SKU management 101
To ensure that the business meets its financial goals, SKU management analyzes the cost of carrying inventory items.
In managing your business, you have two finite resources: time and money. While you may think that your offering of SKUs is limitless and costs nothing, the truth is that merchants usually spend far too much time dealing with low-margin items. Dropshipped items and purchased inventory both require SKU management. Just think, how much does it cost to hold inventory month after month that doesn't sell? SKU management can help with this (and much more).
What is a SKU?
You (and others) can identify stock on hand by using Stock Keeping Units, or SKUs, which are product codes. SKUs are found in lists, invoices, or order forms. An alphanumeric SKU system is created, maintained, and optimized to identify and organize your inventory effectively.
To organize your inventory, you'll need to use an SKU system once you begin selling through wholesale or retail channels.
Where and how SKUs are used?
Good inventory management requires the use of SKUs since they allow for easy tracking of your inventory down to individual product variants (colors, sizes, etc.). Keep in mind that to ensure efficient inventory management, two warehouses that stock identical products would require different SKUs.
It is important to remember that each SKU reflects only the stock you have on hand and is ready for consumption, not the product ordered for replenishment. SKUs record the tiniest details about the product (when used correctly); they represent the most fine-grained level and make your inventory management techniques more efficient.
A well-designed SKU system will make fulfilling orders and answering inquiries more efficient and effective.
Importance of managing SKUs
In and of itself, a SKU is merely a string of letters and numbers. Their use and management are crucial, however.
Key benefits that come from managing SKUs include:
Inventory tracking
Demand forecasting
Product tracking
Business operations and supply chains are reliant on SKUs. Products, logistics, and fulfillment cannot be tracked without SKUs. SKU logistics and accurate tracking help retailers respond to the needs of their customers, avoid out-of-stock situations, and reduce return rates.
Automating repetitive tasks, improving productivity, and optimizing product catalogs are some of the other benefits of SKUs. SKUs can streamline operations, reveal what your customers want, where to cut costs, and how to increase revenue.
Best practices for SKU management
Various organizations will develop SKU naming conventions that are tailored to their product catalogs, as mentioned previously. SKU architecture best practices can improve inventory management regardless of whether a company is large or small.
Some simple ways to improve your SKU management include:
Considering possible misspellings
Using names that are easy to remember
Arranging numbers in a way that makes sense
Name your products the same way you would describe them in words. A retailer's SKU number might be followed by an alphabetical list of categories (shirts, pants, hats), a brand name, and the product type.
If you must manually enter them, keep them short, but keep them consistent. Begin by choosing a general identifier such as type, brand, or even your business office location. Add more specific details after.
It is best to limit the use of numbers, and letters that could seem confusing, such as lowercase Ls and uppercase Is, as well as Os and zeros. It is recommended to avoid using slashes, mathematical symbols, or formatted text (bold, italic, underlined).
Conclusion
Increasing numbers of third-party sellers compete on Amazon to win coveted buy boxes. Building the necessary teams and infrastructure is expensive. As a result, managing the resources required to handle complexities specific to each market becomes increasingly challenging.
The Channel Gate team can assist. Our team has been building the technology and systems necessary to compete and win on marketplaces since 2004. We can help you launch your SKUs on all leading marketplaces. Get complete control over your SKUs. Add and update your catalog at will. We help optimize your inventory and order management across marketplaces. Contact us to learn more.