SKU.
aka stock keeping unit, item code, product variant
One exact product, in one exact version, with its own code.
What it actually means
A SKU, stock keeping unit, is a unique code a business assigns to each distinct item it sells, down to the variant. A T-shirt in three colours and four sizes is twelve SKUs. The code lets a business track stock, sales and profit for each precise version instead of for “T-shirts” in general.
SKUs are internal: each company invents its own. That is the difference from a barcode number such as a GTIN, EAN or UPC, which identifies the product globally and is the same wherever it is sold.
The number of SKUs is a strategic choice. More variants mean more choice for customers and more cash tied up in stock, more forecasting errors and more leftovers. Many retailers find that a small share of SKUs produces most of the profit, and that pruning the rest improves cash flow more than any marketing campaign.
Where you'll hear it
We carry 840 SKUs. Sixty of them make 70% of the margin and about 300 have not sold in ninety days.
Translation: a third of our shelves, and the cash sitting on them, could go without customers noticing.
Also in warehouse systems, on purchase orders, in marketplace listings, and in the phrase “SKU rationalisation”, which is corporate for clearing out the cupboard.
The pop-culture version
A shoe shop does not stock “the white trainer”. It stocks the white trainer in size 38, in 39, in 40, and so on, and each size is a separate box on a separate shelf.
When a customer asks for a 42 and there are only 38s left, the shop has trainers and no sale. Knowing you have forty pairs is useless. You need to know which forty.
Each of those boxes is a SKU. The code is how the shop knows that 42s sell out in a week and 38s gather dust.
Counting products tells you what you sell. Counting SKUs tells you what you have to buy, store and get right.
Say it like you mean it
“That style is 12 SKUs; the two middle sizes in black are 55% of its sales.”
Thinks at variant level, where stock decisions are made.“We only have 30 products, inventory is simple.”
Thirty products with sizes and colours can be 400 SKUs. Complexity lives in the variants.When someone says how many products they sell, ask how many SKUs. The gap between the two answers is the size of their inventory headache.
Which tools manage catalogue, stock and orders, and when a new store needs each.
Decoded next
Decoded by the Kurums editorial team. Kurums Decoded translates the language of business for people who are new to it. Definitions are kept short on purpose; the serious version above goes deep. Nothing here is financial, legal or career advice.
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