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SKU-Based Product and Inventory Management

Selling various types of products inevitably changes the way you manage and sell those items.

SKU-Based Product and Inventory Management

When adding products, it's crucial to always pay attention to having a unique SKU (Stock Keeping Unit) for each item. Every product should have its own SKU, and each SKU should be assigned based on a specific coding system. This enables you to effectively manage inventory and prices for each product. If you don't have SKUs yet, it's best to create them using a structured key so that you can extract essential information about the product directly from the SKU.

For example, let's consider SKU-based product coding in the context of clothing sales. SKUs often consist of different segments. If you have an eight-digit (8) SKU, you can use the first four (4) digits for labeling the clothing model, the next two (2) for the color, and the last two (2) for the size. So, a two-digit number in the color segment, like 01, would represent white, while 02 would indicate that the item is black.

It's advisable not to use special characters in SKUs to avoid potential issues when transferring data between different systems. Additionally, it's a good practice to limit the length of SKUs to ensure they are not excessively long.

For items without variations, you would have a single simple product with its own SKU. However, for products like clothing with various options, you can handle this by creating configurable products. With configurable products, you don't display individual options but instead have a single product page where customers can choose the color and size, and the system manages inventory based on the SKU. Alternatively, you can configure the product differently, with a separate product (SKU) for each color variant where customers can select the size. In this case, you would have multiple SKUs in the category, but the individual color options would be visible immediately without the need to specify that the product is available in other color combinations.

Often in both online and physical stores, you'll see bundled products, where multiple items are combined into one product to boost sales of the included items. Bundle products can make it easier to reduce prices due to a wider profit margin, and they provide additional promotion for the included items. Similar to configurable products, bundle products involve combining multiple items with different SKUs. So when someone orders a bundle product with two items and their respective SKUs, you can decrease the inventory for both items in your system.

bundle product

In addition to traditional products, you may also come across other types of items that differ primarily in how their content is delivered to the customer. These include virtual products and downloadable products. Virtual products encompass services, subscriptions, and warranties, while downloadable products refer to digital items like computer games, software, e-books, and more. The key feature of virtual products is that they have no physical form and do not need to be shipped. For downloadable products, you only need to provide customers with a link or URL to download the content online. Virtual products do not require physical delivery and are often used in bundle products, such as selling an extended warranty for a washing machine.

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