Most SKU advice is written for shopkeepers. Importers have a harder problem: your SKUs have to survive two factories, four colourways, three carton configurations and a 3PL that has never seen your product. Here's how to build a SKU system that doesn't fall apart at your second purchase order.
Last updated: 13 September 2026
In short: A SKU (Stock Keeping Unit) is a short code you create to identify one specific, sellable version of a product — one size, one colour, one pack configuration. It's yours, it's internal, and you invent the format. That makes it different from a barcode, which is a global number you buy from GS1 and which retailers scan. If you import from China or Vietnam, your SKU system has to do more work than a shopkeeper's, because it also has to tell your factory, your freight forwarder and your Australian 3PL exactly which item is in which carton. Build it as a readable, fixed-length code with no ambiguous characters, and lock it before your first purchase order — not after.
SKU stands for Stock Keeping Unit. It's a unique code that identifies one distinct sellable item in your inventory.
The key word is distinct. A navy hoodie in size medium and a navy hoodie in size large are two SKUs, not one, because they're stocked, picked and counted separately. If you can sell it on its own and it needs its own count, it needs its own SKU.
SKUs are internal and self-assigned. Nobody issues them to you and nobody checks them. That freedom is exactly why so many importers end up with a mess — there's no system stopping you from inventing something unworkable.
These get conflated constantly, and the distinction matters the moment you sell through an Australian retailer.
| SKU | Barcode (GTIN / EAN) | |
|---|---|---|
| Who creates it | You do | Issued via GS1 |
| Scope | Internal to your business | Globally unique |
| Format | Whatever you decide | Fixed 13 digits (EAN-13) |
| Readable by humans | Yes, if designed well | No |
| Cost | Free | GS1 Australia membership fee |
| Needed for retail | No | Yes — Coles, Woolworths, Bunnings all require it |
You need both. The SKU is how your team talks about the product. The barcode is how the rest of the world scans it. If you're heading into Australian retail, our guide to product barcodes and GS1 for Australian importers covers the registration side.
A Melbourne boutique buying finished stock from a local wholesaler can get away with a loose SKU system, because someone else already solved the identification problem. An importer can't, for four reasons.
The SKU on your purchase order is what the factory prints on the carton label. If your codes are ambiguous, the carton labels are ambiguous, and you will unpack the wrong colourway in a Melbourne warehouse six weeks later with no way to send it back economically.
Plenty of our clients run a China and Vietnam dual-sourcing strategy. If the same finished SKU can come from two plants, you need a way to trace which batch came from where when a quality issue appears — without creating two separate SKUs for an identical sellable item.
Factories revise inner and outer carton counts more often than you'd like. Your SKU identifies the sellable unit; your carton labelling handles the pack. Mixing the two into one code is the single most common error we see.
An Australian third-party logistics warehouse picks by label, not by judgement. A picker who has to decide whether "BLK-S" means black small or blackout shade is a picker who will eventually get it wrong. If you're weighing up fulfilment options, our warehousing and 3PL service page explains how intake usually works.
Good SKUs are readable left to right, from broad to specific. Here's a structure that works for an importer, using a Melbourne activewear brand as the example.
Format: BRAND-CATEGORY-STYLE-COLOUR-SIZE
| Segment | Length | Example | Meaning |
|---|---|---|---|
| Brand / line | 2 | AC | Apex Core range |
| Category | 3 | LEG | Leggings |
| Style | 3 | 074 | Style number 074 |
| Colour | 3 | NVY | Navy |
| Size | 2 | 10 | AU size 10 |
The finished SKU is AC-LEG-074-NVY-10. Anyone in the business can read that without a lookup table, it sorts sensibly in a spreadsheet, and it prints cleanly on a carton label.
Five rules make the difference between a system that lasts and one you rebuild in eighteen months:
Fixed-width segments sort correctly and parse reliably. Variable lengths break every spreadsheet formula you'll ever write.
Excel and Google Sheets will strip it. You'll lose a day working out why half your stocktake doesn't match.
Drop the letter O, the letter I and the letter L. On a warehouse label under fluorescent light, O and 0, I and 1, and L and 1 are indistinguishable.
No prices, no supplier names, no season codes, no carton quantities. Suppliers change, prices change, and a SKU that lies is worse than one that says nothing.
Three digits for style numbers gives you 999. Two gives you 99, which sounds like plenty until it isn't.
Assign SKUs before you request quotes, not after the goods arrive. The sequence that works:
First, finalise your product variants and lock the SKU list. Second, put the SKU against each line of your request for quotation so quotes come back priced per sellable unit rather than per vague "style". Third, carry the SKUs onto the purchase order, which is the document the factory actually works from. Fourth, require the SKU on every carton label and on the packing list, so your freight forwarder and your 3PL can reconcile a container without opening it. Finally, map SKUs to GS1 barcodes before you approach any Australian retailer.
Do it in that order and your bill of materials, your quotes, your POs and your stocktake all speak the same language. Do it backwards — assigning SKUs once stock is already in the warehouse — and you'll spend your first quarter reconciling cartons by hand.
Stock Keeping Unit. It's a unique internal code identifying one specific sellable version of a product — a single size, colour and pack configuration.
Between 8 and 16 characters is the practical range. Shorter than 8 rarely carries enough information for an importer with variants; longer than 16 gets truncated by e-commerce platforms and marketplace listings and becomes unreadable on a label.
No. A model number is usually assigned by the manufacturer and describes the design; a SKU is assigned by you and describes one sellable variant. Two retailers buying the same model from the same factory will have completely different SKUs for it.
Yes. If it's counted, picked or sold separately, it needs its own SKU. A style available in 4 colours and 6 sizes is 24 SKUs, not one — and pricing it as one is how importers end up with 400 units of a size that never sells.
No. Suppliers change, and a SKU containing an obsolete factory name is actively misleading. Track the supplier in your inventory system as a separate field, where you can update it without reprinting every label.
We're a product sourcing and supply chain company with bilingual teams on the ground in China and Vietnam and offices in five countries. We've sourced over 20,000 products for more than 300 clients, who save around 77% on average against what they were paying before.
Part of what we do on every project is the unglamorous structural work — getting the variant list, the bill of materials, the SKU scheme and the carton labelling right before a single unit is made. It's the difference between a container that unpacks cleanly and one that costs you a fortnight. If you're about to place your first serious order, or your last one arrived as a puzzle, give us a bell and we'll sort the structure with you.
You can also read our guide to when to move off marketplaces like DHgate, or see how we work on our pricing page.
