Whether your ecommerce business starts out selling one product or a hundred products, it is crucial to create an organised SKU naming strategy as early as possible.

When selling your products on any channel, SKUs allow easy identification of products throughout your supply chain — helping you effectively manage inventory and orders.

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This blog will talk about why SKU naming matters for your ecommerce business, and how to properly name your SKUs for maximum efficiency.

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What is an SKU?

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SKU is an abbreviation for Stock Keeping Unit. It is a unique combination of numbers and letters assigned to specific products and their variants used to identify, track, and manage inventory. Usually, SKUs include naming schemes that indicate the product’s manufacturer, name, size, model, colour, material, packaging, warranty terms, or other parameters. These parameters are abbreviated in the form of letters and numbers to easily distinguish products from each other.

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Product SKUs are not only placed on the product but also on the picking list, the order receipt, in your inventory management system, and on the warehouse shelves where the products are stored. Moreover, there is no standard way to create an SKU since its purpose is to create a code that’s unique to your business. That means the SKU naming scheme you use may differ from the SKUs of identical products you order from a manufacturer.

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Why SKU naming is important for your business

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Ecommerce businesses use SKUs as an industry standard to track their products throughout the supply chain. You cannot sell any product online without having unique product SKUs. For example, Amazon will not allow you to list products unless each of them has a unique SKU.

Additionally, properly named SKUs are an integral part of your company's inventory management strategy. Having good, organised SKUs can be read by your staff to understand what they're looking for —or what they're looking at in the fulfilment centre.

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Here are some benefits of naming your SKUs properly:

• Helps in easy identification of different products and their variants
• SKUs act as a universal identifier across the supply chain to convert product information
• Reduces fulfilment errors and enhances quality control by preventing incorrect picking and inaccurate shipping of products

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How to create and name SKUs

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As we know that there is no universal practice when it comes to creating SKUs, you can follow some widely-practised SKU naming conventions as stated below:

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1. Create a format

As discussed earlier, some of the most important product indicators include manufacturer, name, model, size, colour, material, packaging, warranty terms, description, and other parameters. Firstly, you need to decide which of these parameters you want to include in your SKUs and their particular order. You need to think about what attributes your products have that distinguish them from other products to determine what needs to be included.

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Here are a few examples:

• If you sell apparel, you can include: brand, item type, material, colour, size.
• If you sell computers, you can include: brand, model, colour, warranty, and accessories.
• If you sell coffee mugs, you can include: design, size, and colour.
• If you sell crockery sets, you can include: brand, item type, material, colour, size, and quantity of items within the set.

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You can also use various SKU name generators by Zoho, Gorgias, TradeGecko, and more to keep item naming consistent, clear, and easy to remember, even if you have a long list of items in your inventory.

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2. Establish a coding system

Next, you need to create a list of parameter codes to identify different aspects in your SKU names such as manufacturer, sizes, colours, and many more.

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Here is an example for brand names:

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Similarly, you can do the same for other parameters like colours:

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Best practices for SKU formatting

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Here are some SKU naming conventions and best practices used by companies across the world:

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1. Arrange the parameters based on importance

You can include the most important parameters (product type or brand) in the first section of the SKU. Similarly, you can include the unique variables (colour or size) in the last section of the SKU.

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2. Stick to one format and coding system

Choose the format and the coding system that works best for your business and ensure that you stick with it when naming all of your SKUs.

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3. Ensure it's easy to read and understand

Choose SKU names that are simple, straightforward, and self-explanatory. This will help different departments within your company to efficiently understand exactly which product the SKU refers to.

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4. Avoid using confusing letters and special characters

You need to be careful as some letters and numbers look similar. This can confuse team members. Additionally, you should also avoid using special characters.

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Here are some examples:

• The number 0 and letter O appear to be similar in most fonts.
• I (uppercase i) and l (lowercase L) look the same.
• Symbols like @, >, <, *, don't have a standard or clear meaning.
• Special characters like the forward-slash "/" are treated as a data separator in Excel.

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5. ‍Avoid starting your SKU names with zero

Another reason for not using the number 0 to start your SKU is that some data storing tools disregard them altogether. For example, if you enter 06581 in Excel, it would actually store 6581.

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6. Don't use manufacturer numbers

You should avoid including the manufacturer's SKUs in your own SKU names. As using manufacturer SKU names can create confusion if you sell products produced by different companies.

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Examples of properly named SKUs

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T-Shirts

• Men’s T-Shirt, Black, Medium = TS-M-Bl-Md
• Women’s T-Shirt, White, Large = TS-F-Wh-Lr

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Scented candles

• Home Decor, Scented Candles, Small, Pack of 8 = HD-SC-Sm-PO8
• Home Decor, Scented Candles, Medium, Pack of 4 = HD-SC-Md-PO4

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Daily Planners

• 2021 Daily Planner, Blue with Color-Coded Tabs = DP21-Blu-T
• 2021Daily Planner, Red (no tabs) = DP21-Rd

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Bottom line

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When it comes to SKU naming, consistency is the key, and it's essential to create a format that works best for your ecommerce business. You can opt for simplicity when naming your SKUs, and it will automatically ensure operational consistency for your ecommerce business.