This is Part 3 of my experience switching from self-fulfillment in my home to a 3PL fulfillment center. If you haven't read Part 1 click here.
“I finally created SKUs for all my products.” - Me
“Glad to hear you're finally taking your business seriously.” -My husband
Harsh. But true.
I've been running The Bali Market for over three years now. I've sold on both Amazon and my own Shopify store. And I've long crossed the six-figure sales mark. And with all that under my belt I still did not have a proper Inventory management system. I didn't even have SKUs.
But now that I'm actively moving toward using a 3PL for managing my orders I needed to have a logical SKU system in place.
SKUs vs. UPCs
SKUs are different than UPCs. When I sold on Amazon I purchased UPCs (Universal Product Codes) but I never created an internal system which are SKUs (Stock-Keeping Units). What are SKUs?SKUs are an internal system, made-up by you, to track and manage inventory. It's not something you purchase, it's a system you create. It’s a logical numerical or alphabetical system that categorizes your products for easier management and identification.
In order to best work with a fulfillment center I needed to have SKUs. ShipBob said that they could work around not having SKUs, but it is best practice. And MintFulfill strongly advised having them. So I wanted to follow best practice.
SKUs are also really important when you're selling wholesale. It helps the receiver identify each product. It makes ordering and re-ordering from you easier and helps them manage your products in their back-stock.
The person who receives your product may not be the same person who ordered. SKUs are going to help them identify exactly what the product is so they can receive it into their system properly.
In short, your retail/ecommerce business needs to have SKUs. And let's be real this is something I should have had for my business a long time ago.
Here's how I set up my SKUs for my Shopify business.
I don't have a ton of products. At most I have maybe 40 SKUs between each individual product and each bundle or set.
The identifying markers I needed for my SKUs are Item Name, Category, and Color. So a three-part SKU system.
For the item name I used letters because that was easily identifiable. For instance I have towels named the Perfect Classic. Within the Perfect Classic there's bath towels, hand towels, and multiple matching sets. So to identify the item name, I went with the letters PC. When I look at that SKU I can quickly see that it's a Perfect Classic.
I have multiple categories, such as bath towels, hand towels, robes, and blankets. For the category I went with a three digit numerical sequence. Starting with 100 and going up one digit. So for the category of bath towels it's 100, hand towels it's 101.
And to identify the color I used a 2 digit numerical sequence. Starting at 10 and again going up one digit. So light gray is 10 Dark gray is 11 and so on.
Using this sequence the SKU for a Perfect Classic bath towel in light gray is PC10010. And a Perfect Classic hand towel in light gray is PC10110.
To manage my SKUs I kept it really simple and created a document in Google Sheets. I added the SKUs to each Shopify product listing and shared the SKUs with my manufacturer. They’re easily able to add the SKUs to a sticker on each product before they ship them to me (and eventually directly to my fulfillment center).
There are definitely other ways to create your SKUs. This was what worked for me and my catalog size. Would this approach work for a store that has over 2,000 SKUs? No. but if you have, I'd say less than 100 products, this approach would work quite effectively.
I had a very basic understanding of SKUs before I started this process, so I used a comprehensive resource to help me. If you’re ready to create SKUs for your Shopify store I highly recommend using this resource from Vend: Everything You Ever Wanted to Know About SKU Numbers.