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UPC vs SKU - What's the Difference and How Do I Make Them?

UPC vs SKU - What's the Difference and How Do I Make Them?

April 29, 2024
Posted By
Hafez Ramlan
Title asset to the "Summer Shipping" blog post from Atomix Logistics. A small green 3D truck with a small sun floating above it portrays the hot summer sun during order transport. KW: Ecommerce, 3PL, order fulfillment, fulfillment center, summer order fulfillment, new orders, new customer, temperature, protection, packaging, eco-friendly, sustainability

If you're setting up or managing an eCommerce business, understanding the difference between UPC (Universal Product Codes) and SKU (Stock Keeping Units) and how to create them is crucial for efficient inventory management and sales tracking. This guide will delve into these essential tools, helping you decide which one suits your business needs and how you can implement them effectively.


Difference Between UPC and SKU for Small Business eCommerce

Universal Product Codes (UPCs) are unique numerical identifiers that are used globally to track products in stores and online, particularly at points of sale. UPCs are standardized and recognized worldwide, making them ideal for large-scale retail environments. In contrast, Stock Keeping Units (SKUs) are alphanumeric codes that retailers generate internally to manage inventory. SKUs are flexible and can be customized to reflect various attributes of a product, making them perfect for internal operations. The primary distinction lies in their scope of application—UPCs for universal tracking and SKUs for personalized business tracking.

Universal Product Codes (UPCs):

  • Unique numerical identifiers.
  • Used globally to track products in stores and online, especially at points of sale.
  • Standardized and recognized worldwide, suitable for large-scale retail environments.
  • Essential for universal tracking of products across different retail platforms.


Stock Keeping Units (SKUs):

  • Alphanumeric codes created internally by retailers.
  • Flexible and customizable to reflect various product attributes such as category, brand, type, size, and color.
  • Ideal for internal operations within a specific business.
  • Allow for personalized business tracking tailored to specific needs and systems.


How to Create UPC Codes for New eCommerce Products

Creating UPC codes for new products involves a few key steps. The first step is to register with a recognized provider, such as GS1. This organization ensures that each UPC is unique and can be globally recognized. After registration, you will receive a company prefix that forms part of the UPC and uniquely represents your company in the marketplace. This process ensures that each product you sell has a distinct identifier that can be tracked anywhere in the world.


Steps to Generate SKU Numbers for Online Store Inventory

Generating SKU numbers for your online store inventory involves a systematic approach that leverages internal data to create meaningful, manageable identifiers for each product. Here’s a step-by-step guide to constructing SKUs:

1. Identify Key Product Attributes:

Determine which attributes are most important for categorizing your products. Common attributes include product category, brand, type, size, and color. Consider what is most relevant for your inventory and sales analysis needs.

2. Develop an Abbreviation System:

Create a standardized list of abbreviations for each attribute. For example, assign "BLU" for blue, "JEANS" for jeans, "34" for size 34, etc. This ensures consistency across your inventory system.

3. Combine Abbreviations into SKU Codes:

Start by combining these abbreviations to form a SKU. A logical order might be category, type, color, and size (e.g., JEANS-BLU-34). This structure helps keep your inventory organized and searchable.

4. Ensure Uniqueness within the SKU:

Make sure each SKU is unique to prevent any overlap, which could cause issues in tracking inventory. Each SKU should distinctly identify a specific item or variation.

5. Test the SKU System:

Implement the SKU codes in a small segment of your inventory to test their effectiveness. Check for ease of use, clarity in identification, and any potential issues that might arise in the scanning or tracking process.

6. Review and Iterate:

Periodically review the SKU system to ensure it meets the needs of your business as it grows and evolves. Make adjustments to the abbreviation system or SKU structure as needed to accommodate new product lines or changes in inventory management strategies.


UPC vs SKU: Which is Better for eCommerce Tracking?

Both UPCs and SKUs play critical roles in eCommerce tracking, but their suitability depends on the scope and scale of your business operations. UPCs are indispensable for businesses looking to sell through major retailers or on global marketplaces that require standardized identifiers. On the other hand, SKUs offer greater flexibility and are ideal for managing internal operations, providing detailed insights into inventory without the need for global standardization.


Tutorial on Making UPC Codes for Handmade Items Selling Online

For sellers of handmade items, the idea of obtaining UPC codes may seem overwhelming. However, the process is quite manageable once you secure a GS1 company prefix. With this prefix, you can start assigning unique product numbers to your handmade items, ensuring each one is uniquely identifiable in the online marketplace and through retail partners, thus facilitating smoother transactions and tracking.


Best Practices for Assigning SKUs in an eCommerce Shop

When it comes to assigning SKUs, consistency is crucial. It’s important to establish a clear naming convention that captures essential product attributes and stick to this system. This approach helps avoid confusion and enables your team to efficiently locate products and analyze performance data, contributing to better inventory control and business intelligence.


Establish a Clear Naming Convention:

  • Develop a systematic approach to creating SKU numbers that include critical attributes of each product.
  • Ensure each part of the SKU represents a specific aspect of the product, such as its category, brand, type, size, or color.


Maintain Consistency:

  • Apply the same SKU structure across all products to avoid discrepancies and simplify training for new staff.
  • Consistent SKUs ensure that everyone in the organization uses and understands the inventory system uniformly.


Integrate Descriptive Elements:

  • Include descriptive elements in your SKUs that immediately convey important product information.
  • For example, use ‘BLUJEANS’ for blue jeans, followed by a numeric code indicating size and style, like ‘34SLIM’ for size 34 slim fit.


Avoid Overcomplication:

  • Keep SKU codes as simple and concise as possible while still capturing essential information.
  • Overly complex SKUs can lead to errors in handling and data entry, which complicate inventory tracking and reporting.


How UPC and SKU Integration Improves eCommerce Efficiency

Integrating both UPCs and SKUs into your business operations can significantly enhance your operational efficiency. While UPCs help streamline transactions with external parties such as retailers and online marketplaces, SKUs optimize internal stock management and data analysis. This dual approach ensures that your business can operate smoothly both internally and externally.


How to Manage SKUs in Multi-channel eCommerce Platforms

Effectively managing SKUs across multiple sales channels requires a centralized inventory management system. This system should be capable of updating in real time to maintain accurate stock levels and consistent product data across all platforms. Such a setup not only reduces the likelihood of errors but also ensures that customers have a seamless shopping experience, regardless of the sales channel they choose.


UPC and SKU Setup Guide for Beginner eCommerce Sellers

For eCommerce beginners, understanding the market needs and the scale of operations is vital. If you plan to expand globally or sell through major retailers, registering for UPCs is a wise decision. For internal tracking and management, start by creating SKUs that are scalable and easy to integrate into your existing systems. This foundational work will pave the way for more efficient and manageable growth.


Conclusion

Both UPCs and SKUs are vital for successful inventory management in the eCommerce sector. Grasping their distinct functionalities and deploying them wisely can substantially elevate operational efficiency and precision in tracking inventories. Regardless of whether you are initiating your business journey or aiming to optimize your existing inventory systems, integrating these tools strategically can immensely benefit your operations in the dynamic marketplace. If you need expert assistance in managing your SKUs and UPCs efficiently, reach out to us today. We specialize in helping eCommerce brands streamline their inventory processes for better accuracy and efficiency.

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