What is a SKU?
A stock keeping unit, or SKU, is an internal code that identifies each distinct item a business stocks and sells. Every variant that needs to be counted separately gets its own SKU: a T-shirt in black size M is one SKU, the same T-shirt in black size L is another.
SKUs are chosen by the business itself, unlike barcode numbers such as the GTIN or EAN, which are issued under the GS1 system and are the same wherever the product is sold.
Core principle: If a customer can choose it and a warehouse has to pick it separately, it needs its own SKU.
SKU vs barcode numbers
| SKU | GTIN / EAN / UPC | |
|---|---|---|
| Who sets it | The business | The brand owner, under a GS1 licence |
| Format | Free, usually letters and numbers | 8, 12, 13 or 14 digits |
| Unique | Within your own systems | Worldwide |
| Used for | Stock control, orders, reporting | Retail scanning, marketplaces, warehouse scanning |
Most fulfilment centres use both: the SKU to link orders from your shop, and the barcode to scan items when receiving, picking and packing.
How to build good SKU codes
- Keep them readable: for example TSH-CTN-BLK-M for a black cotton T-shirt in size M.
- Use the same order of attributes for every product: product type, model, colour, size.
- Avoid characters that cause confusion, such as O and 0, or spaces and special characters that break imports.
- Never reuse a SKU for a different product, even after the old one is discontinued.
- Keep SKUs identical across your shop, marketplaces and warehouse system, so stock stays in sync.
Why SKU count matters in fulfilment
Storage
Each SKU needs its own location. A brand with 500 SKUs at low quantities needs more shelf space than one with 5 SKUs on full pallets.
Receiving
Mixed-SKU cartons and pallets take longer to receive than single-SKU pallets.
Watch out for: Receiving fees and dock-to-stock time rise with SKU complexity.
Picking accuracy
Similar SKUs, such as sizes of the same product, are easy to mix up.
Why it matters: Barcodes on every item and clear SKU names prevent wrong shipments and returns.
Example: A sneaker brand with 4 models in 7 sizes has 28 SKUs. Adding two colours per model doubles it to 56, each needing its own shelf location, barcode and stock count.
Frequently asked questions
What does SKU stand for?
Stock keeping unit: a code for each distinct product variant a business stocks.
Is a SKU the same as a barcode?
No. A SKU is an internal code you choose. A barcode number such as a GTIN or EAN is a global standard number that can be scanned.
Does every size and colour need a separate SKU?
Yes. Any variant that is stocked and picked separately needs its own SKU.
Do I need barcodes to use a fulfilment centre?
Most fulfilment centres prefer scannable barcodes on every item. Some can label items for you for a fee.
