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How to create SKU numbers for a small business (with examples)

How to create SKU numbers for your products: seven rules, a format you can copy, examples, and the difference between a SKU, a UPC and a barcode.

By Thinkvale Editorial · Published

Illustration of a product tag with a barcode next to shelves and a parcel

A SKU (stock keeping unit, pronounced “skew”) is the internal code you give to each product you sell. It sounds like a detail, but almost everything else in inventory depends on it: counting stock, picking orders, syncing sales channels and reading reports.

The best time to set up a clean SKU system is before you need it. The second best time is now.

SKU, barcode, UPC: what is the difference?

Code Who creates it What it is for
SKU You Your own internal reference. You choose the format.
UPC / EAN (GTIN) Issued through GS1, the global standards body A universal product number, shown as a barcode. Often required by marketplaces and retailers.
Supplier or manufacturer code Your supplier Their reference for ordering. It can change if you switch suppliers.

You can have all three for one product. The SKU is the one you control, and the one your whole system should be built around. For the full comparison, see SKU vs UPC vs barcode.

One SKU per variant

The golden rule: every version of a product that you can sell separately needs its own SKU. A T-shirt in 3 colors and 4 sizes is 12 SKUs, not one. If a customer can choose it, and you need to count it, it gets its own code.

Seven rules for good SKUs

  1. Keep them short. Aim for 8 to 12 characters. Short codes are faster to read, type and print.
  2. Use letters and numbers only. Separate parts with a hyphen. Avoid spaces, slashes, accents and symbols, which break in spreadsheets, URLs and some software.
  3. Put the most important information first. Start with the product type, then the details: MUG-BLU-12, not 12-BLU-MUG.
  4. Do not start with zero. Spreadsheets love to delete leading zeros, turning 00123 into 123.
  5. Avoid look-alike characters. The letters O and I are easily confused with the numbers 0 and 1.
  6. Never reuse a SKU. When a product is discontinued, retire its code. Reusing it corrupts your sales history.
  7. Do not copy your supplier’s code. If you change supplier, your SKUs should not have to change.

A simple format you can copy

A three-part format works for most small shops:

PRODUCT – ATTRIBUTE – SIZE

Product SKU How to read it
Blue ceramic mug, 12 oz MUG-BLU-12 Mug, blue, 12 oz
White ceramic mug, 16 oz MUG-WHT-16 Mug, white, 16 oz
Black cotton T-shirt, medium TSH-BLK-M T-shirt, black, medium
Lavender soy candle, large CDL-LAV-L Candle, lavender, large

Write your abbreviations down in a short “SKU key” (BLU = blue, WHT = white) so everyone uses the same ones. Decide in advance how you will handle new product types, so the system still works when your catalog doubles.

What about bundles?

Give each bundle its own SKU, for example SET-MUG-4 for a set of four mugs. In your stock records, note which component SKUs it contains, so selling one set reduces the mug stock by four.

Should a SKU mean something?

Some sellers prefer simple sequential numbers (10001, 10002). They never run into abbreviation problems, but they tell you nothing at a glance. For a small catalog, readable SKUs like the examples above are easier for humans: you can spot a picking error just by looking at the code. Whichever style you choose, the rule is to be consistent.

How to clean up existing SKUs

If your current codes are a mix of styles (or missing):

  1. Export your product list to a spreadsheet, with one row per variant.
  2. Decide your format and your list of abbreviations.
  3. Create the new SKU in a new column, keeping the old one next to it for reference.
  4. Check for duplicates. Every SKU must be unique.
  5. Update your store and every sales channel using the same SKU for the same item everywhere. This is what allows stock to sync correctly later.
  6. Relabel shelves and bins so the physical stock matches.

Do it at a quiet time, ideally together with a full stock count.

Key takeaways

  • A SKU is your own internal code; barcodes and supplier codes are separate things.
  • One SKU per sellable variant, never reused.
  • Short, readable, letters and numbers only, most important information first.
  • Use the same SKU for the same item on every sales channel.

With clean SKUs in place, the next step is knowing when to restock each one: see reorder point and safety stock.

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