What is SKU?
SKU is an acronym for Stock Keeping Unit, which is a unique identifier for a product. The first thing you need to understand is that no SKU comes with each product sold. Instead, there are retailers, warehouses, distributors and other middle men involved in the process of getting items from manufacturers to your local store. Each time a unit moves from one location or individual to another, it needs a new identifier. The more people who touch this physical object before it gets to you, the more SKUs are required for tracking purposes.
Who needs SKU management?
SKU management is an important activity for all businesses to maintain the highest level of efficiency in their supply chain. For any company that manages inventory, having proper records can help improve customer service levels and boost overall profitability at the same time. This includes ecommerce managers who are looking for a better way to handle their large number of products without putting too much strain on their staff or IT resources.
The problem is that it can be very costly in terms of time and resources to manage the data in your warehouse manually. The last thing you want is for someone to assume that they know what should be happening within your inventory management system when there are actually errors or omissions at play. With SKU management via cloud software, you will have complete transparency into what is really going on with your business processes . It doesn’t matter if you have 200 products or 200,000 – the only difference is how much time it will take you to create all of these records yourself.
What is an SKU management solution?
An SKU management solution is the process of controlling variations in stock keeping units (SKUs). By creating and assigning unique identifiers (like barcodes) to these variations you end up with one manageable number that represents each variation . This allows companies to track their inventory much more accurately and efficiently than ever before .
The advantages of using an SKU management solution for this process are:
– It will shorten the time it takes to create a new product.
– The system can easily track what has been ordered, reordered and sold.
– The system will also be able to pre-empt trends that may occur in the future e.g. fashion items or seasonal items etc.
– In addition, by creating wholesale relationships with key suppliers you’ll have access to more detailed information about your inventory levels at any given point in time .
– You’ll have absolute visibility on how much stock you should be holding and whether a full, partial or no re-order is necessary at all.
How to implement SKU Management?
Here are some basic steps you should take if you want to avoid potential problems down the road:
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1.) Inventory control – Use your existing warehouse management solution to read in the barcode of the products you receive (either on purchase orders or packing slips).
2.) Product information – Pull in all data about each product. These can be things like title, description, size, colour etc.
3.) Mapping – Map your products with the codes that are being used by distributors or retail partners so that you can create records for them when they update their systems.
4.) Security – Implement security around who is allowed to update stock levels and where this happens e.g. warehouses, stores etc.
5.) Replenishment / Repricing / Pricing rules – Link into any automated repricing or repricing tools which are available to ensure that prices remain correct at all times
6.) Inventory reports – Generate inventory reports on any of the above data points to identify potential issues with your inventory management.
What are the benefits of doing SKU management?
There are many positive outcomes when you use an SKU management solution. Here are just a few:
– You will have a 100% accurate picture of your inventory levels.
– You will be able to create sales projections and forecasts more effectively.
– Your marketing teams can take advantage of opportunities as they arise e.g. by pre-empting seasonal or product trends etc.
– You’ll improve order accuracy, reordering processes and reduce out of stocks to name but a few benefits!
What do eCommerce stores have to do with SKU?
The problem with many ecommerce sites is that they are not able to account for all of these different stock keeping units across vendors, warehouses, distributors etc. SKU management becomes an issue when no one person has a complete picture of what should be happening already within their system. Without this information, you cannot guarantee the accuracy or completeness of your inventory level data.
For example, if you have received full truck loads from a distributor and only created 1 record for each item in your warehouse – it will appear as though you have enough inventory despite having sold half of those items already. This can cause unexpected shortages or excesses down the line which can lead to inaccurate sales forecasts.
How do eCommerce stores benefit from SKU management?
As an eCommerce store, you can gain many benefits from proper SKU management . The most important one is that it makes inventory tracking much easier. Many business owners choose to go with manual inventory management or excel spreadsheets but these practices do not provide any real-time data and require constant checking which takes time away from other duties.
SKU (Stock Keeping Unit) enables your team to quickly check on what’s available, how many items there are left in stock, reordering points etc – all within seconds instead of hours or days. Moreover, by streamlining the process of creating purchase orders for each item manually into a single action , you’ll be able to reduce errors down the line as well .
What are the benefits of using customized SKU management for eCommerce stores?
These days most people are using the internet to do shopping. So you have to come up with something innovative and different which can help you in winning their heart. Custom eCommerce stores with SKU management capabilities make it easy for shoppers to access relevant product information at one place so that they don’t have to waste time searching on various platforms again and again. This is the reason why retailers prefer cloud based customizable solutions rather than traditional online store development methods. The former gives them complete control over creative elements, content, designs etc., while the latter doesn’t allow common people modify web pages and publish the website. Customized eCommerce stores with SKU management offer an array of features such as inventory tracking, price maintaining and profitability analysis to give your business a huge push.
Customized eCommerce stores with SKU management
A customized E-commerce site with SKU management capabilities solutions help you to create your own unique space on the web so that your brand name can be imprinted in customer’s mind. Customized eCommerce stores give scope for adding various features that are useful for business like, up-selling and cross selling options, displaying images of products along with their price comparisons, Facebook product pages etc.
With this you not only encourage customers to buy more but also provide them real time view of availability of specific products across all leading online shopping portals like Flipkart, Amazon, Snapdeal etc., If you opt for cloud based customizable solution it makes it easier for retailers to make changes in content and design of web pages in real time and publish the website. And this is not possible with traditional online store development methods which give no such features.
Here we come up with some of the most important benefits that you can avail from a customized eCommerce stores with SKU management:
1.) Cross selling and Up selling options
Customized ecommerce stores with SKU management capabilities allow retailers to add more than one product in an image so that it becomes easier for shoppers to compare prices of various products. This helps business owners to increase revenue by suggesting them the best possible product alternatives within their budget.
2.) Product availability
With custom eCommerce stores, retailers get access to multiple sales channels where they can keep check on real time availability of products. So whenever customers visit your website they can connect to the nearest supplier and purchase products without wasting much time.
3.) Inventory management
Customized eCommerce stores with SKU management capabilities allow uploading specific product images, names and prices which helps business owners to maintain their inventory in the proper way. Custom web development solutions give you an opportunity to meet all your requirements but at the same time it is recommended that one should always choose a reliable service provider for this task.
4.) Profitability analysis
It also allows retailers to analyse trends taking place across selected sales channels so that they can take immediate action if required. This helps them in increasing their productivity efficiently by decreasing money wastage.
5.) Shipping details
Customized ecommerce stores with SKU management capabilities allow storing shipping details of products so that whenever customers visit your website they can know all the information regarding the same very easily. This allows them to finalize their product within no time and boosts up revenue generation for retailers without wasting much time.
6.) Product images
This type of solution helps retailers in designing multiple pages on the web where they can upload detailed information about products along with image format which makes it easier for common people to understand the topic properly. If you are planning to develop an online store then you need not look beyond customized eCommerce sites with SKU management capabilities because it has proven itself as a perfect solution for business owners for promoting their brand name.
How to create an SKU for an eCommerce store
Steps in Creating SKU for eCommerce stores
Key Takeaway: The first step towards creating an eCommerce SKU involves deciding how customers will transact with you i.e. whether they will be buying it through your online shopping cart or if they will come directly to your physical store/warehouse for purchasing it.
Here are the various steps involved in creating a SKU which you can use for your eCommerce store:
STEP 1 : Identifying your Product types
Which type of product are you selling on your eCommerce store? Here are some of the common product types that most businesses usually deal with on their website. Depending upon what kind of product you are selling, different specifications will be required for making an effective SKU.
-Books & DVDs etc.,
-Clothing & accessories,
-Toys & baby products,
-Personal care items,
-Home décor items,
-Stationery items, etc.,
These are just a few examples of common things that we come across in our daily lives. Therefore, the process of creating an SKU for any type of product is relatively simple and straightforward.
STEP 2: Product Specifications
What are the specific specifications that you need to include in your SKU?
Most eCommerce stores list down certain details like color, size, availability etc., under each product’s SKU. Here are some key components that you need to focus on when putting together your own unique identifier:
– Material: What is the primary material used for manufacturing this particular product? Is it made out of plastic, cotton or something else?
– Size: What is the exact dimension (length , width and height) in inches/centimeters/mm? So if it’s a clothing product then what is the size of that particular piece?
– Selling Price: What’s the exact price of your product in US Dollars, Euros or any other currency you transact with?
– Quantity Available for Purchase: How many pieces are currently up for sale under this SKU? This helps you to manage inventory in an effective manner.
– Color Availability: What are all the colors available in which you can sell that particular product? Is there only one color or multiple colors available in which case specify it accordingly.
There are other minor yet important details like weight, warranty etc., but they aren’t always required. So, depending upon the specific requirement, list down whatever specifications are needed for your eCommerce SKU.
STEP 3: Inventory Management
Once done with SKU definition what comes next? Well, managing inventory effectively & efficiently comes next to ensure that you don’t run out of stock when an order is placed.
Let us take a look at some common mistakes when it comes to inventory management:
– Overstocking: Sometimes store owners tend to overstock products to ensure that they never run out of stock which usually ends up in wastage of time and money. Overspending also happens sometimes in the process so try to avoid it.
– Understocking: Just like overstocking, understocking can be hazardous for your eCommerce business as well since not having enough products available in your store will definitely affect business growth . So keep a tab on how much quantity should be stocked according to trends and product availability.
– Inventory Issues: Sometimes inventory tracking gets complicated over time especially when it comes to managing multiple stores. For example, an online shoes store owner wants to track the product availability in all his 10 regional outlets which usually becomes a tiresome job after a particular period of time. So what’s the solution? Well, StoreYa offers a feature-rich inventory management platform which enables you to manage your stock from one place across unlimited eCommerce stores so there is no need to take out additional effort or money for managing inventory.
What is SKU Grading for eCommerce stores?
SKU Grading is a method for grading each product individually so that you know which product needs replacing, downgrading or refunding before even going to pick it up from your store. Most people just choose a random percentage of their stock to grade and ship out. This isn’t good enough because you can just end up with a high number of returns due to poor quality products if not all your stock gets graded properly but if only 1% gets graded – there’s no point in doing this at all!
How to grade SKU in eCommerce stores ?
The most common grading systems are FIFO (First In First Out), ABC (ABC analysis) and Weight method grading.
FIFO Grading System – First In First Out
The products are sorted according to their “first in” date, so that the oldest products are displayed first. This ensures that the freshest product is provided for customers at all times, while older stock can still be sold off. This type of sorting requires good accuracy when recording SKU history data, but has low overhead costs as no additional activities are needed during daily operations.
ABC Analysis Grading System
The ABC analysis grading system classifies products into three groups, “A” being the most profitable products and selling the best, “B” a mid-grade product and “C” being low-margin goods. This grading method has high overhead costs as it requires an additional warehouse storage for each of the three categories of products.
Weigh Grading System
In the weight grading system, SKU are sorted according to their weight, so that the products with heavier weights get displayed first on shelves. This ensures that customers have access to lightweight items first, while more bulky or heavy items can be kept aside until their turn comes up later in the day/shift/season etc.
This type of sorting requires a weighing scale along every shelf location where these products are displayed, resulting in high operational costs. In order to improve accuracy and reduce operational costs, the weight of every product is only recorded once at the time of invoicing, instead of recording it daily or on a per pick basis.
How to standardized SKU grading in eCommerce stores
One way to standardize the grading process is to assign a unique number or code to each SKU and use this as an identifier instead of keeping track of product grades manually. With this method, it becomes easy to sort all products according to their assigned number/code inside warehouses and stores alike. This sorting can be done using either barcodes or RFID tags for automatically recording information about every product pick without the need for manual intervention.
The advantage of standardized grading is that any change in the system needs only a single update at the point where SKU numbers are assigned – once – instead of going through the whole picking process again. From a business perspective, implementing automated data collection reduces overhead costs by lowering operational expenses and also ensures complete accuracy in the grading process.
Steps in grading SKU in eCommerce stores:
1. Product filtering
– Identify the product type [Soft, consumable or hard] based on its durability [number of times it can be used for].
– Is it a seasonal product [Halloween and Mother’s Day and Father’s Day and Christmas (hard) products come under this category]?
– Product SKU should not be the same as any other product in the store which is already in use by another customer. This option will help you to avoid such mistakes when there are multiple orders for one SKU.
– Product price should be filtered with a min price of $1.00 so that users do not get confused at checkout page while adding more quantity to cart during checkout process. This helps in avoiding mistakes of adding the wrong product to cart at checkout.
2. Product information is the key in any business.
– The product title, description, brand name and SKU should be clear in order to avoid customer support queries when products are delivered to them.
3. Images play an important role in eCommerce stores.
– It helps customers understand, feel and experience almost all the features of the products which are not possible with just text descriptions on websites or online catalogs. High quality images with specific views [front view, close up of front texture etc.] so that users get enough details about various parts of the product before placing order will help you increase sales by attracting new customers to your store and retaining existing ones by satisfying their needs of specific details .
4. Product warranty and returns policy.
– Is a must for online stores because customers demand it. If you are not fulfilling this requirement then you may lose potential customers as well as existing ones who have already placed order with you
5. Product delivery information.
– Delivery method: It should be appropriate based on the nature of products being sold in eCommerce stores so that users can feel safe while shopping online. As per our experience, we recommend shipping through Fedex, DHL or USPS which provides tracking number, insurance option and offers better delivery options to users.
– Estimated time of product arrival at the customer place: Retail stores which sell hard and consumable products recommend having a standard delivery time for all customers so that they can plan their activities accordingly.
– Tracking number: Customers demand it as it offers them peace of mind during order transactions with your eCommerce store. They feel safe when you offer a tracking option as they know exactly where their product is and how many days before it will arrive at their address.
– Insurance Amount: You can decide upon various shipping methods such as Fedex, DHL or USPS for fulfilling online orders on your website depending on the nature of products being sold in your eCommerce store. As per experience, shipping through Fedex, DHL or USPS which provides tracking number, insurance option and offers better delivery options to users.
Overall, the impact of SKU management in eCommerce stores is huge and increasing day by day. The implementation of smart practices will help you in realizing the true potential of your eCommerce store and will assist you in dominating your global markets.
A single wrong SKU can result in wastage of time, effort and money spent on an item. It would also lead to deterioration in customer service levels resulting from delay or failure to deliver ordered products leading to negative reviews for your business.