All you need to know about Amazon SKUs

Many small businesses choose to start selling on Amazon Seller Central because it boasts a wraparound solution for eCommerce and supply chain management. This blog demystifies Amazon SKUs and provides clarity around what they are used for and what to consider when creating them.

While it is true that Amazon provides end-to-end services for its sellers, businesses that are new to the game often find themselves drowning in a sea of new terminology and jargon. Examples of confusing abbreviations include:

• Stock Keeping Unit (SKU)
• Amazon Stock Identifier number (ASIN)
• European article number (EAN)

What is an Amazon SKU?

Developed for inventory management in warehouses, SKUs refer to unique alpha-numberic codes assigned to each of your products and their variants. An SKU can consist of any combination of letters and numbers that you choose, just as long as the system is consistent and used for all the products in your inventory.

An Amazon seller SKU follows the same principle, but limits each SKU to under 40 characters. All products sold on amazon are required to have SKUs which you can either generate, or have Amazon generate for you. Amazon SKUs are meant to help sellers keep track of their merchandise. 

What to include in an Amazon SKU?

As a rule of thumb all SKUs should contain information that helps you;

• Effectively categorize products by colour, size and type.
• Help warehouse quickly staff pick, pack and ship products.
• Manage inventory that is being sold across multiple channels

If you are selling necklaces, a good Amazon SKU example could look something like this:

In the example, we have used the color variant, which distinguishes the items, as the last value in the SKU. By suffixing the SKU with the colour variant, we make the SKU easy to comprehend whilst still grouping together all the Looped Necklaces with LN for easy identification.

Should I create my own SKUs or let Amazon do it? 

Most small business merchants selling on Amazon recommend creating your own SKUs as a matter of best practice. Let’s consider some of the disadvantages of letting Amazon generate SKUs for you, versus creating them on your own.

Amazon generated SKUs

• If you are selling the same products on two different Amazon stores, Amazon will assign different SKUs to those products. So on one store the SKU for Small Blue T-shirt could be ST-21-GRO-5 and the same product on another store could be XY-52-ZTW-06. Keeping track of the number of units sold across channels then becomes challenging.
• Amazon generated SKUs will be meaningless to you and your team and therefore hard to recall especially as your inventory grows. One of the benefits of having SKUs is that it provides a quick way to search for products- long meaningless codes detract from that purpose. 

Generating your own SKUs

• You can easily group together items that are selling well.
• You can create a comprehensive product identification system that includes, type of product, size, colour and even which collection the item belongs to, so that you are able to identify the product with a single glance. 

For example, the SKU for a Small Red Floral T-shirt from your Summer 2019 catalog could be; S19T-FLO-RS. An added benefit of designing an SKU system this way is that it is easily expandable.

• You can standardise your sales reporting across channels for greater visibility into sales by season, channel, product and more. 

While there are many obvious upsides to creating your own SKUs, doing so for a large number of products is tedious work. One way to simplify the process is to use tools such as TradeGecko’s Free SKU Generator for your entire product catalog. The SKU generator makes stock availability easy to determine, makes searching for products simple and can help you easily identify your most profitable products when you run reports in the future. 

Assigning clear and easily identifiable for your products on Amazon Seller Central is the first step to proper inventory management on Amazon. As your Amazon business grows and as you start selling on other eCommerce channels, keeping track of orders and stock availability becomes painstaking and complicated work that can take up many hours in a day. 

TradeGecko integrates with Amazon Seller Central as well as many other eCommerce and supply chain solutions, providing small, fast-growing businesses with a single source of truth to manage stock movements, sales orders, warehousing, shipping, accounting and more. Investing in an inventory management tool at the same time as you set up your Amazon store, could save time and money and let you focus on building an amazing business.