SKU (Stock Keeping Unit)
A SKU (stock keeping unit) is the unique code a brand assigns to each distinct product it sells and stores. Every size, color, and bundle gets its own SKU, so inventory can be counted, picked, and tracked down to the exact variant.
How a SKU Works in a Fulfillment Center
A SKU is an internal code you create to identify one specific version of a product. A shirt that comes in three sizes and two colors is not one SKU, it is six, one for each size-and-color combination a customer can buy. The code itself is usually a short string that encodes attributes you care about, like BLU-TEE-LG for a large blue tee. You control the format; the point is that every distinct sellable item maps to exactly one SKU.
Inside a fulfillment center, the SKU is the anchor for everything physical. When your inventory arrives, each unit is received against its SKU and stored in a mapped location tied to that code. When an order comes in, the warehouse system turns the SKU on the order into a pick location and a quantity, so a picker knows exactly which item to pull and from where. At Simpl, product is stored and picked by SKU, and a proprietary warehouse management system keeps the count for each one current in real time.
That is why clean SKUs matter. If two different products share a SKU, or one product has two, the counts drift, pickers grab the wrong item, and your inventory numbers stop matching reality. A disciplined SKU system is what lets a warehouse pick the right unit every time and keep stock levels accurate down to the variant.
SKUs in Ecommerce Fulfillment
For an ecommerce brand, SKUs are the shared language between your store, your inventory, and your 3PL. Your Shopify or BigCommerce catalog assigns a SKU to each variant, and that same code flows into the warehouse so an order for a specific size and color maps to the exact unit on the shelf. Get the mapping right and inventory syncs cleanly across every channel you sell on.
SKUs also drive the operational decisions behind fulfillment: which items are stored where, which move fast enough to sit near the packing station, and which sell slowly enough to review. When you connect a store to Simpl, orders flow in by SKU and inventory counts sync back in real time, so you know what is in stock before you run a promotion. Simpl ships for Shopify brands and DTC stores shipping 50 to 5,000+ orders a month, all tracked at the SKU level.
SKU vs UPC
A SKU is internal; you create it and it means something only inside your business. A UPC (universal product code) is external, a standardized barcode assigned to a product so it scans the same way across any retailer. Your product can carry both: a UPC on the package for universal scanning, and your own SKU for how you track and pick it. In the warehouse, the SKU is what ties the unit to your order and your counts. See pick and pack for how that code drives each order out the door.
Common Questions About SKUs
What does SKU stand for?
SKU stands for stock keeping unit. It is the unique internal code a brand assigns to each distinct product variant it sells, so every size, color, and bundle can be counted, picked, and tracked separately.
What is the difference between a SKU and a UPC?
A SKU is an internal code you create to track a product inside your own business. A UPC is a standardized external barcode used across retailers. A single product can have both: a UPC for universal scanning and your own SKU for how you store, pick, and count it.
How does a fulfillment center use SKUs?
The SKU is the anchor for every physical step. Inventory is received against its SKU and stored in a mapped location, and when an order comes in the system turns the SKU into a pick location and quantity. At Simpl, product is stored and picked by SKU with real-time counts kept for each one.
How should I set up SKUs for my products?
Give every distinct sellable variant its own unique code, and keep the format consistent so it encodes attributes you care about, like color and size. Never reuse a code across two products or split one product across two SKUs, since that is what makes counts drift and pickers grab the wrong item.
Related terms
Fulfillment that tracks every SKU
Simpl stores and picks your orders by SKU with real-time inventory counts, and ships same day on orders in by 12pm CT. Starting at $7/order with a $750/month minimum.