The Ultimate Guide to Setting Up Amazon SKU’s the Right Way
One thing that can be surprisingly daunting to new sellers, especially on Amazon, is the SKU system.
A SKU, short for Stock Keeping Unit, is the unique code given to a product that allows organizations the ability to more easily identify each individual product among the thousands of products they have in their range. These are vital when it comes to managing products on the back-end, and more easily generating and making sense of reports.
When selling products online, you will need to create unique SKU’s for your products so you can identify them easily. It might be fine to forgo this when your product range is very small – your 1 yoga mat with the SKU “product1” could work – however, as your business and product line grows, it’s going to be very time consuming and confusing to differentiate “product1” and “product25” or “yogamat1” and “yogamat4” from each other just by looking at the SKU’s.
With this in mind, creating a system to quickly and clearly identify each product by its SKU number is essential to effectively running and scaling an e-commerce business.
Here, we’ll take you through the best methods for creating a SKU system that will save you time, money and headaches when running your Amazon business.
Table of Contents
SKU Best Practices
In the Amazon Seller Portal, you are asked to identify products with a “Seller SKU”. As a new seller getting started, this will probably just be one more complicated thing you are yet to understand, and your temptation will be to leave it to Amazon to handle.
Relying on Amazon can be great sometimes, but in this case can make it extremely difficult to identify products if you have a large product catalog further down the road, so it’s worth giving it some consideration right off the bat.
When planning an efficient SKU system, there are three main things you need to keep in mind:
Keep it short
Keep the coding system under 10 digits. This helps display all characters when you run charts in Excel or Google Sheets.
Easy to read
The SKU should be easy to read at a glance, so stay away from characters that look alike. The “O” and the “0” look very similar and can cause confusion. Also, repeating characters more than 3 times will make it difficult for the reader to mentally count the number of times the character is used in a row.
The purpose of the SKU is to help provide a quick reference to the product. No matter what system you decide to use, you want to be able to quickly identify the product you’re referencing. This will save time searching for the product name when reviewing reports. And more time saved means more time to grow your business!
Default Amazon SKU’s
Amazon will offer to provide a random SKU for your new product. And if you do not give the product you are listing a SKU identifier yourself, Amazon kindly does this automatically. It will usually look something like:
How thoughtful of them, right?
However, imagine if you have hundreds of these little codes. Trying to identify your products can become a real pain! This destroys the chances of being able to quickly identify your products.
What you want to do instead, before listing your product catalog on Amazon, is develop an efficient SKU system. The system needs to help you understand and quickly identify what the product is within a few characters. Yes, you could use the product title, but with a 200 character limit, it can be difficult to read in a nicely developed visual report. Developing an actual SKU system beforehand can help save a lot of headache down the road.
Developing a More Optimal SKU System
Developing a system is very easy. Here are some suggestions to get you started:
The Simple Word System
The simple word system works by selecting a few words that you use to identify the product(s) already. After you choose one or two words, just simply remove some of the vowels. For example:
|Product:||A cutting board that is made of bamboo shaped like a pig|
|Suggested SKU Codes:||BMBBRD||PIGBRD||BAMBPG||BMBPIG|
The main words that you would likely refer to this this product would be; board, bamboo, and pig. These words help identify what the product is easily with just a few characters. Combining these words together and removing the vowels can make a very effective SKU that is easy to recall the product in question.
Number Segment System
Another useful system that a lot of retailers use is a number system. This can have many different options to help you quickly identify the product.
|Product:||Baby rattle and teething ring that massages|
|Example SKU Code:||03-267|
03 – This could be a department of the product, like “Baby”.
267 – This could be the type of “Baby” product. The 2 could mean “Toy”, and 67 could be the sequential number this product was added to this category. This system can be very helpful if you sell products in various categories or departments.
The UPC or Universal Product Code, commonly found on the barcode symbol for products in many countries, could be incorporated into a SKU system.
It could become difficult if you have numbers in sequential order, however, and not to mention they have 12 different numbers. That could be hard to interpret, right? If you have the sequential order, one idea might be to just use the last 3-5 numbers to help identify the product.
Using a UPC code for the SKU is helpful if you are selling something one time only, such as original (one-of-a-kind) items or hand-crafted items.
|Product:||Small bowl bought from a store on clearance to sell for a small profit on Amazon|
|Suggested SKU Codes:||The whole 12 digit code||The last 5 digits
For sellers that sell across different platforms, you might need an easy way to identify what products are selling on what platform. Assigning the channel with a code identifier at the beginning or end will help you see which channels are rotating through what products.
|Product:||Hair bow ribbon clip assorted colors in pack of 10|
|Suggested SKU Codes||Amazon Platform:||FBAHRBW10||HRBW10-AMZ||HRBW10-12|
On the Amazon platform, try to stay away from identifiers that include “AZ” and “AM”; these codes can get confusing to read because of Arizona and the “AM” time period for the morning. The best way to identify Amazon is with FBA, AMZ, or even FBM.
When coding for your own e-commerce store or other platform, try to use identifiers that resemble the name of the channel:
|Platform||Suggest SKU Codes|
A combination of letter and number coding used as an Amazon identifier can be extremely useful as well. It is recommended to use at least a two digit number. The first digit could be the identifier for the online department, and the second digit the number assigned to the platform service.
|Product:||Hair bow ribbon clip assorted colors in pack of 10|
|Example SKU Code:||HRBW10-12|
HRBW10-12; the “1” could signify that the product is being sold online. The “2” could be the sales channel the product is being sold on, such as Amazon.
Amazon Global Sellers
For sellers that sell on different Amazon channels, like Amazon Canada, United Kingdom, Germany, or Australia, the multi-platform combo coding could work best for SKU. Just add a third digit to identify which Amazon platform the item is listed on.
Variations should not be neglected for an easy to read system.
If you use the variation wizard, Amazon will assign your parent SKU with one of their lovely SKU codes only a computer can decipher. The best way to prevent this is to use the excel sheet template you can download from the Inventory > Upload products tab. This way you can give a parent SKU something easy to classify your group of products.
|Product:||A series of different color water bottles. (They all look the same, except the color)
|Suggested SKU Codes||Parent SKU||21OZH2BTL|
|Red Color SKU||21OZH2BTL-RED|
|Smoke Color SKU||21OZH2BTL-SMK
Each of these can easily be identified by reading just the SKU. The SKU gives two parts; the product group SKU (21OZH2BTL) and the actual color (-RED).
Amazon Reports and an Effective SKU system
This system provides easy to read business reports and visual displays.
Under Reports > Business Reports, you can click on detail sales by parent item. This view provides insight on how each group of products is performing. You could easily identify what type of products are top sellers and which have a low turnover rate.
When you run Amazon reports, the best way to make charts is by using the SKU. The best SKU is a small amount of characters that can easily fit on a chart for labelling.
Most reports are generated in Microsoft Excel and provide a lot of data. Correct SKU planning can make your pivot tables and visual displays easier to understand. No deciphering or zooming, just a quick report that saves time. And when you save time, you have more time to grow your business.
Creating an efficient SKU system is not something new Amazon sellers spend much time thinking about, but taking this into consideration at the start will save you a lot of time as your business grows.
Hopefully this article has better illustrated this for you and shown you the fundamentals of creating an effective SKU system.
The key takeaways to remember when creating your SKU system are:
- It should allow you to quickly identify products if you were to add hundreds or thousands of products across multiple platforms
- Keep it short
- Use simple words
- Make it easy to read
- Identify parent SKUs, colors and variations
- Identify different platforms you are selling on
This guide is pretty comprehensive, however, it’s also important to remember that the SKU system simply needs to work for your business, products and platforms you are selling on.
If you’ve got any questions or need any other help creating a SKU system, feel free to comment below or get in contact with any questions you have.
And if you’ve got a method or way of creating your SKU system that hasn’t been covered here, we’d love to hear about it.
For consulting and training opportunities, Larry can be reached on LinkedIn.
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- The Ultimate Guide to Setting Up Amazon SKU’s the Right Way - September 10, 2018