as colour, size or fabric if you have these options for a product, this will make your SKU rich in details. 

Leave Out the Special Characters

Just like spaces, leave out the special characters. These will only create confusions and make it difficult for you to track in excel files.

Don’t Start with 0

Never start your SKU with 0. It is a bad practice and can result in disruption of the data while making calculations in excel. 


Understanding product SKU can take your business to the next level. Creating them is a one time effort, but the benefits coming in will be for the long term. Make sure you follow the best practices while creating them. Inform your team about the creation process so that it helps in tracking the products much easily. Finally, leverage a reliable logistics platform like Dash101 logistics that can help you deliver your products efficiently to your customers. Sort your inventory with SKU and deliver them seamlessly with Dash101 Logistics. Take off with your business with shipping rates starting Rs 23/500 gms. 


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