SKU

Definition

SKU (Stock Keeping Unit) is a unique identifier used by a retailer or supplier to track a specific product and its variations (such as size, color, or model). Each variation of a product has its own SKU so it can be managed and tracked individually in inventory and order systems.

Explanation

In dropshipping, SKUs are essential for accurately matching the product listed in your online store with the product provided by your supplier.

Because dropshippers usually sell products without holding inventory, the SKU acts as a bridge between the retailer’s store and the supplier’s inventory system. When a customer places an order, the SKU tells the supplier exactly which product variant to fulfill.

Common uses of SKUs in dropshipping include:

• Order processing: Ensuring the correct product variant is shipped
• Inventory synchronization: Keeping store listings aligned with supplier stock
• Product management: Distinguishing between multiple versions of the same product
• Automation: Allowing integrations and apps to match products correctly

Without a clear SKU structure, order mistakes and fulfillment errors become much more likely.

Example

A dropshipping store sells a hoodie in three colors and two sizes.

If a customer orders a Black Hoodie – Medium, the system sends the corresponding SKU HD-BLK-M to the supplier so the correct item is fulfilled