SKU vs. UPC: What's the Difference & Which Is for Dropshipping?

As your business grows, you will need to focus on making it even better than before. From adding products to transforming the services, it will require a lot of work. But, a growing business is quite hard to manage, and keeping track of products and services becomes even more challenging.

If you're a business owner trying to find the best strategies to grow your business, you must have come across the terms "SKU" and "UPC." Starting with the basics, both are product identification methods and use barcodes. In this write-up, we'll discuss SKU vs. UPC and which one would be the best for dropshipping.

SKU vs. UPC: Based on Definitions

Before we start with the differences, you must understand the meaning of the two respective terms:

SKU

Stock Keeping Unit (SKU) is a custom alphanumeric code that a merchant assigns to every product in his inventory. As each product will have a unique SKU code, it will be easier to distinguish it from other products. Hence, it makes inventory management and tracking much easier than before.

Every company has its own set of rules for deciding on an SKU code. Basically, an SKU code is a combination of 8-10 letters and numbers that simply represent the product features. For example, a shirt company wants to assign an SKU code for one of its products, so it has to go through the features. So, the selected product is a formal black shirt, size 9, and the manufacturing month and year is June 2022. Hence, the SKU code generated by the company would be:

[Shirt Style]-[Color]-[Size]-[Collection Month]-[Collection Year]

Which will result in F-BLA-09-06-2022.

UPC

Universal Product Code (UPC) is a 12-digit barcode containing only numbers. It is assigned to a product without showing the concern of its seller, the place of selling, and the mode of making the sale.

The first 6 to 9 digits of a UPC code are the company's prefixes. These numbers are used to identify the business owner who takes responsibility for making the product. The UPC owner chooses the preceding 2 to 5 digits, and the final digit is the sum of all of the digits mentioned ahead, which makes all UPCs different from each other.

UPCs are recognized and used worldwide, which is why they're regulated by an international non-profit organization known as GS1. The company that designed the product being sold must purchase UPCs from GS1.

SKU vs. UPC: Based on Benefits

As you now know the basic definitions of UPC and SKU barcodes, let's take a look at the specific services and benefits of each below:

SKU

If you're a business owner concerned about the growth of your business, SKUs can be highly beneficial to improve the overall performance of your business. SKU barcodes allow you to track your items, manage your inventory, and work as per your customer's orders. Apart from that, you get the following benefits from SKUs:

1. First, they are easy to create, and the process requires no cost. You can seek help from various SKU generators available online to create custom SKUs for your products and build a well-optimized inventory system.

2. As mentioned earlier, you can easily track your products and distinguish them from each other. It is very helpful when you manage your inventory in the best way possible and get to know what's in stock.

3. SKUs are easily customizable as merchants can easily create them according to the products and services offered.

UPC

As SKUs are better at identifying internal references and inventory management, UPCs are effective for external uses and mainly to track the product along the supply chain. Other than that, UPCs are helpful because:

1. First, UPCs are required by major brands regardless of the product category. The best two examples we can give here are office products and video games.

2. Most eCommerce platforms and business owners use UPCs throughout North America. If you're also planning to establish your business in North America, you must focus on UPC barcodes.

3. UPCs are randomly generated by the system used in the US. This makes it easy to keep track of items throughout the supply chain.

SKU vs. UPC: Overall Differences

Both barcode types are often used simultaneously but are quite different from each other. With the definitions mentioned above and the benefits they offer, we can conclude the following differences:

Composition

Starting with the composition, SKUs consist of 6 to 12 characters and can have a combination of letters and numbers. On the other hand, UPCs can only have number combinations and cannot have more than 12 digits.

Construction

SKUs are unique and can be created by dropshippers and business owners easily. But, UPCs are only generated by the US organization GS1. Sellers can only use the UPC codes provided by their suppliers, and different manufacturers can use the same code for a specific product.

Purpose

As discussed earlier, SKUs are used for inventory management, and business owners can stay up-to-date regarding their products and escape from out-of-stock situations. On the other hand, UPCs are only effective in making identification fast and easy.

Which Is the Best for Dropshipping

Whether you're running your business online or offline, when it comes to dropshipping, SKU and UPC can surely be of huge help. Inventory management and product classification are two essential functions of any retail business, and barcoding can help you streamline both processes.

Barcoding can also help you track product availability, keep your store organized, and accomplish other tasks essential to your business's success. Apart from that, both barcodes can be useful for your business in many ways, so let's take a look at some of them.

Better Customer Convenience

Both SKUs and UPCs can help improve the shopping convenience of your consumers. These barcodes can help your consumers to locate their choice of products in their online catalog. As your consumers will be getting better convenience, you'll get positive feedback, and your store will be full of compliments. Thanks to an efficient search system and quick access to SKUs, your customers will be thrilled with how easy it is to find what they need on your site. This will lead to increased satisfaction and fewer returns.

Inventory Control

You must be familiar with inventory control if you're running an eCommerce store. It is basically keeping an eye on all kinds of changes taking place in your storage and quantity. In addition, you can also calculate turnover inventory and get a notification every time any potential problem is about to occur. The SKU and UPC codes can make this very for you and give precise inventory reports. This way, you can find a particular product in a few minutes and be notified of any shortages.

Better Sales Management

SKUs and UPCs offer an accessible and practical way to track inventory, allowing you to observe your dropshipping sales and successfully maintain them closely. Since these product codes provide detailed information about your merchandise, you can keep tabs on high-selling and low-selling items, giving you much-needed insight into how your products are doing on the market. This, in turn, gives you the opportunity to take the required actions on time.

So, based on the points mentioned above, you can decide which product identification would be the best for you.

Wrapping Up

So, now that you've got an idea about the two commonly used product codes - SKU and UPC, you can easily say both of them would be excellent for your dropshipping store. From inventory management to a convenient shopping option for your consumers, both barcodes can help your dropshipping store grow. To read more interesting topics about dropshipping, you can start reading DSers Blogs.