Everything you need to know about cloud ERP and Ecommerce

One wise (and unidentified) man is quoted as saying that “I won’t be impressed by technology until I can download foods from the internet.”

Maybe that day will come, but for now we can order almost everything online.

However, businesses that hadn’t made the decision to do so were forced to reconsider their decision after the COVID-19 crisis. Ecommerce is not a future option, but a necessity for survival.

Statista estimates that retail ecommerce revenues reached 431 billion U.S. Dollars in 2020, according to Statista . The revenue is expected to rise to more than 563 billion U.S. Dollars by 2025. How can ecommerce companies manage the extraordinary growth and meet higher-than-ever customer demands?

IDC is a leading global market intelligence company. It has released a white paper, Best Together: SaaS Digital Commerce Platforms & ERP Help Organizations Move Past Legacy Limitations. This whitepaper states that the solution lies in a combination team effort and the right technology.

The IDC analysts wrote that meeting customer expectations requires team effort. This is dependent on all areas of the organization (e.g. commerce, customer service and financials, supply chain).

The analysts recommend that businesses invest in a cloud ERP and digital commerce system, such as the native Acumatica BigCommerce Connector, to ensure they grow and mature into enterprise-level companies.

Before we get into the details of this seamless solution, let’s first talk about what cloud ERP software actually is.

What is Cloud ERP?

Understanding cloud computing is key to understanding cloud ERP solutions. An Microsoft Azure article gives a clear definition.

Cloud computing simply means that computing services are delivered over the internet (or “the cloud”), including servers, storage, databases and software. This allows for faster innovation and flexible resources as well as economies of scale. Cloud services are typically only charged for what you use. This helps you to lower operating costs, scale your infrastructure more efficiently, and reduce your overheads.

Cloud ERP software, then, is software-as-a-service (SaaS) that allows users to access Enterprise Resource Planning (ERP) software over an internet connection. A cloud-based ERP system acts as an organizational system of record. Data from financial, distribution, CRM, etc. The ERP synchronizes data from all systems in real time. The ERP is a central repository for all business data. It integrates business processes and serves as an “unique source of truth” for employees. Users can also access the ERP from any device with a browser, and at any time.

A general rule of thumb is that if a company is still using a legacy system or multiple disconnected, poorly integrated systems to manage complex inventory, warehouses and financial obligations, it is time to move to a cloud-based ERP solution.

Learn more: 

Magento Pos

Shopify Pos

Bigcommerce Pos

Woocommerce Pos

Netsuite pos


Cloud ERP vs Private Cloud ERP

Understanding private cloud ERP is essential to fully comprehend cloud ERP solutions. Let’s take a look at both options.

1. Cloud ERP.

As we know, cloud ERP options allow users to access their business applications via the internet. They run on shared computing resources. Cloud ERP options allow users to easily integrate with third-party apps while still providing the flexibility and scalability that businesses require in a dynamic economy. Cloud ERP vendors are responsible for security, updates, as well as upgrades. Businesses pay a monthly subscription fee depending on how many users or resources they use.

2. Private Cloud ERP.

The only difference between private and cloud ERP systems is the location of the software. The software is installed and maintained at the business’s own facilities. Only the IT department of an organization is responsible for software deployment and the maintenance and security of software and hardware. The initial costs of software licenses and hardware may be prohibitive. Remote access is possible but not always an integrated function. It may be necessary to use a third-party app and device.

Private Cloud ERP: Challenges

All ERP options have their unique challenges, but private cloud ERP challenges are something businesses, particularly small-to-medium-sized businesses (SMBs), should pay attention to.

Private cloud ERP solutions may be more expensive to implement and maintain, with a higher capital investment upfront. Businesses must have a full-time IT staff. Private cloud solutions can take longer to deploy, may require more hardware to accommodate additional users, and may not be mobile-friendly.

Private cloud ERP solutions often have legacy systems that are not modernly integrated. Customers suffer as a consequence.

What makes cloud ERP business sense for an online store?

We now have a better understanding of the differences and challenges in the various ERP solutions, it is time to bring ecommerce into the picture.

Ecommerce platforms are essential for putting their products/services before customers. An ecommerce portal allows online businesses to manage sales, marketing and operations.

According to IDC’s Whitepaper, whichever ecommerce platform businesses choose, it must combine seamlessly and natively with an ERP solution–preferably, a cloud ERP solution.

Analysts at IDC write that the most successful digital businesses have an overarching strategy for digital transformation and select ERP and digital commerce systems that can be tightly integrated or combined. A future-proof digital platform must use modern SaaS systems designed for the cloud.

An online store that uses cloud ERP solutions makes business sense is always a good idea.

Cloud ERP for Ecommerce: Benefits

Cloud ERP solutions are often faster to implement, have lower upfront costs and allow for real-time communication with ecommerce platforms. Businesses can also benefit from cloud ERP solutions that include an ecommerce vertical such as Acumatica’s retail-commerce edition.

1. Flexibility and adaptability.

Flexibility in the face of market fluctuations is a key indicator of a company’s success. Businesses can easily make required customizations with the right cloud ERP system, without having to hire IT staff. They can adapt their back-office processes and workflows as well as their customer-facing apps to change circumstances.

Each merchant also operates in a unique way. Each merchant operates in a unique way. The right cloud ERP solution can be configured and used without code to adapt to merchant’s unique requirements, instead of forcing them to use the ERP software.

2. 2. Improved security

Cloud-based ERP software can be hosted in data centers such as Amazon Web Services and Microsoft Azure. They have the resources that SMBs might not have, including top-notch security. A cloud hosting service offers many benefits:

  • Physical access to the equipment can be controlled.
  • Environmental protection.
  • Protection against unforeseen disasters.
  • Network intrusion detection and prevention.
  • Regular maintenance of your system.

3. Business growth can be sustained

Businesses expect their business management software to grow along with them as they grow. However, this is not always possible. It is difficult for legacy solutions to keep up with technological innovations that are constantly changing.

Cloud-based solutions receive regular updates and upgrades. These updates allow ecommerce businesses remain competitive and provide the opportunity for continued growth.

4. Compatible with many tools

No matter what business offers or what services it sells, integration with key business applications is essential. Acumatica has the technology partner to help a business expand Acumatica’s platform.

BigCommerce allows Acumatica businesses to process orders, manage inventory and set prices. It also facilitates inbound logistics.

Steps to Cloud ERP Implementation

Connecting an ERP cloud solution to an ecommerce platform may sound like a smart decision. There are few steps you need to follow when choosing or implementing a cloud ERP system. While cloud ERP providers might differ in the number of steps and the names of the steps, the end result is the exact same: ecommerce success.

1. 1.

Ecommerce businesses need to take the time and research all options. While it may take time to compare and contrast the various cloud ERP systems available today, rushing this step could result in making a bad decision.

A checklist such as Acumatica’s Business Management System Evaluator Checklist is a great way to evaluate and research options. It allows businesses to compare features and benefits between vendors based upon five categories: Productivity (functionality), Technology (value), and risk.

This checklist, or any similar one, will help businesses to find the right cloud ERP system.

2. Installation.

The second step is to install the software. To complete the installation, you will need to first gather an internal team. This team often includes an Executive Sponsor, a Project Leader (or Project Manager), a technical Lead and Subject Matter Experts.

This step requires you to identify your requirements. Acumatica customers classify requirements as necessary, desirable, not an urgent need, and nice-to-have. This results in a list with features and functions that is affordable and fits the project’s timeline.

3. Migration.

Migration of data from an old system to a new one is complex. However, a checklist can make it easier and more manageable. Acumatica’s data migration checklist is an example.

  • Verify that all customer contact information is current and accurate
  • Correct or remove redundant data (discontinued vendors and contacts not longer associated with the company).
  • Correct or out-of date company data (old part numbers and discontinued products) should be removed
  • Set up your Acumatica database
  • Your legacy ERP data can be mapped to Acumatica’s new fields
  • Transfer the data to your new system
  • To verify that all data from the past has been transferred and is still accessible, test the new system
  • Verify that new data can be added (new product information or inventory item location, customer information).

4. Test.

It is important to test and approve any new product before it is sold to customers. While cloud ERP vendors may have their own procedures and methods for creating a test plan to test the system, most test plans will be able to test every requirement.

These are some guidelines that may be followed during testing:

  • Scope: The purpose of the test
  • Requirement: The specific requirement that is being tested
  • Configuration: System configurations required to conduct the test
  • Step-by-step procedure to perform the test
  • Test Data: An SME can provide this if needed. The test data should be representative of real-world situations
  • Expected Results: The results that are expected to be produced when the system performs according to specifications
  • Pass or fail: This determines whether the test was passed.
  • Comment: Additional observations, system behavior and partial successes
  • Training

Training is an essential step. Users and system administrators who aren’t properly trained from the start may not fully grasp the benefits of the cloud ERP system.

A cloud ERP vendor should offer training assistance, as well as all the documentation and training courses required for a complete training experience.

5. 5.

The deployment is also known as “go-live” and is when the cloud ERP vendor will be available to push the go-live button.

This step involves making the decision about when you want to go live. This usually happens on the day or days that have the lowest impact on the business. Businesses will then need to decide whether they want the new system activated and deactivated simultaneously. Or if they prefer to proceed in a gradual manner.

Whatever activation method you choose, the final result will be a business that uses a mobile cloud ERP system. But there’s more.

6. 6.

After the excitement of a successful launch, there will always be questions or additional assistance. This could include the need to integrate with custom and third-party applications. As the business refines their business processes, and continues to require support, the cloud ERP provider should always be available.

Wrapping up

Ecommerce businesses are enjoying a boom economy, and they expect even more growth in the future. These businesses need to be efficient, flexible and adaptable in order to reap the full benefits of an economy like this. This is possible when they choose the right cloud ERP solution, which natively integrates with their ecommerce platform.

Analysts at IDC write that “Already at an unprecedented high, the rate for change in the global economic system is expected to continue increasing over the next decade.” B2B and B2C merchants require modern, tightly integrated front-office and back office applications to adapt to these changes and remain competitive. These tightly integrated applications offer resilience so merchants can overcome obstacles with agility, rather than waiting for their systems catch up.

Combining the forces of BigCommerce with Acumatica will provide much-needed automation for ecommerce businesses. This will help them streamline their business processes, compete in a growing domestic market, and ultimately succeed in today’s marketplace.

Everything you should know about purchase order management

Purchase order management is a core process for any retail business. They enable you to track your orders from your vendors, keep them accountable, and help you stay on top of inventory management.

Let’s walk you through purchase order management so you’ll learn about the overall process, it’s benefits, and how you can optimize it in your business.

What is a purchase order?

A purchase order is a legally-binding agreement sent from a buyer to a supplier, authorizing the purchase of goods from the seller, essentially outlining the expectation of the business transaction.

It is ideal to protect both parties involved in that the seller is covered if the buyer refuses to pay, and conversely, it protects the buyer if the seller refuses to deliver their products or services.

Our products






Purchase requests vs. purchase orders vs. invoices vs. receiving documents

Purchases orders and invoices are similar in some regards, but the intent of each document is different.

Both contain legally-binding details about the order and the mailing information, although the invoice also includes the order price, payment terms and conditions, and the date the payment is due.

However, the key difference is that while an invoice requests the payment for an order, the purchase order simply confirms that an order has been placed.

In addition, the purchase order is created by the buyer when they order the product or services, and the invoice is created by the seller to request payment for those products or services and is usually sent after the order is completely shipped.

Purchase requests, on the other hand, is an internal document provided by the buying party’s inventory and product managers to be approved by the appropriate staff or department (such as accounting/finance) into a purchase order. The purchase request is converted to a purchase order once it is approved.

Receiving documents are utilized when a purchase order is delivered to the buyer and an invoice is received. The warehouse it is received in will count the products and match them on a receiving document against the original purchase order and invoice. This creates a series of documents that account for every step of the way, ensuring all products were delivered as promised, they are in selling condition (meaning no defects, damage, etc.), and the prices charged on the invoice match those agreed on the purchase request.

What are the overall benefits of using a purchase order system?

Matching Records/Verification

Easily verify information such as when and what purchases were made for a particular purchase order. This helps you track incoming orders, price changes, avoid duplicating the order, and coordinate effectively with your suppliers/vendors.

Time Savings

Your time is often on short supply. Once you have an effective purchase order management system, all you have to do is go in, find approved products for purchase, and place the order.

A proper inventory management system will allow you to repeat this process or even automate it, but that’s more advanced stuff we can cover over a phone call!

Our other articles







Accurately Manage Budgets

Since you’re tracking the quantity and costs of everything you purchase, this is the base point of comparison to your retailing price (or MSRP) where you determine your mark-up and profit.

Legal benefits

As mentioned, purchase orders are legally binding documents that once the seller accepts puts responsibility on both parties to deliver on the goods, services, and exchange of money.

Increasing Inventory Turnover

Ensuring your products don’t sit in inventory too long is crucial to your overall success. Your inventory might lose demand, value, and quality over time, so it is ideal to sell it as fast as you receive it.

Getting a handle on your purchasing procedure will help you accurately determine your inventory turnover, which you can then strategize ways to adjust your purchasing schedule or quantities to increase the turnover rate.

What information is contained within a purchase order document?

Although different retail verticals or product types may require supplementary information, this information is generally found on just about any purchase order:

  • Name, address, and contact information of both the buyer and the supplier
  • Products and services being purchased, including quantity of each
  • Purchase order number
  • Price per unit (or cost per unit if you are the buyer)
  • Delivery date and location
  • Agreed upon payment terms
  • Terms, conditions, and additional instructions

What are the best practices that ensure you save time, money, and energy when it comes to purchasing?

Keep employees looped in

Ensure your staff is fully trained of the procedures, policies, and expectations when it comes to the approval and purchase order management process. It is ideal to create a guide that can serve as a reference to outline the ground rules for specific purchasing scenarios.

Track your vendors

Another important best-practice is to track who you’re purchasing your inventory from. Create a directory list of your various suppliers that includes all necessary details to submit a PO to them. Information such as their address, payment terms, prices, and even a rating as to how reliable their services are.

Digital transformation of inventory management

Finally, you should definitely consider “digitizing” your purchasing and inventory management with a POS/ERP solution such as NCR Counterpoint.

Counterpoint continues to be the leading point of sale and inventory system. We help businesses nationwide implement powerful inventory solutions and automation.

There are tons of benefits to implementing a proper inventory and purchasing system, talk to our consultants today to see if we’re a good fit!

See also:






Everything You Will Need to Know About Free POS Software

Is there such a thing as free POS software? The brief answer is yes, free point of sale software will not exist. However, the perfect answer is not as cut and dry.

As a small business owner,’free’ can be an attractive offer your bottom line finds hard to refuse. After all, who does not love free stuff? Particularly when it’s something which may typically cost hundreds to thousands of bucks to purchase, free sounds just like the deal of a lifetime.

However, before you register for the first free POS system you find in a Google search, finish reading this report. Let us look at the ins and outs of free POS software so you can decide if it is a wise business decision.






What’s POS Software?

First, let us define POS applications, so we’re all on the same page. Point of sale software is what brick-and-mortar businesses use at the point of purchase to help streamline efforts between back-of-house business operations and front-of-house customer-facing actions. The software, along with POS hardware, form an extensive point of sale system.

Two Forms of Free POS Software

When it comes to free point of sale software, expect to find two choices:

  1. Open-source Program
  2. Cloud-based software

Both are effective and may be a viable solution for your company. However, it’s vital to know how each work and which one will better support your business requirements and match your technical abilities. Let us take a look at both options, will we?

Open Source POS Software

Since open-source program is distributed with its source code available for modification, it is possible to customize the software in whatever way you choose. But unless you are a tech-savvy small business owner with programming skills, this likely is not the best thing to do.

With open-source applications, almost everything is a DIY approach. From POS installation and installation to troubleshooting and ongoing technical assistance, you will spend a whole lot of time sifting through online documentation and neighborhood boards to find answers to your questions.

Additionally, it suggests that data from the POS system is saved, on-premise at your company location. Therefore, you may only access the data if you are on site, along with the responsibility for securing sensitive client information falls squarely on your shoulders.

Find the news





Cloud-Based POS Software

On the opposite end of the spectrum, there is cloud-based point of sale applications. This sort of software securely stores POS information on remote servers and makes all the information accessible online via a web browser and dedicated portal.

Although you can not alter the source code and need to use the applications’as is’ out of the box, cloud-based POS software is much more user-friendly and more manageable compared to the former.

POS Features: Free POS Software vs. Getting POS Software

Apart from network infrastructure, what sets one POS system aside from another are the characteristics and performance of the program. That is what also sets it apart on price, and not all software is created equal. With free POS software, you can expect to find limited capabilities compared to a premium version that will tap into your monthly budget.

Software companies market stripped-down versions of the applications with restricted features at a lower price point compared to their premium version with all the bells and whistles. Therefore, if you’re searching for free POS software, you want to know exactly what those constraints are and how they will impact your operations.

Odds are, free will only go up to now. While some smaller businesses may be able to skate by with the minimum attributes, others may find constraints stifle workflow, and end up needing to buy additional features.

Let us take a look at a number of the features that you can expect to find from the point of sale software supplier and where the constraints may lie at the free plan.

See also





Inventory Management

It should come as no surprise that stock tracking and management features are essential for retail companies to stay afloat. If you can’t monitor how much you are spending on stock and what items customers purchase the most, it’ll be tough to remain profitable.

With free point of sale software, expect the amount of SKUs to be restricted in relation to the paid version. As an example, a free plan might only allow for 100 goods or items, while the version with the monthly fee provides you an infinite amount.

Employee Management

Besides managing inventory, you will also need a point of sale system that can help manage your employees. Each worker should have their own login credentials and user permissions based on their role in the company. If the point of sale solution can monitor labor hours, arrange employee schedules, and supply sales analytics for each change, that is the icing on the cake.

POS companies typically allow for a couple of users using the free software deal, but it usually stops at that. If you have more than a couple of workers (or even managers), you could see how it can be problematic. Using a system using multi-user capabilities allows managers to keep track of which users are making sales and to establish goals for workers who may not have as many sales.

Related posts






POS Reports

Speaking of analytics, be sure the POS system you select has reporting features that will give valuable insight into your organization. Some reports you should expect to find are:

  • Revenue reports
    These reports provide business owners numerous sales metrics that provide insight to the lucrative areas of your business and other areas which may need more attention.
  • Labour reports
    Labor reports help you get a better understanding of how your employees are doing (or not doing ) and the number of hours they are working.
  • Client reports
    Client reports shed light on customer buying habits and tastes. This information enables business owners to fine-tune their own loyalty programs and marketing strategies to attain their target market better.
  • Rental management reports
    Inventory reports are arguably among the most important for any organization. With stock management accounts, you can monitor products in stock and how much money you’ve wrapped up in stock.
  • Accounting reports
    Tax season is stressful for everyone, especially business owners. Using a POS system that offers accounting reports makes it easier to compile the details and send off the data to your accountant.

Having a’freemium’ version, ensure you understand precisely what reports it includes which will make your daily managerial tasks easier.

Much useful links





Returns and Refunds

Regrettably, not every transaction is going to be a sale. For retail POS systems, it is crucial that you could process returns and refunds effortlessly. From locating the first purchase and refunding the original payment method to adding the product back into stock, your retail POS system should be able to handle all these details.

Discounts and Promotions

Clients go crazy for a fantastic promotion or discount. It is a classic marketing strategy to get more customers through the doors, and it works. With your point of sale system, you should have the ability to apply discounts at the individual product level and for your whole order.

Free POS software might only allow for one or another, or in some cases neither. Understand how discounting works as you will have to use it sooner or later.

Loyalty Programs

Much like promotions, clients love loyalty programs. Have a look at the numerous successful big-box retailers. The huge majority have some loyalty program set up to reward customers for their purchases.

Although a lot of POS systems offer some sort of consumer loyalty program, more frequently than not, it is a part of a superior software subscription.

Installation, Configuration, and Multi-Location

When it’s menu customization for a restaurant POS system or configuring the retail matrix to your boutique, obtaining a easy setup and configuration is vital to optimizing workflow and checkout rate at the point of purchase. This is especially important when you need more than 1 cash register or have multiple locations.

For those who get a larger-scale business with many places, free POS software packages normally can not offer you multiple locations or registers. Multi-location support is also an issue for smaller companies for the sheer fact of having more than 1 register. Your choice depends upon where you visualize your company going in the long run.

Updated :






POS Hardware Will Still Cost You

Whether you choose to go free software or not, POS hardware and peripheral devices will still have a price tag. These are the output and input devices that help carry out the purposes of the POS program. This equipment can include, but not Limited to:

  • Tablets such as iPads, Android, or Windows apparatus
  • Touchscreen monitors or all-around pc
  • Cash drawers
  • Barcode scanners
  • Customer-facing screens
  • Receipt printers
  • Charge Card readers

The Bottom Line

Though free POS software looks like a wonderful deal that would pique anyone’s interest, it is important to understand just what you’re getting for the price — or lack thereof. While free point of sale software may work for your company now, in six months you will need more attributes. Therefore, be certain you opt for a POS system that can grow with your organization.


  1. /what-is-draft-order-in-pos/
  2. /top-5-mobile-pos-in-2020/
  3. /how-to-manage-staff-when-not-in-the-store/
  4. m/black-friday-tips-for-small-businesses/
  5. /10-essential-features-of-inventory-management-system/

Everything You Will Need to Know about Retail Payment Options

Payments and transactions are the most usual element of a retail company, which makes it easier for clients with multiple payment options can play a major role in further growth and conversion.

Retail businesses in the market concentrate a lot on supplying easy and quick solutions to their clients. The most essential amongst these would be the payment solutions. By providing multiple retail payment solutions, retailers can have the benefit of greater customer engagements and upward sales than many others on the marketplace.

Let’s see how different payment methods can benefit the retail enterprise. Moreover, we will analyze the services provided by ConnectPOS within this domain.

Guidelines to Payment Methods:

1.) Cash:

Cash payments are the easiest means of earning payments against company sales. Cash payments are widely accepted in all kinds of retail businesses. That is why ConnectPOS guarantees the cash payment documents are properly managed and preserved for future use.

Money Payments is one of the simplest modes of payments against the purchases, and the retail companies widely accept it, but they require an effective mechanism to control the money transactions and their listing in retail store POS.

2.) Credit Card:

Paying through a Credit card is another payment option well-supported and approved by the majority of the retail companies. Why is it that people think paying through the Debit/Credit card is secure? The answer to this question is portability and security.

Nowadays, people prefer paying cards since they don’t carry significant amounts with them due to certain risks. From the ConnectPOS software solution, the credit card payments transaction information is readily recorded in the system. This information can easily be obtained through well-designed reporting features provided by the ConnectPOS Retail POS system.

3.) Account Receivables:

The account receivable payment option is designed to ease those clients who intend to cover their purchases afterward. This payment method is best suited for retailers that admit sales details through romantic invoices and drafts.

In reaction to these invoices, the clients need to pay the sum through any method possible in a specific time frame allotted by the merchant. Retail shop pos application by ConnectPOS provides all supported account receivables facilities for their clients to get their payments sorted regarding the invoices generated according to the purchases.

4.) Splitting:

Account dividing is the payment mode which offers a window for those clients to pay for their purchases via more than 1 payment method. Account splitting is a procedure that involves more than 1 payment method incorporated by an individual client.

The payment processes are no method provided by the retailer. It can be direct money payments, debit/credit card, or the sum can be a charge against the client for later payment. ConnectPOS accepts all sorts of receivables through broken payments.
All these kinds of payment methods help in building client’s confidence, it helps the consumers needing to pay for their purchases in departments so that they can be eased by all means.


ConnectPOS is the flag-bearer of POS technology in Pakistan. We provide all sorts of Cloud POS solutions to our clients with adequate payment options to ease them through all ways.

Among the better advantages of providing multiple payment processes is to produce a great customer base for your own brand. If you offer great payment services to the clients where they feel at ease, they’ll consider you the perfect place to go to.

Having different payment solutions helps create a progressive approach to enhance retail company management and transaction. It’s something which goes hand to hand and is appreciated by the people involved in this procedure.

Different Payment methods may be the way forward for greater customer engagements, it offers convenience to people. Such choices can be a better indication of brand awareness and increased sales.

As a merchant, if you’re planning your earnings in a large proportion online, then be prepared to receive all of the payments through electronic credits and debit card transactions. Sales strategies should be proposed regarding the sort of payment methods a company can support. Consider this example of an E-Commerce shop, where different payment methods are accepted thankfully.

To the contrary, think about a physical set up where payments are made through money. This scenario entirely explains the working principles and the sort of method accepted. To make sure that the business shouldn’t suffer, pick the acceptable way out.

Source references

  1. top-5-mobile-pos-in-2020
  2. how-to-manage-staff-when-not-in-the-store
  3. black-friday-tips-for-small-businesses

Everything You Ever Wanted to Know About SKU Numbers

Have you ever looked at a price tag and wondered why on earth there are so many numbers and letters on it? What are they all for? One of those numbers sets is usually the SKU number (stock keeping unit). SKU numbers are unique to each store and allow the store to keep track of each item in inventory. SKU numbers can be anything you want to be but are most often about 8 alpha-numeric digits.

SKU vs UPC vs Serial numbers

There are quite a few numbers associated with products and inventory-keeping and it can be hard to tell what makes them all different. We know what a SKU number is, but what are the others and how are they different?

First, there’s the UPC number (universal product code). The UPC number is the twelve-digit number that runs along the bottom of the barcode and, as the name implies, is a universal number. That means anyone with a barcode scanner can read the number. It also means that the UPC is not unique to a store. If two companies are selling the same item, those items will have different SKUs, but the same UPC.

Next, there’s the serial number. Serial numbers are unique to each specific product and are most frequently used for electronics. (If you’ve ever had an issue with your laptop, you’ve probably encountered the serial number as you’ve given details to a help desk or customer service, for instance. It’s that number on the barcode tag on the bottom of your laptop.) Serial numbers are used to track the ownership information of an item. They can also be used to track warranty information.

What do SKU numbers mean to retailers?

SKU numbers are important for every store to use because they make life way easier. Each SKU is recorded within your internal tracking system (which is hopefully an inventory management system and not a manual spreadsheet). Once within your system, SKUs will make it possible for you to record loss easily, make smarter inventory decisions, track the exact location of each item, increase the accuracy of your inventory and warehouse activities, and for your employees to easily look up inventory to help your customers. When done right, a SKU number can even tell an employee what item should be attached to your SKU.

True story: When I was working retail, a woman once came in with a list of SKUs from the catalogue that she wanted to buy, but no other descriptors. Coincidentally, our inventory management system also chose that particular hour to go out. I was actually able to locate all 5 pieces she wanted to buy because our SKU numbers were well set up to direct me to the right items.

SKUs also enable some really amazing marketing activities. For instance, SKUs are what are used to generate suggestions for other items you might like on a site. They are also used to run product remarketing on a site like Facebook.

At the end of the day, SKUs take your physical items and turn them into pieces of data a computer can easily track. You really can’t eschew SKUs.

How Do You Generate SKU Numbers?

You can generate SKU numbers any way you want, but it’s probably easiest to use your inventory/retail management system. The length is up to you, but do take into consideration that your staff will need to be able to easily read and even remember SKUs. (Grocery cashiers, for instance, often end up memorizing swaths of produce SKUs in order to be able to ring faster.) You can also choose to use only numbers or letters – or do a combination of the two.

When choosing digits, you could go totally random. However, it’s better to imbue your digits with some meaning. By that I mean, segment the digits out to refer to certain things. For instance, if you have an 8 digit SKU, the first two digits could refer to the item category, the second two digits could refer to sub-category, the third two could refer to item color, and the last two can be the unique identifier.

There are a number of ways this can be done. First, if your inventory is simple enough, you may only need to specify a single category and combine it with a sequential set of numbers to refer to the item. Here’s a visual example of how that would be put together for a small pet store:

Category Code Item Code SKU Number
Dog Toys 10 Tennis Ball 012 10012
Rodent Accessories 20 Hamster Wheel 005 20005
Cat Food 30 Salmon Bites 001 30001

The item codes should be created in a sequential order (thus, each new item you get in will just be assigned the next available number). The item codes can be reused in different departments, as well. So “012” could be used for Chicken Bites in the cat food department, even though it’s used for Tennis Ball in the Dog Toys department. (That Chicken Bites SKU, by the way, would be: ‘30012.’)

However, your inventory may get more complex. Here’s a quick list of the aspects of an item you might wish to put into a SKU:

  • Supplier
  • Store Location
  • Department
  • Variation
  • Item Type
  • Size
  • Color

Let’s look at how a clothing store with men’s, women’s and children’s clothing might want to create a SKU.

Department Code Category Code Color Code Item Number SKU
Men’s M Knits 223 Purple 02 001 M223-02-001
Women’s W Knits 223 Brown 58 010 W223-58-010
Children’s C Denim 604 Pink 25 035 C604-25-035
Women’s W Dresses 005 Green 51 120 W005-51-120

Each section of the SKU tells a detail of the item and these codes can be put together in unique ways to demonstrate particular items. A different men’s purple sweater than the one seen in the table above, for instance, might be M223-02-002. You could also see that the first 5 digits of any women’s purple sweater would be W223-02, or that a pair of men’s green jeans would start with M606-51.

When a SKU number is put together this logically, it becomes easy to see how a sales associate might be able to take a number and figure out what item it represents.

SKU Number Tips

You can reuse SKUs.

Some people will tell you not to reuse SKUs ever — but the truth is, as long as you wait for a few years or so (after multiple total catalogue refreshes and completely selling all items attached to that SKU) you can certainly reuse your old SKU numbers.

The store I worked for in college did this with no hiccups. In fact, the only reason I ever realized that they reused SKUs after a number of years is because one customer decided to return an item she bought 12 years previous and had never worn. The item still had the tags and the old SKU number, which corresponded with a new item when I typed it into our system.

The first 2-3 digits should represent the highest category.

Use the first few digits of the SKU number to represent what is the highest category of importance about the item to you, and work into the more unique features of the item. (And once you’ve locked your formula in, always write your SKUs in the same order.)

Think of it as the opposite of how you identify where you’re from. That is, when identifying your hometown, you start most specific and get more broad. I’m from Trumbull, Connecticut, in the United States, which is on the North American continent on planet Earth. A good SKU number goes the opposite direction, essentially identifying planet first and town last.

Avoid beginning the SKU with the number 0.

You shouldn’t start your SKUs with 0s, mainly because some data storing software may interpret that 0 as literally nothing. That is, when told to store the number “012345,” the software will read it as “12345.” It’s just best to avoid putting yourself in that situation altogether. (This tip is a solid data storage tip in general. Try to avoid starting data with 0’s.)

Do begin your SKU with letters.

Starting your SKUs with letters is an easy way to help them stand out in a spreadsheet filled with other numbers. It provides an easy visual cue that that’s the beginning of a SKU number, rather than a continuation of the number in the cell before it.

Avoid using letters that look like numbers.

It’s a good best practice to avoid using letters that can be confused with numbers or even other letters (‘I’ can look like ‘1’ and a lowercase ‘L’, for instance).

Your staff will (fairly often) have to type SKUs in by hand and you really want to make this process as quick and easy for them as you can.

If you don’t want to completely cut these numbers and letters out of your system, you should ensure that you use sectioned SKU numbers in which some sections are only ever [uppercase] letters and some sections are only ever numbers. IE, a SKU that looks like this: BLE-134. Your staff will know that ‘O’ is the letter and not a zero if they see it in the alphabetical section in that case.

Don’t use any of the manufacturer numbers within your SKUs.

In general, it’s recommended that stores avoid reusing the manufacturer numbers as or within their SKU numbers in order to prevent confusion. SKUs are meant to be unique to each business, so go ahead and honor that. Of course, the easiest way to avoid using any of the manufacturing numbers is to have a set formula (as mentioned in the previous section) for generating SKUs in place, rather than to approach SKU creation haphazardly.

Don’t overload your SKUs with meaning.

Finally, while you do want to infuse your SKUs with meaning, you don’t want to overload them. For instance — you don’t want to end up creating a 32 digit SKU because you wanted to get every last piece of detail you could into the number. It’s better to forsake some detail in the name of ease of memorability and fitting the number on your tags.

So pick which 2-3 aspects of items matter most for you when dividing up your warehouse or store floors and then let the item’s specific identifying number at the end of the SKU do the rest of the lifting.

And if you really need to fit more than 3 aspects of detail in, keep the individual codes as short as possible. For instance, if you work with nine manufacturers, assign them a single digit 1-9, rather than abbreviating their name into a 2-3 letter code.

Using SKUs to seamlessly sell on multiples channels

Another advantage of having a solid SKU number system is that it makes it easier to sell on multiple channels.

A growing trend retail today is the rise of “See what’s in store” a capability that lets retailers showcase their in-store inventory on the web, so cusotmers can browse their catalog before heading to the store.

You can use a solution such as Pointy, a Vend add-on that allows you to display your in-store products on Google without manually re-entering your inventory data. Once you’ve created a Google My Business account and verified your business, all you have to do is connect Vend and Pointy, and your stock will automatically be displayed on your Business Profile on Google Search and Maps when consumers search for your business name or, potentially, for a product that you have in stock.


SKU numbers are a surprisingly powerful tool that all retailers have at their disposal. By turning your products into numbers, you can track your inventory and make smarter merchandising decisions. You can also make life easier for your floor staff. SKUs really are a win-win.

More sources