SKU Meaning

SKU stands for Stock Keeping Unit: the smallest distinct item a business tracks separately in inventory. Two products are separate SKUs if they differ in any attribute that must be counted, ordered or reported separately.

An SKU code is internal to a business, so the same product carries different codes at the manufacturer, distributor and retailer. A barcode such as an EAN or UPC is externally assigned and globally unique, so it is the same everywhere.

Yes. A 100 ml, 200 ml and 500 ml bottle of the same shampoo are three separate SKUs, because each must be stocked, priced, ordered and counted separately. The same applies to flavours, packaging formats and promotional packs.

Anywhere from a few hundred to several thousand, depending on how many brands and categories are handled. Multi-brand distributors in general trade commonly run into the low thousands.

Every SKU needs a minimum stock holding regardless of how slowly it sells, so slow SKUs tie up working capital that never turns. They also consume godown space and picking time and carry most of the expiry risk, while the bottom 40% of a typical catalogue contributes under 5% of revenue.