SKUs

What is a SKU (stock keeping unit)?

A Stock Keeping Unit (SKU) is a unique alphanumeric code a business assigns to each individual product or product variation in its inventory. It allows merchants to identify, organize, and track items efficiently across sales channels, warehouses, and storage locations, and is the foundation of order management and inventory accounting in any ecommerce or retail operation.

In ecommerce, SKUs are most useful for managing product variations such as size, color, style, or pack quantity. Each variation gets its own SKU, making it easier to manage stock levels, update listings, and fulfill orders accurately. SKUs also improve reporting, simplify reordering, and serve as the backbone of inventory analytics.

SKUs are sometimes confused with UPCs (Universal Product Codes), but the two are distinct. SKUs are internal codes set by individual sellers and can vary between merchants for the same item. UPCs are standardized 12-digit barcodes assigned by GS1 and stay the same across every retailer that sells the product.

In subscription and DTC commerce, SKUs also underpin customer-facing features like SKU swapping, where a subscriber can change the underlying product on an active subscription while the rest of the order (cadence, billing, shipping) stays intact.

What are the 4 types of SKUs?

SKUs typically fall into one of four categories:

• Internal SKUs (also called private SKUs): Custom codes a business creates and uses only internally for its own inventory and reporting.
• Manufacturer SKUs (also referred to as MPNs, or manufacturer part numbers): Codes assigned by the product’s manufacturer, sometimes adopted as the merchant’s SKU when reselling.
• Retailer SKUs: Codes created by a retailer to organize products in-store or across an online catalog, often grouped by department, category, or location.
• Digital SKUs: SKUs assigned to non-physical products such as software licenses, eBooks, downloadable content, or subscription plans.

Examples of SKUs

• SHRT-WHT-LG = Shirt, White, Large
• DSLR-CPN-2000 = Canon DSLR Camera, Model 2000
• PNTS-BLK-MED = Pants, Black, Medium

Each example encodes the product type, attribute, and variant in a consistent order, so the SKU can be parsed at a glance by anyone in the operation.

Driftcharge Tip

Create a logical, consistent SKU naming structure. Avoid special characters and spaces, keep length predictable, and encode attributes (category, color, size, variant) in the same order across every product. A clean SKU schema improves inventory management, prevents shipping errors, and is essential when building product bundles from multiple constituent SKUs or running automated workflows on top of your catalog.

Ganesh Pawar

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Ganesh Pawar is the founder of Driftcharge, a subscription management app designed to help Shopify merchants streamline and scale their subscription businesses. With a deep focus on solving real-world pain points—like legacy account page support, flexible subscription options, and advanced analytics—Ganesh is passionate about building tools that drive growth and retention.