We previously discussed the UPC in detail in our blog UPC and EAN Barcodes: How To Get Them For Your Products.

In Barcode Basics: A Simplified Guide For Startups, we also briefly mentioned the SKU.

Barcodes tend to look alike to people who don’t use them for business. That’s why we often get asked about the difference between the SKU and UPC, especially by Amazon sellers who encounter the FNSKU for the first time.

 

Different Barcode samples

 

We shall answer that question in this article and explain why it pays to know.

 

What Is the Meaning of “SKU”?

 

“SKU,” pronounced as “skew,” stands for “stock keeping unit.” Essentially, it is a unique product identifier used for inventory management. It is internally generated, meaning it is set by the establishment that will use it. This contrasts with the Global Trade Identification Number (GTIN), a numeric string assigned by GS1 to internationally sold products. The Universal Product Code-A (UPC-A) encodes a 12-digit GTIN.

SKUs help track down item supply. They are even more useful at the point of sale, where inventory information can be paired up with customer purchasing patterns, seasonal market fluctuations and other business-relevant data.

Technically, a SKU does not always have to be barcoded. However, you have to pair it up with a reliable barcoding system to maximize its benefits.

 

 

Code 128 or Code 39 format

 

 

SKU barcodes are typically of the Code 128 or Code 39 format. Both represent alphanumeric strings with variable lengths. Of the two, Code 128 is the more condensed type. It is more widely used for retail barcoding than Code 39 because it can fit small product labels. Amazon’s FNSKU, or “fulfillment network stock keeping unit,” uses Code 128.

 

 

UPC-A code

 

What Are the Benefits of SKUs?

 

SKU systems bring many benefits for businesses. The most important ones are stated below.

 

SKU Systems Help Monitor Product Supplies

 

The primary function of SKUs is to help business owners record the movement of their stocks. By using a dependable SKU system, you can keep track of increases from deliveries and reductions through sales and warehouse transfers. SKUs can help you monitor relocated units inside your facility.

When paired with a good barcoding system, SKUs can make these tasks more efficient. When integrated into a wireless network, they can help relay product supply information from your warehouse to your storefront.

 

SKUs Help Show Sales Trends

 

When used at the point of sale, these stock identifiers enable you to monitor sales patterns. You can see their relationships with customer buying habits, seasonal changes, socio-political events and many other factors that can impact commerce. From there, you can forecast future trends more precisely and adjust your inventory accordingly.

 

SKU Systems Can Guide You in Optimizing Your Inventory

 

By tracking your stocks, you can easily identify which products attract the most customers and which ones are not so profitable. You can then adjust your supplies by loading up on the bestsellers while cutting down on the not-so-popular items. Additionally, you can take advantage of this information to get customer feedback and improve your products.

 

SKUs Can Help Formulate Effective Customer Retention Strategies

 

With point-of-sale information gathered from SKUs, you can understand your customers’ behaviors more.

SKUs can help you determine what products appeal to which demographics, enhancing your chances of making successful offers. This marketing strategy is used by giant e-commerce platforms like Amazon and eBay.

By identifying your buyers’ preferences, you may personalize your offers, which is one way of keeping old customers buying. Customer retention strategies generate more profits than do client acquisition efforts.

 

SKU Systems Can Improve Warehouse Security

 

SKU systems can inform you of stock levels to the last box. They can alert you of sudden shortages or sales record inconsistencies, which could be signs of internal theft. Therefore, these product identifiers may help you stop such crimes and protect your business.

 

A SKU being used at the point of sale

 

SKUs help businesses in more ways than one. Most retail giants depend on barcoded SKUs because of their advantages.

 

What Are the Differences between the SKU and UPC?

 

As we pointed out earlier, SKUs are internally generated. They are used by the same establishments that designed them. They typically have 8-12 alphanumeric characters, barcoded using the Code 128 or Code 39 format, although they can be shorter or longer. Special software or online barcode generators can help you create your own SKU system.

SKUs encode more product details, like size, color, price, batch number and other information that a company wants to be encoded. Label sizes are establishment-specific, but 1″ x 2″, 1″ x 3″, 2″ x 2″ and 2″ x 3″ stickers are often used. They are not always needed at the point of sale, although they can encode both tangible and billable intangibles, such as service time.

Since SKUs are customized, their Google searches will help buyers zero in on the retailers that authored them. One product can have multiple SKUs, each one created by a different seller.

In contrast, UPCs are assigned and regulated by GS1. They are standardized product identifiers used by different retailers. In the US, the UPC-A barcode format is used, which represents a 12-digit purely numeric GTIN. One has to buy GS1-registered UPCs from GS1 or third-party vendors, so you cannot simply make them using an unauthorized barcode generator.

The UPC encodes manufacturer information and limited data about a product or product variant. The recommended UPC barcode dimensions are 1.469″ x 1.02″. But they can range from 1.175″ x 0.816″ to 2.938″ x 2.04″ so long as the height-width ratio is maintained. The UPC is always used at the point of sale and cannot encode billable intangibles.

The UPC is not retailer-specific, so search engines may lead customers to the manufacturer, midchain suppliers or retailers. Each UPC is assigned to only one product.

This table summarizes the differences between the SKU and UPC:

 

Points of Comparison

SKU

UPC

Organization that assigns the barcode

Internally generated

GS1

Where the barcode is used

Within the same establishment

Different establishments

Length

Usually 8-12 digits, but can be shorter or longer

Always 12 digits for the UPC-A

Character types included

Alphanumeric

Purely numeric

Format

Code 128 or Code 39

UPC-A in the US

Can be created by the retailer with a barcode generator

Yes

No

Item types encoded

Products

Billable intangibles

Products only

Types of product data encoded

Any feature that the retailer wants to encode

Manufacturer info

Limited product info 

Acceptable label sizes

1” x 2”

1” x 3”

2” x 2”

2” x 3”

Labels on which the following can fit:

 

1.175” x 0.816”

1.469” x 1.02”

2.938” x 2.04”

Always used at the point of sale

No

Yes

User specificity

Retailer-specific

Manufacturer-specific

Number of codes that can be assigned to each product

Multiple

One

 

Knowing the differences between the SKU and UPC is vital. It saves time to know beforehand how they can be obtained and on what products you can use them. The information can also save precious resources by helping you choose the right label size and avoid costly barcoding errors.

 

How Can I Generate My Own SKUs?

 

A red shirt SKU

 

Here are some tips for generating your own SKUs:

  • Keep the length within 8-12 characters—this is the optimum range for SKUs. They will be hard to retrieve if you make them longer. Shorter SKUs can be misread and confused with other barcodes.
  • Start with letters, not numbers—doing so ensures the SKU’s machine and human readability. Starting with zero can also interfere with information retrieval.
  • Use alphanumeric characters—this gives you more options for encoding your products and their identifying features.
  • Make your SKUs easy to use and recognize—use meaningful codes to make SKUs easier to understand. This will help your staff identify merchandise accurately or type the barcode number on a computer in case the store scanner fails.
  • Customize your SKUs—use a numbering scheme that is relevant to your business. SKU customization helps clients find your store and not someone else’s. Avoid using manufacturer codes because doing so reduces your SKUs’ uniqueness, which can lead customers to your competitors. 
  • Use a reliable barcode generator—your barcodes should be generated and printed accurately, or they will harm your business. When you look for a barcode generator, don’t just do a simple search. Compare online product reviews and ask your knowledgeable friends. Using reliable barcoding software is as good an investment as any.

Once you’ve created your digital SKUs, ensure their print quality. Test them as well to make sure that they do not pose problems along the way.

 

When Do I Need To Use SKUs?

 

It depends on how massive your business is and where you’re selling.

If you have only a few product types, store only a few dozens, and sell them at a small brick-and-mortar store, you may not need an intricate SKU system until you scale up.

Amazon FBA requires FNSKUs. No matter how many product types you have, when you’re using Amazon FBA, technically, you’re already using a SKU system.

If your inventory has about 100 different products or it can already fill an entire room, then it’s time to consider building a SKU system. It doesn’t matter if you’re selling only at a physical store or using an online platform.

However, this is only a rough guide. Keep in mind that spending too much time doing inventory is already a reason for creating a SKU system.

 

An employee working inside a big warehouse

 

Conclusion

 

In summary, SKUs are internal product codes that help manage inventory. They are alphanumeric strings that can be encoded by Code 128 or Code 39 barcodes and can be created with the aid of reliable barcode generators. They differ from UPCs in many ways, and knowing how to distinguish one from the other saves time and other resources.

When used properly, these product identifiers can help boost sales, retain customers and protect businesses. Consider building your own SKU system when inventory management is already starting to reduce your efficiency. 

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