How to Create and Grade SKU in eCommerce Stores
What is SKU?
SKU is an acronym for Stock Keeping Unit, which is a unique identifier for a product. First, you must understand that no SKU comes with each product sold. Instead, there are retailers, warehouses, distributors, and other middlemen involved in getting items from manufacturers to your local store. Each time a unit moves from one location or individual to another, it needs a new identifier. The more people touch this physical object before it gets to you, the more SKUs are required for tracking.
Who needs SKU management?
SKU management is essential for all businesses to maintain the highest efficiency level in their supply chain. For any company that manages inventory, having proper records can help improve customer service levels and boost overall profitability at the same time. This includes ecommerce managers looking for a better way to handle their large number of products without putting too much strain on their staff or IT resources.
The problem is that it can be very costly in terms of time and resources to manage the data in your warehouse manually. The last thing you want is for someone to assume that they know what should be happening within your inventory management system when errors or omissions are at play. With SKU management via cloud software, you will have complete transparency into what is going on with your business processes. It doesn’t matter if you have 200 products or 200,000 – the only difference is how long it will take you to create all these records yourself.
What is an SKU management solution?
An SKU management solution is the process of controlling variations in stock-keeping units (SKUs). Creating and assigning unique identifiers (like barcodes) to these variations gives you one manageable number representing each variation. This allows companies to track their inventory more accurately and efficiently than ever.
The advantages of using an SKU management solution for this process are:
– It will shorten the time it takes to create a new product.
– The system can easily track what has been ordered, reordered, and sold.
– The system will also be able to pre-empt future trends, e.g., fashion items or seasonal items.
– In addition, by creating wholesale relationships with critical suppliers, you’ll have access to more detailed information about your inventory levels at any time.
– You’ll have absolute visibility on how much stock you should hold and whether a full, partial, or no reordering is necessary.
How to implement SKU Management?
Here are some basic steps you should take if you want to avoid potential problems down the road:
1.) Inventory control – Use your existing warehouse management solution to read the barcode of the products you receive (either on purchase orders or packing slips).
2.) Product information – Pull in all data about each product. These can be title, description, size, color, etc.
3.) Mapping – Map your products with the codes used by distributors or retail partners so that you can create records for them when they update their systems.
4.) Security – Implement security around who can update stock levels and where this happens, e.g., warehouses, stores, etc.
5.) Replenishment / Repricing / Pricing rules – Link into any automated repricing or repricing tools that are available to ensure that prices remain correct at all times
6.) Inventory reports – Generate inventory reports on any of the above data points to identify potential issues with your inventory management.
What are the benefits of doing SKU management?
There are many positive outcomes when you use an SKU management solution. Here are just a few:
– You will have a 100% accurate picture of your inventory levels.
– You will be able to create sales projections and forecasts more effectively.
– Your marketing teams can take advantage of opportunities, e.g., by pre-empting seasonal or product trends, etc.
– You’ll improve order accuracy, reordering processes, and reduce stocks, to name a few benefits!
What do eCommerce stores have to do with SKU?
The problem with many ecommerce sites is that they cannot account for all these different stock-keeping units across vendors, warehouses, distributors, etc. SKU management becomes an issue when no person has a complete picture of what should be happening already within their system. Without this information, you cannot guarantee the accuracy or completeness of your inventory-level data.
For example, suppose you have received full truckloads from a distributor and only created 1 record for each item in your warehouse. In that case, it will appear you have enough inventory despite having sold half of those items already. This can cause unexpected shortages or excesses down the line, leading to inaccurate sales forecasts.
How do eCommerce stores benefit from SKU management?
As an eCommerce store, you can benefit from proper SKU management. The most important one is that it makes inventory tracking much more accessible. Many business owners choose to use manual inventory management or Excel spreadsheets. Still, these practices do not provide real-time data and require constant checking, which takes time away from other duties.
SKU (Stock Keeping Unit) enables your team to quickly check what’s available, how many items are left in stock, reordering points, etc., within seconds instead of hours or days. Moreover, by streamlining the process of manually creating purchase orders for each item into a single action, you’ll also be able to reduce errors down the line.
What are the benefits of using customized SKU management for eCommerce stores?
These days most people are using the Internet to do shopping. So you have to come up with something innovative and different that can help you win their heart. Custom eCommerce stores with SKU management capabilities make it easy for shoppers to access relevant product information in one place so that they don’t have to waste time searching on various platforms repeatedly. This is why retailers prefer cloud-based customizable solutions rather than traditional online store development methods. The former gives them complete control over creative elements, content, designs, etc., while the latter doesn’t allow ordinary people to modify web pages and publish the website. Customized eCommerce stores with SKU management offer various features such as inventory tracking, price maintenance, and profitability analysis to give your business a huge push.
Customized eCommerce stores with SKU management
A customized E-commerce site with SKU management capabilities solutions help you to create your own unique space on the web so that your brand name can be imprinted in the customer’s mind. Customized eCommerce stores give scope for adding valuable business features, like up-selling and cross-selling options, displaying images of products along with their price comparisons, Facebook product pages, etc.
With this, you not only encourage customers to buy more but also provide them accurate time view of the availability of specific products across all leading online shopping portals like Flipkart, Amazon, Snapdeal, etc.; if you opt for a cloud-based customizable solution, it makes it easier for retailers to make changes in content and design of web pages in real-time and publish the website. And this is not possible with traditional online store development methods, which give no such features.
Here we come up with some of the most important benefits that you can avail yourself from customized eCommerce stores with SKU management:
1.) Cross-selling and Upselling options
Customized ecommerce stores with SKU management capabilities allow retailers to add more than one product in an image, making it easier for shoppers to compare the prices of various products. This helps business owners increase revenue by suggesting the best possible product alternatives within their budget.
2.) Product availability
With custom eCommerce stores, retailers get access to multiple sales channels to keep a check on -accurate time product availability. So whenever customers visit your website, they can connect to the nearest supplier and purchase products without wasting much time.
3.) Inventory management
Customized eCommerce stores with SKU management capabilities allow uploading specific product images, names, and prices which helps business owners maintain their inventory correctly. Custom web development solutions will enable you to meet all your requirements; still, at the same time, it is recommended that one should always choose a reliable service provider for this task.
4.) Profitability analysis
It also allows retailers to analyze trends taking place across selected sales channels so that they can take immediate action if required. This helps them in increasing their productivity efficiently by decreasing money wastage.
5.) Shipping details
Customized ecommerce stores with SKU management capabilities allow storing shipping details of products so that whenever customers visit your website, they can quickly know all the information regarding the same. This will enable them to finalize their product speedily and boosts revenue generation for retailers without wasting much time.
6.) Product images
This type of solution helps retailers design multiple web pages where they can upload detailed information about products along with image format, making it easier for ordinary people to understand the topic properly. Suppose you plan to develop an online store. In that case, you need not look beyond customized eCommerce sites with SKU management capabilities because it has proven itself as a perfect solution for business owners to promote their brand name.
How to create an SKU for an eCommerce store
Steps in Creating SKU for eCommerce Stores
Key Takeaway: The first step towards creating an eCommerce SKU involves deciding how customers will transact with you, i.e., whether they will buy it through your online shopping cart or come directly to your physical store/warehouse to purchase it.
Here are the various steps involved in creating an SKU that you can use for your eCommerce store:
STEP 1: Identifying your Product types
Which type of product are you selling on your eCommerce store? Here are some standard product types that most businesses usually deal with on their website. Different specifications will be required to make an effective SKU depending on what kind of product you are selling.
-Books & DVDs etc.,
-Clothing & accessories,
-Toys & baby products,
-Personal care items,
-Home décor items,
-Stationery items, etc.,
These are just a few examples of everyday things that we come across in our daily lives. Therefore, creating an SKU for any product is relatively simple.
STEP 2: Product Specifications
What are the specific specifications that you need to include in your SKU?
Most eCommerce stores list details like color, size, availability, etc., under each product’s SKU. Here are some key components that you need to focus on when putting together your unique identifier:
– Material: What is the primary material for manufacturing this product? Is it made out of plastic, cotton, or something else?
– Size: What is the exact dimension (length, width, and height) in inches/centimeters/mm? So if it’s a clothing product, what is that particular piece’s size?
– Selling Price: What’s the exact price of your product in US Dollars, Euros, or any other currency you transact with?
– Quantity Available for Purchase: How many pieces are currently up for sale under this SKU? This helps you to manage inventory effectively.
– Color Availability: What are all the colors available in which you can sell that particular product? Is there only one color or multiple colors available? In this case, specify it accordingly.
Other minor yet essential details like weight, warranty, etc., aren’t always required. So, depending upon the specific requirement, list specifications for your eCommerce SKU.
STEP 3: Inventory Management
You were once done with the SKU definition; what comes next? Well, managing inventory effectively & efficiently comes next to ensure that you don’t run out of stock when an order is placed.
Let us take a look at some common mistakes when it comes to inventory management:
– Overstocking: Sometimes store owners tend to overstock products to ensure they never run out of stock, which usually results in wasting time and money. Overspending also happens sometimes in the process, so try to avoid it.
– Understocking: Like overstocking, understocking can also be hazardous for your eCommerce business since not having enough products in your store will affect business growth. So keep a tab on how much quantity should be stocked according to trends and product availability.
– Inventory Issues: Sometimes inventory tracking gets complicated over time, especially when managing multiple stores. For example, an online shoe store owner wants to track product availability in all 10 regional outlets, which usually becomes tiresome after a particular period. So what’s the solution? Well, StoreYa offers a feature-rich inventory management platform enabling you to manage your stock from one place across unlimited eCommerce stores, so there is no need to take out additional effort or money to manage inventory.
What is SKU Grading for eCommerce stores?
SKU Grading is a method for grading each product individually so you know which product needs replacing, downgrading, or refunding before picking it up from your store. Most people choose a random percentage of their stock to grade and ship out. This isn’t good enough because you can end up with many returns due to poor quality products if not all your stock gets adequately graded, but if only 1% gets graded – there’s no point in doing this!
How do grade SKUs in eCommerce stores?
FIFO (First In, First Out), ABC (ABC analysis), and Weight method grading are the most common grading systems.
FIFO Grading System – First In, First Out
The products are sorted according to their “first in” date, so the oldest products are displayed first. This ensures that the freshest product is always provided for customers, while older stock can still be sold off. This type of sorting requires good accuracy when recording SKU history data but has low overhead costs as no additional activities are needed during daily operations.
ABC Analysis Grading System
The ABC analysis grading system classifies products into three groups, “A” being the most profitable products and selling the best, “B” being a mid-grade product, and “C” being low-margin goods. This grading method has high overhead costs as it requires additional warehouse storage for each of the three categories of products.
Weigh Grading System
In the weight grading system, SKUs are sorted according to weight, so the heavier-weight products are displayed first on shelves. This ensures that customers have access to lightweight items first, while more bulky or heavy items can be kept aside until their turn comes up later in the day/shift/season etc.
This type of sorting requires a weighing scale along every shelf location where these products are displayed, resulting in high operational costs. To improve accuracy and reduce operating costs, the weight of every product is only recorded once at the time of invoicing, instead of recording it daily or on a per-pick basis.
How to standardized SKU grading in eCommerce stores
One way to standardize the grading process is to assign a unique number or code to each SKU and use this as an identifier instead of manually keeping track of product grades. This method makes it easy to sort all products according to their assigned number/code inside warehouses and stores. This sorting can be done using either barcodes or RFID tags for automatically recording information about every product picked without manual intervention.
The advantage of standardized grading is that any change in the system needs only a single update at the point where SKU numbers are assigned – once – instead of going through the whole picking process again. From a business perspective, implementing automated data collection reduces overhead costs by lowering operational expenses and ensuring complete grading process accuracy.
Steps in grading SKU in eCommerce stores:
1. Product filtering
– Identify the product type [Soft, consumable, or hard] based on its durability [number of times it can be used for].
– Is it a seasonal product [Halloween, Mother’s Day, Father’s Day, and Christmas (hard) products come under this category]?
– Product SKU should not be the same as any other product in the store already used by another customer. This option will help you to avoid such mistakes when there are multiple orders for one SKU.
– Product price should be filtered with a minimum fee of $1.00 so that users do not get confused at the checkout page while adding more quantity to the cart during checkout. This helps avoid adding the wrong product to the cart at checkout.
2. Product information is the key to any business.
– The product title, description, brand name, and SKU should be clear to avoid customer support queries when products are delivered to them.
3. Images play an essential role in eCommerce stores.
– It helps customers understand, feel and experience almost all the product features, which is impossible with just text descriptions on websites or online catalogs. High-quality images with specific views [front view, close-up of front texture, etc.] so that users get enough details about various parts of the product before placing an order will help you increase sales by attracting new customers to your store and retaining existing ones by satisfying their needs of specific details.
4. Product warranty and returns policy.
– Is a must for online stores because customers demand it. If you are not fulfilling this requirement, then you may lose potential customers as well as existing ones who have already placed orders with you
5. Product delivery information.
– Delivery method: It should be appropriate based on the nature of products sold in eCommerce stores so that users can feel safe while shopping online. As per our experience, we recommend shipping through Fedex, DHL, or USPS, which provides tracking numbers and insurance options and offers better delivery options to users.
– Estimated time of product arrival at the customer place: Retail stores that sell complex and consumable products recommend having a standard delivery time for all customers to plan their activities accordingly.
– Tracking number: Customers demand it as it offers them peace of mind during order transactions with your eCommerce store. They feel safe when you submit a tracking option as they know precisely where their product is and how many days before it will arrive at their address.
– Insurance Amount: Depending on the nature of products sold in your eCommerce store, you can decide upon various shipping methods such as FedEx, DHL, or USPS for online orders on your website. Per experience, shipping through Fedex, DHL, or USPS provides tracking numbers and insurance options and offers better delivery options to users.
Overall, the impact of SKU management in eCommerce stores is vast and increasing daily. The implementation of intelligent practices will help you in realizing the true potential of your eCommerce store and will assist you in dominating your global markets.
A single wrong SKU can waste time, effort, and money spent on an item. It would also lead to deterioration in customer service levels resulting from delays or failure to deliver ordered products leading to negative reviews for your business.