How to Set Up SKUs and Shelf Locations for a Small Stockroom
Most "inventory problems" in a small shop start with two missing things: a consistent code for every product, and a set place for every product to live. Fix those two and counting gets fast.
Part 1: SKUs
A SKU (stock keeping unit) is your own code for one exact product, including its size or color. It's free, you make it up, and it doesn't need to be a barcode number. A UPC is different: it's the 12-digit retail barcode bought from GS1, needed mainly for big-box retailers and many Amazon listings. If you sell on Etsy, your own site or at markets, SKUs are usually enough.
A simple SKU pattern
Use three short parts: category, product, variant. For example:
| Product | SKU |
|---|---|
| Blue ceramic mug, 12 oz | MUG-BLU-12 |
| Lavender soy candle, 8 oz | CAN-LAV-08 |
| Canvas tote, natural | TOT-NAT-01 |
SKU rules that save headaches
- Letters, numbers and dashes only. No spaces or symbols.
- Keep it under about 12 characters so it fits on a label.
- Never reuse a SKU for a different product, even after you stop selling the old one.
- Avoid letters that look like numbers (O and 0, I and 1) where you can.
- Add the SKU to your Etsy, Shopify or Square listings too, so your exports match your spreadsheet.
Part 2: Shelf locations
A location code is an address for a spot in your stockroom. The simplest system has three parts: Area, Shelf, Bin. So A-2-3 means Area A, shelf 2 (counting from the top), bin 3 (counting from the left).
- Area: a shelving unit, rack, closet or room. Letter them A, B, C.
- Shelf: number from the top down, starting at 1.
- Bin or spot: number left to right. If a shelf has no bins, split it into 3 or 4 spots with tape.
Tip: keep one spot called OVERFLOW for extra stock. Overflow is fine; overflow that nobody writes down is how stock goes missing.
Part 3: Labels
Label the shelf edge with its location code, and label products (or their bins) with the SKU. A barcode on each label means you can scan instead of typing: a free phone scanner app or an inexpensive USB scanner reads standard Code 39 or Code 128 barcodes. Print on standard Avery 5160 sheets and test one page on plain paper first, since printers vary.
Part 4: One SKU, one home
The rule that makes all of this work: each SKU has one main location. When the same item lives in three places, it gets counted twice or missed. Write the location next to each SKU in your inventory list, and when you move something, update the list the same day.
How long it takes
For a shop with 100 to 300 products, setting up SKUs and locations usually takes an afternoon. It's the most boring afternoon you'll spend on your business, and it pays you back every single count after that.
Want this done for you?
The Barcode & Label Maker prints scannable product and shelf labels on Avery 5160 sheets from one spreadsheet. The Cycle Count Starter Kit also has a SKU Builder built in.