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Decoding Barcodes: What Is the Difference Between UPC and SKU?

When it comes to sales and inventory management, you might have come across the terms UPC and SKU. While they both register with barcode scanners, there are key differences between the two codes.

Both the UPC and SKU play a crucial role in identifying products, yet they do it in a different way. 

Universal product codes are used externally for sales purposes and require a company prefix while SKUs, or stock keeping unit numbers, are used internally for inventory management and are specific to the retailer or seller. Inventory management systems, such as InventoryCloud, allow business owners to use and generate both codes for efficient inventory management.

The Big Picture: What's a Universal Product Code (UPC)?

A Universal Product Code (UPC) is a unique, 12-digit numeric code assigned to each item for sale. It is that familiar barcode label you see on product packaging or display labels. What you might not know is that the UPC requires a company prefix, which is obtained through authorized organizations. This prefix uniquely identifies the manufacturer or company behind the product. 

This type of barcode consists of a barcode and a series of numbers, which provides essential information about the product itself, from product description to product characteristics to which company produces it. The purpose of the UPC is to enable accurate and efficient product identification for point of sale systems tied to a database of product information, like most e-commerce platforms. 

Follow This: What's a Stock-keeping Unit (SKU)?

The SKU, or Stock Keeping Unit, is used for internal inventory management purposes. Each product configuration is assigned a unique SKU by the retailer or seller to track inventory levels and manage stock efficiently.

Unlike the UPC, the SKU does not require a company prefix and is specific to the retailer or seller. Different businesses will assign SKUs to the same item, or two different retailers may have the same SKU number for different products. 

The key characteristics of a SKU include its uniqueness and specificity. Each SKU code is distinct to a particular product, letting businesses track product variation in its inventory. They're typically encoded with information such as product attributes, product category, product type, size, color, and price.

By using SKU codes and a barcode generator like this free barcode maker and QR code generator, businesses can easily track the quantity of each item in stock, ensuring that inventory levels are maintained. They also enable businesses to categorize products efficiently, thereby streamlining procurement and storage processes. SKU codes, like UPC codes, are used to generate sales reports and analyze product performance, aiding in decision-making and planning when you use an inventory management system, such as InventoryCloud.

Key Differences Between SKUs and UPCs 

Both codes are necessary for efficient inventory tracking and management. The key differences between UPC codes and SKU codes lie in their standardized nature and internal use.

The biggest difference isn't special characters in the code. It's who issues them.

UPC codes are globally recognized and provide a standardized format for product data while SKU codes are unique to individual businesses and offer customized product identifiers for internal inventory management. UPC codes are standardized and globally recognized by a non-profit organization called the Global Standards Organization (GS1 US). On the other hand, SKU codes are created internally by individual businesses.

Unlike UPC codes, SKU codes can be customized to include specific product details like size, color, and style. Businesses can easily identify each product variant, track sales performance, and make informed decisions about restocking.

While UPC codes provide a standardized format of information about product data, SKU codes go beyond that by offering detailed information for each business to track and manage inventory. Think of UPCs as code to track a retail product, and a SKU as a product label for a physical product. 

SKUs or UPCs? Which Code Does Your Business Need?

Use UPCs to make your products compatible with the North American retail supply chain

Did you know that using UPCs can play a crucial role in ensuring your products are compatible with the retail supply chain? Major retailers and online marketplaces have made it a requirement for manufacturers to have UPCs for their products. This means that without UPCs, your products might not even make it onto the shelves or be listed online. It is important to note that UPCs are primarily used in North America although similar systems exist in other parts of the world.

To obtain UPCs, manufacturers need to purchase them or license them from a GS1 member organization. These organizations facilitate the assignment of unique UPCs to individual products. This process ensures that every product can be easily identified and tracked throughout its journey in the retail supply chain. That's how so many product lines in e-commerce platforms share the same UPC label. 

UPCs can also serve as an essential tool for tracking and inventory control because manufacturers and retailers can efficiently monitor the movement of their products, making it easier to manage stock levels, track sales, and identify any issues in the supply chain. 

For retail stores and manufacturers using systems that don't need much data for product tracking, UPC barcodes offer numerous benefits.

Firstly, they simplify the tracking and management of inventories. By scanning the barcode, retailers can easily update their inventory systems and keep track of sales and stock levels. This aids in efficient supply chain management and helps prevent stock outs or overstocking. Additionally, UPCs enable accurate and faster checkout processes, improving customer satisfaction and reducing human errors.

Use SKUs to track your inventory internally

By assigning unique SKUs to each of your products, you can easily identify and categorize them to effectively track your inventory and sales. Because they have so much data, they allow you to customize your inventory management system based on specific product attributes such as color, size, or style. With SKUs, you have the flexibility to create a system that suits your business needs.

One of the primary benefits of using SKUs is their ability to streamline your inventory management process. With each product assigned a unique SKU, you can easily retrieve information about its stock levels, location, and other important details. This allows you to efficiently monitor and control your inventory, ensuring you have the right products in stock at the right time.

Furthermore, SKUs enable accurate sales tracking. By linking your SKUs to a Point of Sale (POS) system or inventory management software, you can track the movement of products and analyze sales data. This information is invaluable for making informed business decisions, such as identifying popular products, forecasting demand, and managing stock replenishment.

SKU vs UPC vs Barcodes: Similar and Not the Same

1. What is a SKU?

A SKU, short for Stock Keeping Unit, is a unique alphanumeric code that helps retailers and businesses track inventory. It is a commonly used internal identifier, assigned by the company itself, to differentiate products and manage stock levels. SKUs provide detailed information about the item, including its attributes, such as color, size, style, and other variations. By using SKUs, businesses can streamline inventory management, track sales, and enhance overall operational efficiency.

2. What is a UPC?

A UPC, or Universal Product Code, is a standardized barcode system widely used for retail and grocery products. These barcodes consist of black lines and numbers that can be easily scanned by barcode readers at the checkout counter. UPCs act as a universal identification tool for products across various retailers and suppliers. Each unique UPC is assigned to a specific product, enabling accurate tracking of inventory, sales, and pricing information.

3. What are barcodes?

Barcodes are graphical representations of data, sometimes a UPC code or SKU code, and they're encoded on a printed label that can be easily scanned by barcode readers. They consist of vertical lines of varying widths and spaces that encode different information, such as the product's identification number, manufacturer, and price. Business owners who generate the image files will need barcode printers like the ones available from Wasp to produce the actual labels to put on physical products. 

Barcodes are used in a wide range of industries to facilitate inventory management, checkouts, and product traceability. They offer a more efficient and accurate alternative to manual data entry and help businesses streamline their operations for increased productivity.

How Do Business Owners Handle Products With Multiple SKUs but a Singular UPC?

UPC codes cannot track individual variants of a product, necessitating the use of SKUs for internal management. To handle products with multiple SKUs and a singular UPC, businesses often generate internal barcodes based on the SKUs. By utilizing unique SKU-based barcodes, businesses can efficiently manage their inventory and accurately identify and locate specific variations of a product.

SKUs cannot replace UPCs, but a checkout process in the retail industry can associate multiple SKUs to the same UPC.

Is a UPC Mandatory for All Online Products?

While some platforms and individual storefronts may operate using only SKUs, major online platforms like Amazon generally require UPCs. A UPC is a unique identifier for a product, typically represented as a barcode. It helps track inventory, manage sales, and ensure accuracy across various online platforms.

However, certain exceptions exist where UPCs may not be required. These exceptions primarily apply to niche marketplaces or platforms that cater to handmade, vintage, or one-of-a-kind products. In such cases, SKUs alone may suffice for product identification.