A SKU (Stock Keeping Unit) is a unique alphanumeric code a business assigns to each distinct product it sells, so that item can be tracked, counted, and sold individually. Every variation — a different size, colour, flavour, or pack size — gets its own SKU, because each one needs to be managed as a separate line of inventory.
SKUs are internal codes created by the retailer, which makes them different from a manufacturer’s barcode. They are the backbone of inventory management: stock levels, sales reports, reorder points, and pricing all hang off the SKU.
How a SKU is structured
A good SKU encodes useful attributes in a readable pattern. For a men’s cotton T-shirt, size large, in navy, a retailer might use TS-M-COT-L-NVY. Anyone reading the code can tell the category, material, size, and colour at a glance, and the system can group or filter by any of those segments.
Worked example
A clothing store stocks one shirt design in 4 sizes and 3 colours. That single “product” is actually 4 × 3 = 12 SKUs, each tracked separately. If the navy large sells out while the white small piles up, SKU-level data reveals exactly which variant to reorder and which to discount.
Why SKUs matter
Without SKUs you cannot measure inventory turnover, set an accurate reorder point, or know which variants drive profit. Clean, consistent SKUs are the foundation of every reliable stock report.
EloERP generates and manages SKUs automatically and ties each one to barcodes, pricing, and multi-branch stock, so even a catalogue with thousands of variants stays organised. Explore the inventory features for how variant tracking works in practice.
Related glossary terms
Frequently asked questions
What is the difference between a SKU and a barcode (UPC)?
A SKU is an internal code you create to manage your own inventory, and it can carry meaning about the product. A barcode such as a UPC or EAN is a standardised, manufacturer-assigned number used globally. One product has one universal barcode but may have a SKU unique to each retailer.
Should each product variant have its own SKU?
Yes. Every size, colour, or pack variation should have a distinct SKU because each is counted, reordered, and reported separately. Sharing one SKU across variants hides which versions actually sell.
How long should a SKU be?
Keep SKUs short enough to scan and read easily — typically 8 to 16 characters — while still encoding the key attributes you sort by. Avoid spaces and ambiguous characters like the letter O versus zero.