Stock Keeping Units or SKUs are codes that represent products within a seller’s inventory. SKUs are unique for each kind of product. It helps in identifying products and maintaining systematic inventory. SKUs embody distinguishing product attributes. These attributes can be anything from color to size to pattern to brand and any other similar characteristics.
Sellers have the freedom to create these codes themselves. Special algorithms and code generating mechanisms would be a waste because these codes are created to convenience sellers. Just the SKU is supposed to tell what the product is, what it is made of, its size, color and design.
The number of SKUs you prepare will depend on the number of products you sell. But is there a limit on this number? The answer is yes. There is a minimum SKU requirement on every online marketplace. However there is no set maximum.
What is the SKU limit?
When selling online the more variety you have the better are your chances of making sales. If you have only one SKU it could be months before online shoppers notice that you exist. The more SKUs you have the more variety you possesses as an online seller. However, a large number of SKUs could affect you negatively too. For example, having 10,000 SKUs is not very feasible for all product categories, because you will unnecessarily be paying for the storage of large product quantities even if they don’t sell. On the other hand if you happen to be a manufacturer of say phone covers, 10,000 SKUs is something you could manage.
(There is no maximum SKU limit.)
Is there an ideal no. of SKUs?
There sure is! The ideal number of SKUs depends on your business model and your investment budget. If you specialize in summer clothes, you won’t create SKUs for winter clothes unless you have stock of these. Similarly, when you start out with summer wear, you won’t jump to winter wear until you know there is demand for it and you have the finances to go through with this new category.
The ideal number of SKUs is 50 (max), especially if you are just starting out. 50 SKUs allows you to maintain decent product variety online and in your warehouse.
What should one be careful about? (Tips/Hacks)
SKUs are short forms for your products. These short forms must be created within 22 characters. When preparing SKUs avoid using special characters (like these – @, #, $, %). Even full stops and colons should be avoided. These symbols make the code complex and prone to errors.
SKUs can be classified into parent SKUs and children SKUs. Parent SKUs represent the main product.
The children SKUs represent slight variations like size, pattern and even color. It’s up to the seller.
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