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Mastering SKU Systems: How to Create SKUs for Small Business on Etsy

Wednesday, April 10, 2024

In a world where e-commerce is booming, it is increasingly important for small business owners to streamline their operations. If you're running an Etsy store, a crucial aspect of managing your shop is understanding and using SKUs (stock keeping units). Here's a comprehensive look at what SKUs are, their benefits, and how to effectively create and implement them in your Etsy business. We also have a FREE sku generator for you to use for your Etsy shop!

Click Here To Access

SKU (Stock Keeping Unit)?

An SKU is a unique identification code assigned to each variation of a product in your Etsy shop. For example, if you sell scrunchies on Etsy in different colors and sizes, each variation, such as a "black small scrunchie" or a "pink large scrunchie," would have a different SKU. This may seem like a simple addition, but the implications for your sales tracking are profound.

Benefits of Using SKUs

Easily Identify Products:

Beyond just seeing an image or title, SKUs allow you to pinpoint exact product variants in your inventory quickly.

Track Cost of Goods Sold:

SKUs make it easier to track the production cost associated with each sale. This is vital for accurate financial reporting and understanding your profit margins.

Improve Product Forecasting:

With SKUs, you can predict future sales based on historical data of how specific items have performed, aiding in better stock preparation and management.

Automate Profit Calculation With ProfitTree:

Tools like Profit Tree automatically calculate your true per-sale profit using SKUs, removing the hassle of manual computations.

Identify Bestsellers:

By tracking sales at the variant level, you can determine which products are your top performers, helping focus your marketing and stock replenishment efforts.

Who Needs SKUs?

Virtually any Etsy shop can benefit from implementing an SKU system, especially those selling multiple product variations. This includes custom shops and businesses selling personalized items. The one exception is sellers of unique, one-of-a-kind items, such as vintage goods, where each product inherently has different costs and characteristics.

Setting Up a SKU System

Step 1: Get your FREE sku generator CLICK HERE

Begin by accessing our tool designed to simplify SKU creation. For instance, ProfitTree offers a free SKU generator, which becomes available once you join our waitlist—an excellent starting point for automating your SKU system. ProfitTree is the first real time Etsy profit tracking solution. Once you create a SKU system and add it to your Etsy listing, ProfitTree can immediately start tracking profits for your Etsy shop!

Step 2: Defining Your Product Attributes

Determine what attributes describe your products. These might include categories such as type (e.g., necklace, bracelet), size, color, material, and personalization options. Each attribute you identify will form part of the unique SKU for that item.

Watch full training below!

Step 3: Assigning Short ID Codes to Attributes

For each attribute, assign a short ID code (usually 1-5 characters). These codes help condense the full attribute names into a concise format that's part of the SKU. For example, a personalized 16-inch necklace might have a SKU that appears as NKL-16-PERS.

Step 4: Building Your SKUs

Once your attributes are set up in the attributes tab, you can then navigate to the SKU list tab to create SKUs for each product variant. You can then enter the cost of goods sold for these variants, streamlining the way you track production costs against sales.

Your SKUs and COGS will automatically get displayed in your SKU & COGS Export tab.

Implementing SKUs in Profit Tree

After creating your SKUs, upload them to your Etsy shop listings. Once your SKUs are inside your Etsy account you are ready to export all your SKUs and COGS from the SKU & COGS Export tab in your SKU Generator.

To export your CSV file