What Is SKU Number and How It Is Useful For Retailers To Boost Their Business?
A SKU tracks a particular product. But, what they probably won`t know is how it works behind. So, at first, what is a SKU and what it does? What Is a SKU? A SKU, or Stock Keeping Unit, is a unique number used to track a business` inventory internally. SKUs are alphanumeric, and should provide information on the important characteristics of a product — price, color, style, brand, gender, type, and size. This information in the SKUs should also be put in order from important to least important — or in other words, the most needed information to the least.
SKUs also aren`t universal. They`re meant to be unique to your business, and can be customized to tailor to what your customers or vendors ask about your store`s product. How Are SKUs Used? Retailers use SKUs to track their stock and sales, which provide analytical data that are beneficial to have for developing relationship with your vendors and customers. But, remember: Each retailer doesn’t track the same information — so it`s important that you look at your business` specific needs before you create your SKU architect. So, how would you create a SKU architect for your business? Follow these basic steps: Ask about the size of your stock: If it`s minimal, you might want to create an architect that tracks customer type, such as adult, babies, kids, and so on. In case if your stock is on the larger side, you might need to break down the product`s attributes after customer type to give extra details on the product, in following way: type >gender > size Make sure the number sequence is unique: When your SKUs show something different, for example, manufacturer SKU or duplicated for different products, then you might be restricted from tracking your inventory accurately. Here are some points to remember for your naming pattern: • Stay in the range of 8 and 12 characters • Begin the number with a letter • Never use zero • Keep the format simple to understand • Ensure each and every letter and number has a definite meaning Keep the customer in mind: You`ll also want to recollect what`s essential to your customer about your merchandise. Do customers frequently ask about color? If so, you`ll need to keep the number that represents to color toward the beginning of your SKU so you can quickly provide your customers with the information they need. Choose your inventory system: If you use epos system, most will allow you to make a SKU architect inside it. If you don`t have one and have a smaller inventory, you can create it by hand and on an as-required basis. Or you can use an online generator, to help with the process. How to Use SKUs to Boost Your Business 1. Track Inventory Accurately Since SKUs are used to track product traits, they can be used to make sure your inventory is accurately tracked overall. This leads to one of the most traits to track: availability. When you constantly keep track of your products` statuses, your SKU architect can help you to pinpoint when exactly to order new products so your merchandise never goes out of stock. This is considered as a retailer`s "reorder point." In addition, most importantly, with accuracy comes efficiency and productivity. When you keep track of your products in real time, it helps you better understand the growing needs of your business. 2. Forecast Sales When you can keep accurate numbers on your inventory, SKUs moreover help to forecast sales so you can predict your business` needs. In this way, you can even more easily keep your products in stock, which subsequently designates you as a trustworthy merchant to your customers and vendors. It`s important to note first that while using SKUs to forecast sales, you`ll want to be strategic before completely eliminating slow sellers from your stock. Some of your important customers may still require those things — and if you quit selling them, they may take their business elsewhere that does. In 2008, Walmart made an initiative called Project Impact, where they kept the store`s top selling products, removed the lowest sellers, and included pricier products. The result? A quick deadline in sales since customers did, in fact, look to other retailers. In any case, there is a solution that involves your SKU architecture. According to the Harvard Business Review, you may need to consider how customers are purchasers your products. By structuring your SKU architecture to provide information to your customers who want to know about your products, you can easily analyze your products so it helps you make the most important decisions about your store`s ever changing inventory. 3. Make the Most Out of Your Biggest Profit Generators Again, your SKU architect can help you to understand what your business` most sought after products are — and the least desired ones, too. Knowing when to reorder and which products to take out from the inventory, did you understand you can get even more creative with your highest selling things — and maybe get them out the door faster? By knowing your business` biggest profit generators are, you can make strategic product analysis, make sure they`re easily available on your online store`s landing page, and goes without saying, keep them always in stock. 4. Boost Customer Loyalty and Satisfaction Since SKU architects can be used to predict reorder points, you can help your customer always find the product they sought out to purchase. When you can track reorder points, you can easily create a shopping experience with minimal out-of-stock statuses — it can result in brand loyalty and customer satisfaction. Besides, when a product actually becomes out of stock, your customers might be willing to be patient rather than taking their business elsewhere. 5. Offer Customers New Suggestions If you are tracking multiple products with SKU architecture, the information isn`t limited to stock and sales analysis — it can be also applied to the sales. If a product is out of stock, you can use your SKU knowledge to direct your customer to an identical product. This can be used online, too. Think of all the shopping websites you visit. When you click a particular product, the page includes similar products you may like. This can be easily done with a retailer`s SKU architecture where they`ve applied an algorithm in order to provide suggestions with similar SKU features. Moving Forward With Your Own SKU Numbers Again, SKUs aren`t a one-size fits-only for retailers and the more you tailor your plan to your architecture to specific needs, the more you`ll set your business up for success. Just remember: Know what`s important for you, your vendors, and your customers. Then you can begin the process of creating a SKU architect that allows you to manage your business` inventory while understanding how to grow and adapt to the evolving needs.