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SmartPOS > Blogs > Business > Everything You Need To Know About SKU Numbers

Everything You Need To Know About SKU Numbers

Posted by: Amogh Balaji

Retail stores deal with a sizeable amount of inventory daily. The objective is to procure stock and sell it off as early as possible. From purchasing inventory to selling it, there are a lot of complex processes that take place in between. There’s storage management, shelving, etc. To ensure that inventory smoothly flows in and out of the store without any barriers, stores need to keep close tabs on inventory movement. That is known as inventory tracking.

Tracking inventory gives you information on stock quantity and whereabouts. Without it, you could face unforeseen inventory shortages and even stockouts. To accurately keep a close watch on your products, you require an effective tracking system. The best way is to use stock-keeping units (SKUs).

In this article, we go over what SKUs are, what their importance is, and how to set them up. Let’s get started.

What are SKU numbers?

An SKU is a number typically consisting of eight alphanumeric digits. It is a unique code you can assign to different types of products. SKUs help identify products and track their movements in your store.

The alphanumeric code in SKUs can hold critical information about a product. That includes product category, size, gender, style, and color. You can customize the code to indicate other types of information too. By generating the codes and labeling them on products, tracking goods becomes an easy process.

The old-fashioned way of creating SKU numbers is by assigning them to products and recording them in spreadsheet software or paper-based tools. The best way to generate and keep track of SKUs is with the help of a POS system.

The importance of SKU numbers

SKUs streamline the process of tracking inventory, eliminating human-made errors. Ultimately, they boost operational efficiency. Let’s look at other reasons why SKU numbers are critical in your retail store.

  • Product arrangement – SKUs help you locate products in your store. By looking up the SKU code, you can find items by department, product category, and by type.
  • Real-time inventory updates – Knowing the latest stock quantity in your inventory is crucial. When you checkout customers using SKUs using a Point of Sale software application, your POS immediately reflects the latest inventory count.
  • Analytics – POS software keeps a log of the SKUs you create and sell. Ultimately, it generates reports showing you various sales trends and buyer behaviors.

Setting up SKU numbers

Now that you know what SKU numbers are and their significance, let’s go over how you can set them up.

The first two or three digits

Assign a top-level identifier in the first three characters or digits of the SKU. You can choose to have it represent a department, product category, manufacturer, or supplier.

The middle numbers

The middle alphanumeric codes denote the characteristics of a product. They can represent item features such as color, style, item type, or size.

Assign sequential numbers

At the tail of the SKU number, you can assign sequential numbers. For example, 0001, 0002, and so on. You can choose to have them represent something like a season, etc.

Enter SKUs into your inventory management system

Next, add the SKUs into the tool you use to manage your inventory. Instead of using paper-intensive tools like books or spreadsheet software, we recommend using a cloud-based POS software solution. It allows you to track and manage inventory from a single location.

Example of an SKU

Let’s go over what an SKU looks like.


Here’s what the above SKU denotes:

The NIK represents the company/brand name. The D4250 shows what model/color the product is. The single letter C indicates what size the product is. And finally, E100 is the style of the product.


Assigning a combination of alphabets and numbers to identify your products makes tracking inventory and making business decisions a hassle-free task. Use SmartPOS – the best POS system to track SKUs in your store. SmartPOS is lightning fast, secure, and feature-loaded to generate SKUs and oversee them. Reach out to us to know more.

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