Selling on Amazon has its perks, and one of them is the massive volume that you can push on the site. In 2020, third-party sellers have sold around $80 billion worth of products on the website (Source: Statista). This means that hundreds of millions of products flew off the shelves of AMZN in just one year.
With so many products being sold on the site, inventory management can be tricky. Knowing how many products you have sold, where they are headed, and tracking their location can only be done if you utilize a product identifier such as an SKU in your store.
So what is a seller SKU on Amazon, and how does it affect your business? This article will talk about this unique product identifier and how they ease up inventory management. We’ll also discuss the benefits of using SKU in your AMZN store and the steps involved in creating one.
Ready to learn how to create SKU for Amazon and improve your inventory management? Then let’s jump straight into the details.
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What Is A Seller SKU On Amazon
When you sell hundreds and thousands of products on Amazon, remembering their product names isn’t enough. You have to create your identification and inventory management system to run your store smoothly.
If libraries have their own “catalog cards” to make it easier for you to arrange, manage, track, and locate books, then third-party sellers on AMZN have their product identifiers too.
An SKU (stock keeping unit) is an alphanumeric identifier created by the third-party seller and submitted to AMZN. This is done to associate your items with the appropriate product information page in AMZN’s catalog.
SKUs are critical components of metadata that you must submit to AMZN. By doing this, you can connect the products in your inventory to an existing product detail page in AMZN’s catalog.
Here are some guidelines on how to create SKU for Amazon according to AMZN Seller Central:
- All of the products that you sell must have their unique SKUs
- Every new SKU uploaded will create a new record in AMZN’s catalog
- If an SKU already exists, it cannot be changed anymore. You must delete the SKU in the catalog first before editing and changing it to a new one.
- Uploading an inventory file that contains data for an SKU that already exists will result in the more recent data replacing the older data.
An SKU comprises a combination of numbers and letters that the third-party merchants choose. You need to be consistent in your format and apply this to all of the products in your inventory.
Your Stock Keeping Unit can be used in traditional retail where they are scanned like barcodes. They can also be used in an eCommerce environment such as AMZN where they are considered metadata in the system.
Just one thing to note – do not confuse SKUs with UPCs (Universal Product Code). While both are product identifiers used in AMZN, SKUs are more utilized as inventory managers. UPCs, on the other hand, have other uses such as tracking sales data, sales estimator, and product location.
The Anatomy of SKUs
An Amazon Seller SKU is composed of strings of alphanumeric characters. Sellers can separate the numbers from the letters by hyphens (dashes). Letters can represent different product details such as country of origin, type of material, etc.
There is no standardized model, particular format, or template to follow when creating SKUs. It all falls under the discretion of the sellers to use any format that they deem suitable.
SKUs can be as brief as ABC-001 to as lengthy and ABC-001-CHN-FBA-123. Usually, the length will depend on how much information you want to put in. Amazon FBA sellers often use SKUs to keep track of the country of origin of their products. This makes it easier to settle fees, taxes, and other selling expenditures.
As previously stated, all of your products must have an existing SKU before being sold on AMZN. They must be limited to under 40 characters, which is more than enough for most third-party sellers’ needs.
Also, they must contain information that will allow the sellers to categorize the information about a product. For example, you can add the prefix CHN if you want to indicate that the product you are selling comes from China.
Why Do You Need An Amazon SKU?
So why do you need a stock-keeping unit for the items that you sell on AMZN? Here are a few reasons that I could think of:
Makes It Easier To Identify Your Products
Easy identification is important when you are an Amazon FBA seller pushing thousands of products every day. To make it easier for fulfillment centers to find your products on the shelves, having a stock-keeping unit is essential.
Short product identifiers can easily describe the nature of your products with just one glance. For example, the SKU US-DT134 can mean that your product was made in the United States (US), it is a dog teether (DT) and it is the one hundred and thirty-fourth item (134) unique item in your inventory.
Makes Data Management Easier
If you use a spreadsheet to manage your data, it will be easier to sort out and arrange with stock-keeping units. It will look tidy, but it will also be easier to find certain products by using tags.
Some software and inventory management systems often use SKUs to streamline the supply chain. These applications developed to use SKUs will perform better and faster if they use a systemic format in arranging and managing data.
Instead of putting actual product titles too long and inconsistent, you can use SKUs. It makes data management so much faster, especially when you are accessing thousands of products a day.
Makes Communication With Suppliers Clearer And Faster
Have you ever tried communicating with a supplier? What was the biggest problem that you’ve had? In my experience, it’s when you are trying to pull data or information about a certain product.
When your suppliers can’t figure it out because all you provided them is a vague product name, you will have a big problem on your hands. However, if you have SKUs in your product database, then it is much easier to communicate with your suppliers.
For example, when one of your products runs out of stock, you need to send the SKU to your vendor and ask for a restock. You don’t have to send them vague product names that look similar. With SKUs, you’ll be confident that you won’t make a mistake in communicating what you need.
It is required by Amazon To Match Your Items With Product Detail Pages
At the end of the day, your Amazon Seller SKU is not an option. It is a requirement. AMZN needs your SKUs so they can connect your products with their catalog’s product detail pages.
Therefore, even though you haven’t assigned an SKU to your listed products, AMZN itself will give your products arbitrary SKUs to product-detail match them in their system.
How to Create SKU on Amazon — A Step-by-step Guide
Creating an SKU shouldn’t be too complicated. You don’t need any special tools or an Amazon SKU generator to create them. As long as you have established the rules and format of the information that you want to include in your SKUs, you are good to go.
As we have discussed earlier, there are no particular formats that you have to follow when creating stock-keeping units. However, there are “ingredients” that you can use to encapsulate the information you want to add. Here are some of them:
- Product Category – This is the general product type that the items fall under. For example, shirts, socks, cell phone cases, dog toys, etc.
- Product Condition – This is the general condition of the product since used items can also be sold on AMZN. For example, refurbished, brand new, etc.
- Color – If you are selling many different colored variants of the same product, you can separate them through color varieties. For example, yellow, red, green, etc.
- Size – If you are selling different sizes of the same product, you can use these criteria to differentiate the variants. For example, small, medium, and large.
- Product Supplier – This is the name of the vendor which you got your products from.
- Country of Origin – This refers to the country where the product was made: For example, the United States, China, Canada, etc.
- Seasonality – This could refer to the season where the product sells best. For example, Christmas, Halloween, New Year, etc.
- Batch or Sequence Number – this refers to the batch number of the products or their sequence number in your inventory.
The first few letters of the stock-keeping unit could be the supplier or source of your product. This is to make it easier to identify where your product came from. For example, if your product came from Alibaba, you can use the letter ALI to shorten it.
Next, you should mention the type of product that you are selling. This is especially important if you are selling multiple products across different categories. For example, if you are selling a dog toy, you can use the acronym DT to identify it.
You can also mention the different attributes of the product you are selling. This is essential if you are selling multiple variants of the same product. For example, if you are selling a yellow dog toy, you can use YLW as your identifier.
Another attribute that is often added is the size. Many products come in different size variants, especially in the clothing and fashion niche. For example, you can use the acronym MED to signify a medium-sized product.
Finally, you need to add the batch or sequence number. This number will represent how many products you already have in your inventory database. It will also give you an idea of how large your database is. For example, you can use the number 000-123 to signify the 123rd item in your inventory. Always add a filler number (like zeroes) in front to give room for expansion.
In our example, a yellow, medium-sized dog toy from Alibaba can have the stock-keeping unit code ALI-DT-MED-YLW-000-123. This code has 5 different identifiers that perfectly describe the product’s characteristics being sold. In my opinion, this is the easiest and most efficient way to describe your products.
Just some things to remember when creating your stock-keeping unit code:
- Avoid starting your SKU with zeroes. Some data management software skips reading the first digits of the code if it starts with zero. This causes isolated issues, so better be safe than sorry.
- Make sure to create documentation or manuals that describe all the identifiers used and what they mean. This makes it easier for your employees (and yourself) to remember what the codes mean.
- If you are selling across different AMZN marketplaces, keep the same format you are using. This is to avoid potential problems in inventory management.
- Never use symbols (such as @ $ ^ #) to describe your products. Always use numbers or letters only. Again, using symbols will cause problems in data management software.
- Avoid using identifiers that can get outdated as time goes by. For example, don’t use dates because they will easily get outdated. Only use dates if you want to describe the batch year of your product (Ex: ALI-YEL-2002)
Conclusion
SKUs are a simple yet highly effective solution to the problem of data management and product identification. Using short letters and numbers to identify a product’s characteristics makes it easier to manage thousands of products on AMZN. Hopefully, the question “what is a seller SKU on Amazon” has been answered by this article.
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