A SKU (Stock Keeping Unit, pronounced “skew”) is a unique alphanumeric code assigned to each distinct product or product variant that a company sells or stocks. A blue medium T-shirt and a blue large T-shirt are the same product but different SKUs. Each variation in size, colour, material, or packaging gets its own SKU.
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SKUs are central to inventory management, warehouse operations, e-commerce, and retail. “How many SKUs do we carry?” tells you about the breadth of a company’s product catalogue. “That SKU is out of stock” identifies the specific variant that’s unavailable.
In warehousing, every storage location, picking operation, and stock count references SKUs. A warehouse management system tracks inventory at the SKU level — knowing that you have 500 T-shirts isn’t useful if you don’t know how many of each size and colour.
In retail analytics, “SKU-level data” means granular sales and inventory data for each individual variant. “SKU rationalisation” is the process of cutting underperforming variants to simplify operations and reduce carrying costs.
SKU vs. UPC
A SKU is created internally by the company and varies between retailers — Walmart and Target may assign different SKUs to the same product. A UPC (Universal Product Code) is a standardised barcode used across the industry. A single product has one UPC but may have different SKUs at different retailers.
Source: GS1 standards for product identification