Table of Contents Expand Table of Contents What Is a Stock Keeping Unit? Tracking Inventory Vendor Benefits SKUs vs. UPCs FAQs The Bottom Line SKU: What It Is and How It Works By Andrew Bloomenthal Full Bio Andrew Bloomenthal has 20+ years of editorial experience as a financial journalist and as a financial services marketing writer. Learn about our editorial policies Updated June 15, 2025 Reviewed by Samantha Silberstein Reviewed by Samantha Silberstein Full Bio Samantha (Sam) Silberstein, CFP®, CSLP®, EA, is an experienced financial consultant. She has a demonstrated history of working in both institutional and retail environments, from broker-dealers to RIAs. She is a current CFA level 3 candidate and also has her FINRA Series 7 and 63 licenses. Throughout her career, Samantha has used her expertise and various licenses and certifications to provide in-depth advice about household and business-specific financial planning, investing, credit cards, debt, student loans, taxes, retirement, and income strategies. Learn about our Financial Review Board Fact checked by Ariel Courage Fact checked by Ariel Courage Full Bio Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street. Learn about our editorial policies Definition A stock-keeping unit (SKU) is a label printed with a unique number and a scannable bar code, used by retailers to keep track of their inventory. What Is a Stock Keeping Unit (SKU)? A stock-keeping unit (SKU) is a sticker attached to a product that retailers use to keep track of their inventory. The sticker contains a unique series of digits and a scannable bar code that records the information when the item is sold. The digits identify the product, its price, its manufacturer, and the point of sale. SKUs may also be applied to intangible but billable products such as units of labor in an auto body shop or warranties. Key Takeaways SKUs are used by retail stores, catalogs, service providers, warehouses, and product fulfillment centers.Retailers rely on them to restock inventory as it is sold.SKU data also allow vendors to see where an item is in the shipment process. Scannable SKUs and a POS system make it easy for managers to determine which products need to be restocked. Investopedia / Theresa Chiechi Tracking Inventory SKUs are used by stores, catalogs, e-commerce vendors, service providers, warehouses, and product fulfillment centers to track inventory levels. When a customer buys an item at the point-of-sale (POS), the SKU is scanned and the POS system automatically removes the item from the inventory while recording other data such as the sale price. Scannable SKUs and a POS system make it easy for managers to determine which products need to be restocked. Important SKUs are not model numbers, although the model number may be included in the identification code. Businesses create unique SKUs for the products they sell. Vendor Benefits Track Inventory: SKUs allow vendors to see what they have in stock, track inventory movement, and provide information on reorder points. Prepare for Sales or Seasons: SKU data can help vendors decide what to reorder to prepare for holiday seasons or sales. In Transit Data: SKUs carry data that allow vendors to see where an item is in the shipment process. Image by Sabrina Jiang © Investopedia 2020 SKUs vs. UPCs Because each company creates its own SKUs to track inventory, the SKUs for identical products vary among businesses. This can make it more difficult for a consumer to compare prices among retailers. For example, if a company provides the SKU to advertise a certain discounted refrigerator, shoppers cannot use it to check the prices at the store's competitors. Universal product codes (UPCs) are identical regardless of which business sells the items, so they can be used for comparison purposes. The UPC label includes a barcode and a 12-digit number that identifies the product. How Do I Distinguish an SKU From a UPC? Both labels are attached to many products, and both contain barcodes and a series of identifying characters. The UPC will display 12 numbers (and no letters). The SKU usually has both numbers and alphabetical characters, and its length will vary.The UPC identifies the product. The SKU identifies the product and its retailer. How Are SKUs Used in E-Commerce? People who sell their products through Web retailers can create and use unique SKUs to track sales and inventory. Amazon, for example, allows sellers to create SKUs for products they sell on the site. What Does Economic Order Quantity Mean for Vendors? The ideal quantity of units a company should purchase to meet demand and minimize inventory costs is called the economic order quantity (EOQ). Retailers set an EOQ to alert them when a product needs to be reordered. The Bottom Line Businesses need to track inventory to know how much they're selling, when they need to restock, and how fast products are selling. Using an SKU simplifies the inventory process, allowing some automation of inventory management. Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. AMZ Scout. "Amazon Statistics." Read more Business Corporate Finance Accounting Partner Links