When a business is small, product names and descriptions are often enough to track what you’re selling. But as soon as you start growing—or begin working with a warehouse or 3PL (third-party logistics provider)—you’ll be asked to provide SKUs (Stock Keeping Units) for each product.

An SKU is an internal code your company creates to uniquely identify every variation of a product you sell. Unlike UPCs (Universal Product Codes), which are standardized across retailers and used for scanning at the checkout counter, SKUs are custom-built to fit your business.

Warehouses want SKUs because they make receiving, picking, packing, and shipping products faster and more accurate. But SKUs aren’t just for warehouses—they’re also valuable to you as the brand. A consistent SKU system makes reviewing inventory reports easier, helps identify which products are selling well, and reduces errors when reordering stock.

In other words: if you want to scale, you need a clean SKU system.

Let’s take a look at how a clothing company (as an example) can create a scalable format for SKUs that could work for any small brand.

Step 1: Standardize Color Codes

Color is one of the most common variations in products. By giving each color a short code, you ensure consistency and make it easy to expand.

• Blue → SBL (Solid Blue)
• Red → SRD 
• Yellow → SYL 

Step 2: Define Product Types

For clothing, this might mean shirt styles. For another brand, it could be candle scents, bag types, or accessory categories. Each variation gets a short identifier.

• Crew Neck → CN 
• V Neck → VN 
• Collared Shirt → CL 
• Button Down → BD 

Step 3: Add Collection or Year Identifiers

If you release products by collection, season, or year, include a two-digit identifier. This ensures older and newer products are easy to distinguish in reports.

• 2025 → 25 

Step 4: Include Size or Comparable Attribute

Size is key in apparel, but in other industries this might represent volume, weight, or package size.

• Small → S 
• Medium → M 
• Large → L 
• Extra Large → XL 

Step 5 (Optional): Add Material or Sub-Variant

If material, flavor, or ingredient is important, you can include another code.

• Cotton → CT 
• Silk → SK 

Example SKU Constructions

Using this structure, a brand can build scalable SKUs that work across many product variations:

• SBLCN25S → Solid Blue Crew Neck, 2025 collection, size Small
• SBLCN25SCT → Solid Blue Crew Neck, 2025 collection, size Small, Cotton

For a candle company, the same format might look like:

• LAVCN25M → Lavender Candle, 2025 collection, Medium size

Best Practices for Small Brands

1. Keep SKUs short and simple – Ideally under 12 characters, no spaces or special symbols.
2. Stay consistent – Once you set a format, stick to it to avoid confusion.
3. Design for growth – Make sure the format can handle new variations without breaking.
4. Prioritize readability – Your team should be able to glance at an SKU and understand it.
5. Integrate with systems – Confirm that your SKU format works smoothly with your inventory software, sales reports, and warehouse operations.

Why This Matters

A thoughtful SKU system benefits everyone:

• Warehouses reduce picking and packing errors.
• You as the brand gain clarity in reports, making it easier to track sales and manage inventory.
• Customers get a better experience because errors and delays are minimized.

For small brands, SKUs aren’t just an operational detail—they’re a foundation for scaling efficiently. By creating a clear, consistent structure now, you’ll set your business up for smooth growth as your catalog expands and your logistics become more complex.