SKU vs. UPC: What's the Difference?

Explore the nuances of SKUs vs. UPCs in ecommerce. Discover their unique strengths, limitations, and how they shape modern brand journeys.

Jim Sharkey
September 1, 2023
Explore the nuances of SKUs vs. UPCs in ecommerce. Discover their unique strengths, limitations, and how they shape modern brand journeys.

In the bustling world of ecommerce, how businesses track inventory and products is a key part of everyday functionality. Between the alphabet soup of acronyms used in inventory management, two stand out prominently: SKU and UPC. Both serve as essential tools in the modern supply chain, acting as unique identifiers that help retailers streamline their operations, so customers can receive their products quickly. 

But while they might seem interchangeable to the untrained eye, each plays a distinct role in the ecommerce platforms and the broader retail ecosystem. In this guide, we'll dive deep into what these codes mean, how they're generated, and when it's best to use one over the other. 

If you've ever wondered about the difference between UPC and SKU, especially as a business owner aiming to optimize your inventory management system, you've come to the right place.

What Is SKU?

An SKU, or stock-keeping unit, is an alphanumeric code specifically designed for internal use by retailers. Unique SKUs help business owners and their teams keep a close eye on inventory levels, forecasting, and overall inventory control. Unlike the universal product code (UPC) that is standard across marketplaces, the SKU system is tailored to each business, allowing for a more personalized approach to product tracking.

Within an ecommerce setting like Amazon, SKU numbers serve as a vital tool for differentiating between product categories, variants, and even specific product nuances. They're flexible, adaptable, and essential for business owners who need a nuanced view of their inventory, especially on ecommerce platforms. SKUs assist in product identification, both for internal inventory management and for informing strategies around product promotion or restocking.

By employing a specific naming convention, businesses can make the most of SKUs to monitor product information, track inventory, and even aid in the point of sale (POS) processes using barcode scanners. Unlike the numeric codes of UPCs, SKUs can contain letters, allowing retailers to create unique SKU codes that resonate with their product's attributes or specific characteristics. 

As a bridge between inventory management software and the actual product, they play a pivotal role in modern retail. 

What Is UPC?

For many in the retail world, UPCs, or universal product codes, represent the global standards of product identification. Unlike SKUs which are customizable for individual retailers, UPCs are consistent numeric codes designed for external use. Every UPC is unique, serving as a product's passport in the global market.

When a product sits on a shelf in a store, its UPC barcode is what gets scanned at the checkout. This universal system, managed by organizations like GS1 US, ensures that a product is recognized the same way, whether it's in New York or Tokyo. 

UPCs typically consist of a company prefix, a unique product number, and a check digit. This structure is more than just a series of numbers. It provides essential product information and ensures that the product is uniquely identifiable across various marketplaces and ecommerce platforms. It's the global language of retail, ensuring seamless product tracking, identification, and management across the entire supply chain.

By understanding the importance and role of UPCs, businesses, especially those in the ecommerce domain, can ensure they're well-positioned to reach a broader audience and ensure seamless interactions in diverse marketplaces.

When Is It Best To Use SKUs vs. UPCs?

Navigating the world of ecommerce, especially for emerging, modern brands, involves making crucial decisions at every turn. One of those pivotal decisions? Understanding when to use SKUs over UPCs and vice versa. At Mochila, we've seen firsthand the impact of making the right choice for your brand and inventory management. Let’s break it down:

Internal Tracking & Personalization

If you're looking for a system tailored to your business's unique needs, SKU is the way to go. With its alphanumeric structure, it allows for a more nuanced and personalized approach to product tracking. Think of SKUs as your internal GPS, helping you navigate the complexities of inventory levels, sales patterns, and product variants specific to your brand. 

Especially for businesses on platforms like Amazon, a robust SKU system is crucial to differentiate and categorize products effectively.

External Recognition & Global Standardization

On the flip side, if you're aiming for external recognition, especially in major retail outlets and across various ecommerce platforms, UPCs hold the trump card. With their standardized numeric codes, UPCs ensure a consistent identity for your product, irrespective of the marketplace. Whether your product finds its way to a Macy’s shelf in Los Angeles or an online cart in Paris, that UPC serves as its universal identifier. 

Hybrid Approach – The Best of Both Worlds?

Modern brands are often discovering the benefits of a hybrid approach. Using SKUs for internal management while relying on UPCs for external sales channels ensures a comprehensive inventory control mechanism. This dual system allows for both customization and global recognition – a match made in retail heaven.

In essence, while both SKU and UPC play critical roles in inventory management and sales, understanding when and where to deploy them can be the game-changer for ecommerce brands establishing their foothold in the market.

What Are the Pros and Cons of Using SKUs and UPCs?

In the dynamic landscape of ecommerce, having the right tools can make or break your business. Both SKUs and UPCs serve as essential mechanisms for inventory management, but like every tool, they come with their own set of advantages and limitations. 

Here at Mochila, with our deep-rooted experience in ecommerce fulfillment, we've seen the impact of these decisions on modern brands. Let's dive into the specific pros and cons of SKUs and UPCs to guide your business strategy.

Pros and Cons of SKUs

When it comes to SKUs, there are some great advantages:

  • Flexibility: SKUs offer unparalleled flexibility. Being alphanumeric, they can be customized to reflect specific product attributes, categories, or even business-centric nuances.
  • Tailored Inventory Management: With SKUs, businesses can develop a system that speaks directly to their unique needs, aiding in precise internal inventory control, especially on platforms like Amazon.
  • Enhanced Internal Analytics: SKUs provide valuable insights into sales patterns, popular product variants, and inventory levels, enabling businesses to make informed decisions.
  • Promotes Brand Individuality: Allowing brands to create their own SKU system fosters a sense of individuality and brand uniqueness in the crowded ecommerce space.

However, there are also some downsides. These include:

  • Lack of Universal Recognition: Unlike UPCs, SKUs are specific to a business. This means they're not universally recognized, which can be a limitation when selling across multiple platforms or global marketplaces.
  • Complexity: As businesses grow, maintaining a consistent and effective SKU system can become complex, especially if not regularly updated or standardized.

Pros and Cons of UPCs

UPCs also have some advantages, including the following:

  • Universal Recognition: The biggest advantage of UPCs is their standardized, global recognition. Whether in a store in Tokyo or an online platform in New York, the UPC remains consistent.
  • Broad Marketplace Accessibility: For brands looking to sell on major ecommerce platforms and retail outlets, having a UPC is often a prerequisite, ensuring broader market access.
  • Streamlined External Transactions: With UPCs, transactions, especially at points of sale, become streamlined, ensuring quick and efficient checkouts.
  • Reliability and Consistency: UPCs offer a consistent system of product identification, reducing the chances of errors in the external supply chain.

Potential disadvantages of UPCs might include:

  • Lack of Customization: Unlike SKUs, UPCs are numeric and standardized, offering no room for customization based on individual business needs.
  • Initial Setup Cost: Acquiring a UPC, especially through organizations like GS1 US, involves a cost, which might be a consideration for smaller businesses or startups.

The Bottom Line

In the ecommerce world, the choice between SKUs and UPCs can define a brand's trajectory. At Mochila, we know how crucial this decision is for emerging brands. It's more than tracking; it's about crafting your brand's story. Whether it's the bespoke touch of SKUs or the global reach of UPCs, make the choice that aligns with your vision. And remember, with Mochila's expertise and boutique approach, you're never navigating this journey alone. Let's shape your story together.


6 Ways To Streamline Business Processes and Workflows |

GS1 Standards At-a-Glance | GS1 US

Best E-Commerce Platforms Of 2023 – Forbes Advisor

The Five Stages of Small-Business Growth | Harvard Business Review

Let's Chat