SKUStock Keeping Unit
A SKU is a unique internal code you assign to each product or variant. It is how your inventory system, warehouse, and reports track individual items.
What is SKU?
A Stock Keeping Unit is a merchant-defined identifier used to track each distinct product or variant in your inventory. Unlike ASINs (assigned by Amazon) or GTINs/UPCs (assigned by industry bodies), SKUs are entirely created by you and only meaningful within your own systems. A typical SKU includes enough information to identify the product without looking it up — for example, 'TSHIRT-BLK-L' for a black t-shirt in large.
Every variation of a product should have its own unique SKU: a t-shirt in 4 colours × 5 sizes = 20 SKUs. Each SKU has its own inventory count, reorder point, and cost basis. Good SKU naming conventions are a foundation of operational efficiency — if your 3PL warehouse can decode 'SUPP-COLLAGEN-60-VANL' from a packing list without calling you, the system is working.
SKUs appear on your packing slips, in Seller Central inventory reports, inside your Shopify product catalogue, on purchase orders to suppliers, and in your accounting software. As your product catalogue grows, a consistent, parseable SKU system becomes increasingly important for avoiding fulfilment errors and reconciling inventory discrepancies.
Why it matters for sellers
Poor SKU hygiene is one of the most common operational problems for growing ecommerce sellers. When SKUs are inconsistently named, duplicated, or missing, warehouse staff pick wrong items, inventory counts become unreliable, and reconciling your books against actual stock takes hours instead of minutes.
SKUs also matter for multichannel selling. If you sell on Amazon, your own Shopify store, and eBay, a shared SKU system across channels allows your inventory management system (Linnworks, Skubana, Cin7) to deduct stock from a central pool when any channel makes a sale — preventing oversells and keeping inventory accurate across all platforms.
How to use SKU
Design a SKU convention before you build your catalogue and stick to it. A practical format: BRAND-PRODUCT-VARIANT-SIZE (e.g., 'SOL-MAT-BLUE-6MM'). Keep codes under 15 characters where possible, avoid special characters except hyphens, and use consistent capitalisation. Document the convention so any team member or 3PL can decode any SKU.
For Shopify sellers, set SKUs on every product variant — Shopify uses them for inventory syncing and for integrating third-party apps (fulfilment, accounting, inventory management). For Amazon FBA sellers, note that your merchant SKU (your internal code) maps to the FNSKU (Amazon's fulfilment barcode) — keep this mapping in a spreadsheet so you can quickly find which FNSKU belongs to which SKU if inventory discrepancies arise.
Real-world example
You sell yoga mats in 3 colours × 2 thicknesses = 6 SKUs: MAT-PRPL-4MM, MAT-PRPL-6MM, MAT-BLUE-4MM, MAT-BLUE-6MM, MAT-SLATE-4MM, MAT-SLATE-6MM. Your 3PL receives a pick order for 'MAT-BLUE-6MM × 12'. The warehouse manager immediately knows to pull 12 blue 6mm mats without calling you. When your Shopify store sells a blue 6mm mat, your inventory management software deducts from the 'MAT-BLUE-6MM' pool across all sales channels simultaneously.
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Frequently asked questions about SKU
What is a SKU and why do I need one?
A SKU (Stock Keeping Unit) is a unique internal code you assign to each product or variant. It's how your warehouse, Shopify, Amazon, and accounting system all refer to the same item. Without SKUs, it's nearly impossible to manage inventory accurately across multiple products, variants, or channels.
What is the difference between a SKU and an ASIN?
A SKU is your internal code, created and controlled by you. An ASIN is Amazon's code, assigned by Amazon. One product can have one SKU in your system and one ASIN on Amazon. On Amazon, your merchant SKU is displayed alongside the ASIN in Seller Central — both refer to the same product but serve different systems.
What is a good SKU naming convention?
Use a consistent format that encodes enough information to identify the product: Brand-Product-Colour-Size works for most sellers (e.g., 'BRAND-TSHIRT-RED-M'). Keep it short, avoid spaces and special characters (except hyphens), and document the system so anyone handling your inventory can decode any SKU without asking.
How many SKUs is too many to manage?
There's no hard ceiling, but complexity compounds. 50 SKUs across one warehouse is manageable with a spreadsheet. 500 SKUs across multiple channels and 3PLs likely requires dedicated inventory management software (Linnworks, Skubana, Cin7). Audit your SKU list annually and discontinue slow-movers to keep catalogue size manageable.