SKU (Stock Keeping Unit)

A Stock Keeping Unit (SKU) is an internal identifier that distinguishes one product from another in a company's inventory system. Each variation of a product — different size, colour, packaging, or configuration — receives its own SKU. For example, a blue T-shirt in size medium is a different SKU from the same T-shirt in red or in size large. SKUs are created by the retailer or distributor, not the manufacturer.

SKUs are the common language of inventory management. They enable precise tracking of stock levels by variant, accurate demand forecasting at the item level, efficient warehouse operations (every pick and put-away references a SKU), and detailed sales analytics. In e-commerce fulfilment, SKU accuracy is essential — shipping the wrong size or colour is one of the most common causes of customer returns.

A SKU is an internal code unique to each business. A UPC (Universal Product Code) is a globally standardised barcode assigned by GS1 that identifies a product universally across all retailers. The same product has the same UPC everywhere but different SKUs at different companies. Warehouses typically use barcodes encoding SKUs on internal labels and UPCs on product packaging.