Much like wild rabbits, product SKUs are welcome in small doses but become pests as they multiply. The problem will start simple enough: an extra SKU here or there to meet a growing range of customer demands. Yet before you know it, SKUs will be everywhere. This phenomenon is known as SKU proliferation, and conventional wisdom dictates avoiding it at all costs due to the extra complexity.
But what if you run the type of business that makes SKU proliferation inevitable? An auto parts store, for example, might need to sell parts to fit a seemingly infinite list of makes and models. Or a hardware store may sell the same type of screw ten times over, with lengths and widths that vary ever-so-slightly. Even apparel stores aren’t immune to inventory multipliers like size and color variants.
Fulfilling as many of your target audience’s needs as possible creates a great customer experience, so SKU proliferation isn’t necessarily the enemy. It does, however, add to the complexity of running an ecommerce store. If you manage a large ecommerce catalog containing thousands or even millions of SKUs, a few extra design, marketing and inventory management considerations will help you tame the wild beasts.
1. Inventory Management Software Is Your Best Friend
Some early ecommerce stores have the luxury of starting with a simple inventory management system and adding extra automation only when they start to scale. Not so when you manage thousands of SKUs. Setting up your inventory management software and ERP systems as early as possible will help you seamlessly track not just your inventory, but your customers and leads. Look for systems that were made specifically to scale into enterprise-level solutions.
Lest you develop Simplicity Envy thinking about businesses that don’t have to onboard themselves with additional pricey tech at the beginning, take heed: it’s far easier to embed solutions into your business from the start than to retrofit them later.
2. Know Your ABCs
Prioritizing your products based on their impact on revenue can help you decide where to focus your attention and marketing budget. For this, we turn to a tried-and-true inventory management technique called the ABCs. Sort your inventory into three categories:
- Category A – Your most valuable, profitable products
- Category B – These products still perform well, but not as well as those in category A — often due to a lower dollar value
- Category C – Individually and as a unit, these products don’t contribute much to your bottom line.
Sorting your inventory like this can help you determine which products to focus on, but it’s not a roadmap for which products you can pull from your inventory. Items that seem low-performing at face value might be exactly what a customer needs in order to complete a big-ticket purchase.
That said, if you experience a breakdown in warehousing, fulfilling or shipping, your Category C products are prime candidates to bump to a dropshipping model. Because they were never big-ticket items for your business in the first place, the higher margins of dropshipping won’t impact you as much with these items.
3. You Control The SKU Format, So Make It Useful
Even if you’re importing manufacturer products, you have control over their final SKU. That’s great, because you can put your SKUs to work for you by helping them tell a story to your staff, warehouse team, and analysts. The alternative — assigning numbers to your products at random — will turn your product catalog into an impenetrable code that Alan Turing himself couldn’t break.
Keeping your SKUs to no more than 16 numbers, let each three-digit number serve as a different category or variant. For example, you could use a ten-digit SKU format of xxxx-xxx-xxx that separates parts into make, model and year. Or you could use an alphanumeric coding system that assigns letters for different product colors (GR for green, BL for blue, etc) and sizes.
4. Make UX One of Your Top Priorities
So far we’ve talked a lot about the back end, but the front end is where it matters for your customers — after all, they actually need to find your products. Ecommerce sites with large product catalogs can easily become a disastrous labrinth, or they can create a delightful experience from start to finish with a few extra nods to good UX.
Start by picking an ecommerce platform built to accommodate thousands of products. Then implement the UX features that will make life easy for your customer, including:
- A mega menu that expands into several organized lists of options so the user can get most of the way there without ever leaving the menu
- A faceted search/sort and filter system
- If needed, custom forms that let users enter what they’re looking for
- An advanced site search system that anticipates the products and categories the customer needs as they search
- Breadcrumbs that let the user understand where they are and navigate back to where they were before
- A user-friendly, SEO-friendly URL structure that can also serve as a reference point for site navigation
5. Invest in Technical SEO
Unfortunately, some of the features that are best for UX can run amok creating duplicate content if they’re implemented incorrectly. That’s why the larger the catalog, the more weight technical SEO should have in your overall strategy.
An SEO specialist can help you run a site crawl to identify areas where you might be creating duplicate content with features like faceted search, product variants, or pagination. Then they’ll help you implement the fix, which will most likely consist of canonical tags and other attribute tags that help search engines understand how to interpret the page.
Your SEO strategy will also include best practices like writing unique descriptions and performing bulk meta tag updates. Remember your category A products? These are all prime candidates for additional optimization.
Managing tons of inventory may feel overwhelming, but it’s also a rewarding chance to capture traffic for highly-specific longtail product searches and become the go-to resource for your target audience. All it takes is the right systems and processes, and your site will run like a well-oiled machine.