What is SKU Management? Top 4 SKU Management Best Practices

Do you need help managing your inventory and keeping track of your product information? If so, you're not alone. SKU management can be daunting, but it's crucial for running a successful eCommerce business. In this guide, Viindoo will cover everything you need to know about SKU management, including best practices and strategies to help you streamline the process.

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What is SKU Management?

SKU stands for Stock Keeping Unit. It's a unique identifier assigned to each product in your inventory. SKU management involves organizing, tracking, and maintaining accurate information about your products. It helps eCommerce businesses keep track of inventory levels, sales, and customer data.

SKU Management

What is SKU Management?

Why is SKU Management Important?

Effective SKU management ensures that your product information is accurate and up-to-date. Precise information improves your inventory management, leading to better decision-making and increased profitability. Here are some other reasons why SKU management is important:

  • Efficient Inventory Tracking: SKUs enable businesses to track and manage inventory accurately. Each SKU represents a specific product variant, allowing businesses to monitor stock levels, identify sales patterns, and make informed purchasing decisions.
  • Streamlined Operations: With proper SKU management, businesses can organize their products effectively. SKUs help categorize products based on color, size, or style, making locating items, fulfilling orders, and managing warehouse operations easier.
  • Accurate Order Fulfillment: SKUs are vital in ensuring accurate order fulfillment. By using unique SKUs, businesses can minimize errors and confusion during the picking and packing, reducing the risk of shipping incorrect products to customers.
  • Enhanced Reporting and Analytics: SKUs provide valuable data for reporting and analytics purposes. Businesses can gain insights into product performance, demand trends, and profitability by analyzing SKU-level data. This information helps optimize inventory levels, identify top-selling items, and make data-driven decisions.
  • Improved Customer Experience: Effective SKU management contributes to a seamless customer experience. With accurate inventory information and quick product access, businesses can fulfill orders promptly, reduce backorders, and minimize customer dissatisfaction.
  • Scalability and Growth: SKU management becomes even more critical as businesses expand. With a well-structured SKU system, companies can easily add new products, manage more extensive inventories, and efficiently scale their operations without sacrificing accuracy or productivity.
Why is SKU Management Important

Why is SKU Management Important?

Best Practices for SKU Management

Now that you know what SKU management is and why it's essential, let's look at some best practices to help you streamline the process and avoid common mistakes:

  • Use a Consistent Format

Using a consistent format for your SKUs makes organizing and tracking your inventory easier. It also helps prevent errors and confusion when processing orders and managing your product information.

  • Keep Your SKUs Short and Simple

Short and simple SKUs are easier to remember and manage. Avoid using long codes that are difficult to read or understand. Instead, use a combination of letters and numbers that are easy to identify and remember.

  • Include Relevant Information

Include relevant product information in your SKUs, such as color, size, and style. This makes it easier to identify and locate specific products in your inventory.

  • Regularly Audit Your Inventory

Regularly auditing your inventory helps you identify any SKU discrepancies or issues. It also ensures that you have accurate information about your products.

  • Use Inventory Management Software

Inventory management software can help you automate and streamline your SKU management process. Look for software that integrates with your eCommerce platform and provides real-time data on your inventory levels.

SKU Management

How to manage SKU

>>> See more: Top 5 SKU Software Can Streamline Your Business Operation

Pros and Cons of SKU Management

Like any business process, SKU management has its pros and cons. Here are some of the benefits and drawbacks:


  • Accurate inventory tracking
  • Improved decision-making
  • Better customer experience
  • Increased profitability


  • Time-consuming process
  • Can be complex and challenging to manage
  • Requires ongoing maintenance and updates

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Tips for Effective SKU Management

Here are some additional tips to help you manage your SKUs more effectively:

  • Use clear and concise descriptions for each product
  • Use high-quality images to showcase your products
  • Regularly update your product information, including pricing and availability
  • Monitor your sales data and adjust your inventory levels accordingly
  • Train your staff on how to manage your inventory and SKUs properly


UPC (Universal Product Code) codes identify products at the point of sale, while SKUs track inventory levels and manage product information.

When deciding on a format for your SKUs, consider factors like the types of products you sell, how many products you have, and whether you need to track specific attributes like color or size.

No, each product should have a unique SKU to ensure accurate inventory tracking.

The best inventory management software depends on your business's needs and requirements. Some popular options include TradeGecko, Skubana, Stitch Labs, and Fishbowl Inventory.

 How often should I audit my inventory?

Auditing your inventory at least once a year is recommended, but more frequent audits can help you identify issues and discrepancies sooner.

Effective SKU management is crucial for running a successful eCommerce business. By following best practices and regularly auditing your inventory, you can ensure that your product information is accurate and up-to-date. Remember to keep your SKUs simple and consistent and include relevant information to make identifying and locating specific products easier.

What is SKU Management? Top 4 SKU Management Best Practices
Viindoo Technology Joint Stock Company, Monica Nguyen May 18, 2023