How Do SKU Numbers Work: Stock Order Units Explained

Woman scans SKU numbers in her warehouse inventory

If you’re a small business owner you surely know what a SKU number is and why it’s so impactful in proper inventory management through your point of sale.

For brick-and-mortar retailers with a physical inventory, SKUs are critical for keeping your inventory organized, thereby maximizing your total sales. They are easy to implement into your store’s inventory management system and daily operations. Once in place, SKUs will assist retailers with ordering, pricing, product recommendations, automation, supplier relations, and inventory control.

But how do SKU numbers work, what are they anyway, and why are they so important? We’ll answer your questions below to get you started.

What Is a SKU Number?

SKU stands for stock-keeping unit. The “number” is actually typically an alphanumeric code that retailers can assign to individual products. SKU numbers are usually between 8 and 12 characters in length, with certain aspects of the code referring to specific defining features of the products, such as brand, department, quantity, etc. SKUs are fully customizable for each business. Merchants are free to come up with their own system or use randomly generated numbers.

How Do SKU Numbers Work?

With the right POS, SKUs are remarkably easy. SKU numbers can be generated automatically through the system or created uniquely by the seller.

For existing sellers making a switch to KORONA POS, our team of specialists can import all existing SKU data into your new system so that all inventory is uploaded in just a few minutes.

Once the infrastructure is established, users can look up SKU numbers in the backend of the system to identify quantity levels, orders, pricing, and sales. Custom sales reports can also be published based on specific SKU number(s).

What’s the Difference Between SKU, UPC, and Serial Numbers?

SKU, UPC, and serial numbers are often misunderstood as being the same things. Though they may all appear on a price tag, they serve different purposes.


  • Stock keeping units
  • Fully customizable by retailer
  • 8-12 characters
  • Can identify product details
  • Alphanumeric
  • Scanned by barcode


  • Universal product codes
  • Not customizable
  • 12 characters in length
  • Numeric
  • Determined and created by the Global Standards Organization
  • Shows manufacturer and product

Serial Numbers

  • Unique to each product
  • Mainly used with electronics
  • Customizable
  • Used to track ownership
  • Not used for inventory purposes

Each of these items serves a unique role in the ordering, stocking, and purchasing process. While all are important in running a business, retailers will primarily need to focus on SKUs.

Why Are SKU Numbers So Useful?

SKUs can be used by merchants in many different ways. Most simply, they’re used to tracking inventory and sales. But in tandem with a powerful point of sale, SKUs can do a whole lot more.

Track Inventory

At the most basic level, SKUs are used to track inventory at an individual store or across multiple locations. Scan an SKU to see the total available inventory.

Combined with stock notifications, order level optimization, and vendor relations that KORONA POS offers, SKUs create a more automated or “hands-free” approach to managing your products.

Predict Future Sales

With product SKUs, your POS software can generate detailed product reports and sales analytics. With such data, small businesses can understand more about the items they sell and forecast future sales and demand. With ABC retail analysis, retailers can see exactly how each item by SKU is performing.

Optimize Ordering

With better forecasting, ordering down the road will be a whole lot easier. Knowing what to anticipate allows merchants to control the amount of inventory coming through their doors. It’s a fine line that must be walked well.

Custom order suggestions through your POS will also assist with making sure you have the right amount of inventory on hand at any given time. 

Product Recommendations

If you create custom SKUs that fit various categories of your product line, employees can find similar products by looking at similar SKUs. For instance, all Napa cabernets could have the same starting SKU numbers, allowing an associate to identify a similar selection for shoppers who want to try something new.

Set Pricing Variations

Finally, SKUs make it easy to offer case breaks, sell bundled products, or break down bulk products into individual pieces.

Businesses can assign unique SKUs to the item by itself as well as the case. A single cigar, for example, could have one SKU, but the case of the same brand has its own unique SKU for a unique price and inventory unit.

How Do You Make SKU Numbers?

Stock keeping units can be created in numerous ways, depending on the software that is being used. 

With KORONA, making SKUs easy and customizable. Users are able to create SKUs in different ways for different purposes:

  • Create unique SKUs with your own letters and numbers to create a custom system
  • Automatically generate an SKU through the system to be assigned to an individual product
  • Scan the existing SKU on a product
  • Price the same product in different ways with different SKUs for case breaks or bulk orders
  • Use “Containers” to sell individual items in larger quantities
  • Use “Product Conversions” to sell bulk items individually

KORONA’s SKU system is built to provide each merchant with a fully customizable inventory management system. This allows retailers to sell their products in a variety of ways while still ensuring ordering, pricing, and inventory is accurate and updated in real-time.

KORONA POS has been a huge game changer for my overall profitability. Implementation was seamless and painless! The support staff is great and always ready to help. Had I known it would be this easy, I would have made the switch sooner!

-Kristen L.

Are There Any Patterns to SKU Numbers?

There are a few things to keep in mind when generating your own SKU numbers.

  • Try not to reuse SKUs – Though your inventory will be fine if your store is completely out of the former product of the same SKU number, it’s best to avoid possible confusion.
  • Use the initial digits to identify a product’s broadest category – Think about Linnaean Taxonomy. The broadest categories come first and narrows to species as it continues. Do the same with SKU numbers.
  • Don’t use a number that can look like letters or letters that look like numbers – Capital “I”s look like the number one, capital “O”s look like zeroes, etc. Again, avoid confusion. With 8-12 characters, there are plenty of options that don’t involve these letters/numbers.
  • Keep it reasonable – A SKU isn’t meant to identify every last product detail. Limit it to a few categories of identification.
  • Make them consistent across stores and channels – SKUs should be the same for each product no matter where you sell it. This will keep inventory accurate and ordering simpler.

To learn more about KORONA POS’s SKU system, set up a product demo. Your dedicated product specialist will walk you through the whole system. You’ll come out understanding just how powerful these little codes can be for businesses. Click below to get started.

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Written By

Michael Chalberg

Michael has long focused his writing on the world of retail and small businesses. He''s been a part of the KORONA POS team since 2018 and loves helping entrepreneurs find ways to adapt and succeed. In his spare time, you'll likely find him hiking somewhere in the Southwest.