Online retailers constantly roll out new products or variations of existing items to stay on top of the shifting market. It boosts sales for retailers to increase the variations of those products if customers appear to be seeking additional product options. However, expanding your inventory comes with a price. With the increase in products and SKU counts, it becomes harder to organize, track, and restock products in your inventory. And without effective product SKU management, you may encounter inaccurate order fulfillments that can impact your bottom line. In this blog article, we discussed everything you need to know about SKU management and why you should outsource it to a service provider for an effective Ecommerce inventory process.
What is SKU management?
As its name suggests, SKU management is the process of developing, preserving, and updating scannable codes known as SKUs that permit the identification, arrangement, and tracking of a company's goods and materials."But what are SKUs, and what is it used for?"
An item's SKU is a unique, alphanumeric code used to track inventory levels. The code typically consists of eight digits, all of which are numbers and letters, representing details about a product, like its color, size, brand, and location.
What does a SKU example look like?
SKUs help to distinguish products from one another. It would be challenging to keep track of sales and inventories without grouping them according to their model, kind, color, size, or any other distinguishing characteristics. Ecommerce brands develop unique SKUs for their products and services. For instance, a retailer of t-shirts might create internal SKUs that list a product's specifications, including its color, size, type, and manufacturer. For example, the SKU for an H&M red t-shirt in size 8 might be read as "H&M-TEE-RED-08."After determining their inventory SKU codes, retailers will need to enter them into an inventory management system, which is tied to a point-of-sale (POS) system. When a consumer buys at a store, the SKU is scanned, and the POS system immediately removes the item from the inventory and records additional information like the sale price. Hence, it is easier for managers to identify which products require restocking. To sum up, SKUs help track inventory and identify products. The information gathered from these codes provides retailers with data that may be examined to determine the profitability and efficiency of their business.
The Role of Product SKU management in Ecommerce business
No matter how big your business is, how many products you carry, or who your customers are, SKUs are considered a must for everyone selling online. Here's how it plays a significant role in managing an Ecommerce business.
Warehouse management
Having a SKU in warehouse management makes it easier to rapidly identify particular items and variations. SKUs keep your warehouse organized and make it less hassle for your personnel to locate products quickly for effective picking, packing, and stocktaking, which saves time and reduces errors.
Customer service
SKU numbers can assist your customers in finding the item they want. For instance, a customer requests a different size of the product. Store personnel can quickly determine whether there's a product in stock by scanning a SKU. As a result, there are fewer or no stockout issues during the shopping experience, which increases customer satisfaction and brand loyalty.
Inventory management
SKUs enable you to track your stock throughout the order process, and initiate reorders, which is another essential component of a successful inventory management system. When you have your SKUs set up for your business, you can later save time and money by determining the appropriate quantities of stock to maintain for your products by compiling data such as sales history.
Product insights
SKUs allow you to get essential information about your product, enabling you to examine its popularity, seasonal demand, and cyclical sale trends for various customer segments. These insights can help you stock inventory that corresponds with patterns in your customer behavior.
Sales and marketing
Tracking a SKU in product management can provide additional insights into your peak sales periods. When there's an influx of customer orders, you can increase your inventory levels and marketing efforts. Likewise, SKU helps you spot "slow months" in retail which allows you to reduce product orders. In addition, SKUs give you the information you need to identify high-yielding products with a high return on investment (ROI), allowing you to market them and earn as much money as possible while in demand.
Product pricing
Your SKUs are an excellent source of information if you need to lower your price for a few particular items by offering discounts or if you want to know what discount rate you have previously offered. It maintains a complete record of your sold items and unsold stock, which helps you run a more cost-efficient business.
Should you outsource your SKU management?
It can take a lot of time and effort, but controlling and tracking your inventory is essential to the success of your Ecommerce business. You can manage your business more profitably and effectively by improving your inventory tracking through SKU management. The following are some reasons why outsourcing SKU management will help your business grow quickly:
Prevent inventory errors
Regardless of how effective your inventory management is, you'll always be vulnerable to inventory errors. Whether caused by product data entry errors, scanning issues, incorrect selections, or misplaced items, it can cost you a lot of money. Your business might outsource to a reputable service provider to prevent such errors. By doing this, you can avoid mistakes when choosing, packing, and shipping your products to customers. Also, your service provider can help you generate reports highlighting inventory management issues and bottlenecks, such as incorrectly labeled, damaged, and out-of-stock items.
Focus on core business functions
SKU inventory management can consume a significant amount of your day that could be used for other critical tasks. For instance, you have to manage your product descriptions, metadata, and keywords to improve your product discoverability on Ecommerce sites. Not to mention the regular upgrading and upkeep of your SKU inventory to guarantee a consistent bottom line. When you outsource your SKU inventory management, you can concentrate on your core business functions where you can make money, like marketing, sales, or building meaningful customer experiences.
Implement the best industry-leading software
It's necessary that you implement inventory software for your business that can connect SKUs to item profiles, barcodes, and QR codes. Don't panic if you don't have inventory management software yet. You can get tools for tracking inventory and gaining business insights by outsourcing SKU management to a service provider. Security on all levels is one advantage of using inventory management software. For instance, if everything is in the correct sequence, a worker can write data about items, and the manager will approve them. In general, you can permit users to determine which data they can access and view. Every user is therefore restricted, eliminating any possibility of data loss or leakage.
Increase customer satisfaction
You could get precise tracking of all your products by outsourcing your SKU inventory management. As a result, you can anticipate when the products will run out of stock and restock them accordingly. So, instead of making your consumer unhappy with an "out of stock" notification, you can increase their satisfaction by taking proactive actions.
Enhance business revenue
Higher revenue and improved gross margins are the results of working with a reputable Ecommerce service provider with a technology-first inventory SKU system. Your service provider can assist you in addressing the rising demand from customers looking for 1-2-day shipping by stocking your most popular SKUs in the ideal location and amount prior to customer purchase. Additionally, your service provider gives you precise reorder points for each SKU, enabling you to maintain sufficient inventory to meet customer demand. This makes it possible for you to sell your products more quickly, which keeps your revenue coming in.
Hire the Best Ecommerce Experts for Seamless SKU Management
It might be difficult to handle several SKUs, especially if you lack the resources to scale up for seamless SKU management. Do you want your SKU management to result in more precise inventory cycle counts and quicker fulfillment times? Then, work with a service provider with extensive experience in handling SKU data. KDCI, an Ecommerce outsourcing company in the Philippines, offers product information management services to help you manage high-quality SKU data. Our product data entry specialists are experts at creating meaningful SKUs helpful in maintaining accurate stock control within your Ecommerce inventory. By making your products searchable on search engines and Ecommerce platforms, we can assist you in maximizing your ROI from SKU management. Are you interested to learn more about our services? Click the button below and get your FREE consultation with one of our experts! Contact Us
