What Is a Stock Keeping Unit (SKU)?

Running a successful business takes more than offering high-quality products. You need a reliable inventory management strategy to provide buyers with a great experience. You can lose notable customers if they must wait for you to replenish stock and deliver since you didn’t know you were running out.

What Is a Stock Keeping Unit (SKU)

This is where the Stock Keeping Unit (SKU) comes in, making your inventory management more productive. Herein, we’ll look at the SKU definition, how it is formed, and its uses.

What Is Stock Keeping Unit (SKU) 

Before diving into how it helps, let’s establish SKU meaning. The simplest SKU definition is that it’s a unique code or number assigned to a product, which is usually alphanumeric. The unique alphanumeric code helps you identify specific products for inventory management purposes. 

How SKUs Are Formed

As per the SKU definition, it is evident that they are flexible. SKUs accommodate diverse formats and structures. You can quickly form SKUs per your needs and industry. You can develop a simple or complex alphanumeric code with specific attributes about your products. Creating SKUs varies from one organization to the next, considering their needs and industry.

The basics that apply across the board are product category/type and attributes, which help create easily identifiable SKU meaning. You can then dive into specifics such as barcode compatibility, packaging information, and special identifiers such as limited edition or new arrivals.

Forming SKUs does not have to be complex. You simply determine the format that best matches your needs and provides clear SKU meaning for easy identifiability. This could be alphabets, numbers, or a combination. From there, consider your products and what differentiates them, like color, size, or style. You then choose the order to help you quickly identify the products, such as attributes followed by size. You are now ready to form SKUS. Here is a demonstration of the same.

Let’s say you want to sell shoes on Etsy. After using Roketfy’s Product Research and Competitor Analysis tools, you’ve learned that selling diverse shoe colors, styles, and sizes in the same category is the best strategy to win more sales. You’ve also established that the best way to optimize your listings is using Etsy variations instead of listing each shoe separately.

Etsy variations save you more time when listing and writing descriptions. Using Roketfy’s keyword research and AI writer, you can quickly write compelling and SEO-optimized descriptions, rank better, and secure more sales.

You have optimized your listing, including using Roketfy’s Listing Checker to uncover areas needing changes. You can also use Roketfy’s Product Research to learn when to expect high sales volume and be better prepared. However, such information won’t be helpful if you aren’t well-stocked for fast delivery and better customer service. This further emphasizes the need for an effective inventory management system, which the stock keeping unit helps achieve.

Your sales are quickly increasing now that your shop and listings visibility on Etsy search is high. This means you can hardly keep up with the orders and track inventory using a spreadsheet or other manual means. The best way to track the sales and inventory and ensure you don’t run out of stock just when your sales are picking is by forming a stock keeping unit. In this scenario, you can create SKUs in this order:

MS (men’s shoes), OP (style – open), Bl (color-black), 05(size) = MSOPBL05

The SKU can include other special identifiers, such as when running sales using Etsy promo codes. In this case, let us say you are offering free standard shipping. You can include this in your SKU as FSS. The above SKU will now be MSOPBL05FSS.   


Where SKUs Are Used

SKUs are applicable in diverse fields but are commonly used in:

  • Retail stores
  • E-commerce stores
  • Warehouses
  • Manufacturing
  • Service industries

Here are among the ways SKUs help improve inventory management.


SKUs let you monitor products’ quantity and movement. Tracking sales and inventory levels helps you make informed stock decisions, including when to reorder and amount to avoid stockouts. This makes it easier to maintain optimal stock levels, ensuring you don’t frustrate buyers with frequent backorders.

Order Fulfillment

Stock keeping unit allows you to identify the specific product ordered, making it easier to pick from the inventory. In the illustration above, the Etsy store has listed shoe variations. When a buyer orders, you must select and ship the right shoe to offer a great customer experience. SKUs help identify the exact shoe, including its size, color, style, and, if applicable, promotions like free shipping. This improves your order fulfillment function, which can help increase Etsy sales.   

Reporting and Analytics

Stock keeping unit helps you analyze an individual or a category of products’ performance. You can analyze sales performance and identify slow-moving items, popular products, and other trends.

You can use this analysis to compare your shop against expected performance using Roketfy’s Product Research feature. This helps you establish if your listings are returning as much as expected and potential issues you should fix, which is essential for business success. Key performance indicators like inventory turnover and revenue generation are easier to manage with SKUs, making the tool invaluable.


SKUs + Roketfy features: The Perfect Match

SKUs offer notable benefits, with e-commerce stores arguably the biggest winners in today’s fast-paced world. Knowing SKU meaning and how to create and use them is essential. The knowledge can help you efficiently and effectively keep tabs on your inventory and sales on Etsy without losing focus on your core functions. Your Etsy sales are more profitable with additional Roketfy tools.

Besides the highlighted Product Research, AI Writer, Competitor Analysis, and Listing Checker features, Roketfy also offers Keyword research and AI Reviews. The Keyword Research helps you uncover the top keywords in your niche, making optimizing your Etsy shop and listings easier for better ranking and discoverability.

Optimized shop and product listings drive more sales, but your job is not done. You must keep up with market trends. This is easier if you keep track of user reviews, an area you efficiently manage with Roketfy’s Listing Checker feature. Besides using SKU to track product performance metrics, you also gain insights into what buyers say about your listings and shop experience. This helps you to proactively implement changes to keep up with the trends and user preferences. Such an approach allows you to increase your Etsy sales in the long run.

Sign up today for a free Roketfy’s plan and access to more resources to improve your Etsy and overall online sales.