Online retailers constantly roll out new products or variations of existing items to stay on top of the shifting market. It boosts sales for retailers to increase the variations of those products if customers appear to be seeking additional product options.
However, expanding and managing inventory comes with a price.
With the increase in products and SKU (stock keeping unit) counts, it becomes harder to organize, track, and restock products in your inventory. And without effective product SKU management, you may encounter inaccurate order fulfillments that can impact your bottom line. That’s a challenge that most growing businesses have to deal with.
As your Ecommerce platform drives more demand and your warehouse space starts to expand alongside it, inventory accuracy becomes far more important — as it could be the difference between getting more sales and losing customers because of errors from the inventory level.
Thankfully, there is an emerging solution: outsourcing SKU management.
In this blog article, we’ll discuss everything you need to know about outsourcing SKU management to reliable outsourcing partners and why you should do so for an effective e-commerce inventory process.
Let’s find out if it’s time for you to outsource SKU management to support the ongoing growth of your online store across multiple sales channels. Keep reading.
What Is SKU Management?
As its name suggests, SKU management is the process of developing, preserving, and updating scannable codes known as SKUs (an acronym for “stock keeping unit”) that permit the identification, arrangement, and tracking of a company's goods and materials. It’s an efficient tool for manufacturers and (re)sellers to organize product information. But what are SKUs, and what are they used for?"
An item’s SKU is a unique, alphanumeric code used to track inventory levels. The code typically consists of eight digits, all of which are numbers and letters, representing details about a product, like its color, size, brand, and location. We often think of it as product information in the form of an easy-to-trace code.
What Does SKU Data Look Like?
SKUs help distinguish products from one another. It would be challenging to keep track of sales and inventories without grouping them according to their model, kind, color, size, or any other distinguishing characteristics.
E-commerce brands develop unique SKUs for their products and services. For instance, a retailer of t-shirts might create internal SKUs that list a product’s specifications, including its color, size, type, and manufacturer. To put it into perspective, the SKU for an H&M red t-shirt in size 8 might be read as “H&M-TEE-RED-08.”
After determining their inventory SKU codes, retailers will enter them into an inventory management system, which is tied to a point-of-sale (POS) system. When a consumer buys at a store, the SKU is scanned, and the POS system immediately removes the item from the inventory and records additional information like the sale price.
Hence, it is easier for managers to identify which products require restocking. To sum up, SKUs help track inventory and identify products. The information gathered from these codes provides retailers with data that may be examined to determine the profitability and operational efficiency of their business.
With an efficient SKU management and inventory management system in place, products are easy to locate and identify from storage to transit to actual purchase.
The Role of Product SKU Management In E-commerce Business
No matter how big your business is, how many products you carry, or who your customers are, SKUs are considered a must for everyone selling online. This is valuable data that gives you insight into the demand for your products, while reducing the manual work of tracking each product that your online store offers (even and especially when you’re using multiple platforms for selling).
Beyond overall efficiency and informed decisions, product SKU management also serves other crucial purposes in inventory management and your business as a whole. Here’s how it plays a significant role in managing an e-commerce business and ensuring effective inventory management.
1. Warehouse Management
Having an SKU in warehouse management makes it easier to rapidly identify particular items and variations. SKUs keep your warehouse organized and make it less of a hassle for your personnel to locate products quickly for effective picking, packing, and stocktaking, which saves time, reduces errors, and streamlines supply chain management.
2. Customer Service
With systems like SKU numbers in place, your team can assist your customers in finding the item they want. For instance, a customer requests a different size of the product. Store personnel can quickly determine whether there's a product in stock by scanning the SKU.
As a result, there are fewer or no stockout issues when shopping, which enhances the retail customer service experience and boosts customer satisfaction and brand loyalty.
3. Inventory Management
SKUs are a valuable resource that enable you to track your stock throughout the order process and initiate reorders, which is another essential component of a successful inventory management system. When you have your SKUs set up for your business, you can save time and money by determining the appropriate quantities of stock to maintain for your products by compiling data such as sales history. This, in turn, reduces disruptions in supply chain operations.
4. Product Insights
SKUs allow you to get essential information about your product, enabling you to examine its popularity, seasonal demand, and cyclical sales trends for various customer segments. These insights can help you stock inventory that corresponds with patterns in your customer behavior. When you know which products get the most revenue and which sales channel gets you the most number of customers, it’s easier to make informed decisions that will streamline operations and allow you to focus on the platforms that need extra attention.
5. Sales and Marketing
Tracking a SKU in product management can provide additional insights into your peak sales periods. When there’s an influx of customer orders, you can increase your inventory levels and marketing efforts.
Likewise, SKU helps you spot “slow months” in retail, which allows you to reduce product orders. In addition, SKUs give you the information you need to identify high-yielding products with a high return on investment (ROI), allowing you to market them and earn as much money as possible while in demand.
6. Product Pricing
Your SKUs are an excellent source of information if you need to lower your price for a few particular items by offering discounts, or if you want to know what discount rate you have previously offered. It maintains a complete record of your sold items and unsold stock, which helps you run a more cost-efficient business.
While it’s clear that SKU management is indeed indispensable in streamlining your Ecommerce inventory management process, it’s also true that it can take a lot of time and manual work for your team to initiate and manage the whole process.
Which takes us to our next point: outsourcing SKU management.
Should You Outsource SKU Management?
It can take a lot of time and effort, but controlling and tracking your inventory data is essential to the success of your e-commerce business. You can manage your business more profitably and effectively by improving your inventory tracking through SKU management.
If you’re wondering whether it’s time to outsource SKU management, the following are five reasons why (and how) it outsourcing SKU management will help your business grow quickly:
1. Prevent Inventory Errors
Regardless of how effective your inventory management is, your online store will always be vulnerable to inventory errors. Whether caused by product data entry errors, scanning issues, incorrect selections, or misplaced items, it can cost you a lot of money.
Your business might resort to outsourcing SKU management to the best BPO companies to prevent such errors and ensure cost savings. By doing this, you can avoid mistakes when choosing, packing, and shipping your products to customers.
Also, your outsourcing provider can help you generate reports highlighting inventory management issues and bottlenecks, such as incorrectly labeled, damaged, and out-of-stock items.
2. Focus On Core Business Functions
SKU inventory management can consume a significant amount of your day that could be used for other critical tasks. For instance, you have to manage your product descriptions, metadata, and keywords to improve your product discoverability on e-commerce sites.
Not to mention the regular upgrading and upkeep of your SKU inventory to guarantee a consistent bottom line. By outsourcing SKU management, you can concentrate on your core business functions where you can make money, like marketing, sales, or building meaningful customer experiences. When you get the expertise of reliable SKU management specialists, you take valuable time back and empower your team to focus on the things that matter the most.
3. Implement the Best Industry-Leading Software
It’s necessary that you implement an inventory management system for your business that can connect SKUs to item profiles, barcodes, and QR codes. Don't panic if you don’t have inventory management software yet. You can get tools for tracking inventory and gaining business insights by outsourcing SKU management to an outsourcing provider.
Security on all levels is one advantage of using inventory management software. For instance, if everything is in the correct sequence, a worker can write data about items, and the manager will approve them. In general, you can permit users to determine which data they can access and view. Every user is therefore restricted, eliminating any possibility of data loss or leakage.
4. Increase Customer Satisfaction
You could get precise tracking of all your products by outsourcing SKU management. As a result, you can anticipate when the products will run out of stock and restock them accordingly. So, instead of making your consumer unhappy with an “out of stock” notification, you can increase their satisfaction by taking proactive actions.
When working with professionals who have extensive experience in SKU management, you improve your supply chain management, boost inventory accuracy, and empower your team to support your customers in the best ways possible.
5. Enhance Business Revenue
Higher revenue and improved gross margins are the results of working with a reputable e-commerce service provider with a technology-first inventory SKU system.
Your service provider can assist you in addressing the rising demand from customers looking for 1-2-day shipping by stocking your most popular SKUs in the ideal location and amount prior to customer purchase.
Additionally, your outsourcing partner gives you precise reorder points for each SKU, enabling you to maintain sufficient inventory to meet customer demand. This makes it possible for you to sell your products more quickly, which keeps your revenue coming in.
With all these functions and benefits considered, we know that it might still be difficult to handle several SKUs, especially if you lack the resources to scale up for seamless SKU and warehouse management.
Do you want your SKU, inventory, and warehouse operations to result in more precise inventory cycle counts and quicker fulfillment times? Do you want to ensure that the SKU management systems you have in place are empowering your team to better support your customers across multiple sales channels? Then, work with an outsourcing company with extensive experience in handling SKU data.
Outsource SKU Management and Hire the Best E-Commerce Specialists at KDCI.
KDCI, an e-commerce outsourcing company in the Philippines, offers retail and e-commerce support services to help you manage high-quality SKU data. Our team of product data entry specialists and e-commerce professionals are experts at creating meaningful SKUs that help maintain accurate stock control within your e-commerce inventory.
We also deliver outsourced inventory management services for businesses to improve inventory control and warehousing operations. By optimizing your inventory process and making your products searchable on search engines and e-commerce platforms, we can assist you in maximizing your ROI from outsourcing SKU management and inventory management services.
Are you interested in building your offshore retail and e-commerce team? Contact us and get your FREE consultation with one of our experts!
