International Journal of Advanced Technology & Engineering Research (IJATER)
www.ijater.com
ANALYZING THE IMPORTANCE OF STORE KEEPING UNIT AND
UNDERSTANDING AVAILABILITY MESSAGES IN RETAIL
1
Roopa Singh ; 2Imran Akhtar Khan
Research Scholar, Department of Computer Science
JJT University, Jhunjhunu, Rajasthan
1
roopas1983@gmail.com, 2imran4bc@gmail.com
Abstract
2. Store Keeping Unit
With the emergence of online retailing, the words
“Store Keeping Unit” and “Availability Message” are becoming
common to the new world. Though we use the word so commonly, 90-95% people are not aware of its significance and use for
the retailer and as well for the customer. This article aims at understanding the usage of store keeping unit(s) and the meaning of
the different availability messages used by the retailers in their ecommerce retail applications. It also emphasizes on how these
two are used by the retailer for his business. This will help the
common man understand how exactly he performs the transaction with store keeping unit, which will impact the business and
how retailer will infer from that.
Keywords:Store Keeping Unit (SKU), Availability Message
(AM), Universal Product Code (UPC), Shipping and Availability
Message, Button Message
1. Introduction
Online shopping is becoming a favorite apple of all. Online shopping helps to escape from the long tiring queue, crowd,
and amount spent on travel, wandering, and even the parking
problems. It is observed that approximately 60-70 % of the consumers wish to opt for web retailers for their shopping.
With the preference of the online Retailers in demand, it
is very important that customers also understand the terminology
of retail - Store Keeping Unit (commonly called SKU) and
Availability Message. This will help them to perform shopping
faster and with no hassle. There are situations when the availability message is “Ship To Store” and you want the order to be
shipped to your house which in turn is not possible by the retailer.
In this article, we will try to understand the basics of retail so that
customers feel ease while shopping and retailers also benefit
from them.
ISSN No: 2250-3536
What does the word “Store Keeping Unit” really means? Every
business has to deal with tracking of inventory stock and out of
stock count. So when retailer performs an online business, it is
very important for him to understand how much is the inventory
available and when he has to order more. This is done by using
Store Keeping Unit (SKU). Hence SKU can be defined as the
unique combination of number and/or code which help to identify the item available for sale [1].
The SKU number of the same product varies from one retailer
to another. The numbering sequence is different for each retailer.
Usually the length varies from 8-12 digit based on the decision
taken by them.
2.1 SKU Vs UPC
Most of the customers are confused between SKU and UPC
(Universal Product Code). UPC as the word suggest, has the code
which is universal to all for same product. This implies that same
product can have the same UPC for different retailers but SKU
cannot be same for different retailers. Retailer A can have the
product ABC having UPC 79876767 and even Retailer B can
have the product ABC having UPC 79876767 but the SKU ID
will vary for both retailer A and B.
2.2 Benefits and Usage for Customer
SKU is very important in online shopping applications. In fact,
without theses it is impossible to perform the retailing in a
smooth manner. Below are some of the usage and the benefits
with respect to the customer.
2.2.1 Ease in Shopping
It is easier to when you know the SKU ID of the item. There
are many similar items of different brands which are sold by the
same retailer. To avoid the confusion, SKU ID will help in shopping experience of the customer
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International Journal of Advanced Technology & Engineering Research (IJATER)
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2.2.2 Saves Time
When the customer knows the SKU ID which he/she needs to
purchase, he can directly search for the item by giving the id and
place the order successfully without wasting time over the site on
searching under the big list.
sales/return of each SKU ID they possess which in turn will update the inventory in the system. If retailer wants to cross check
the inventory with what is updated, he can do that easily (for
small inventory available since big amount inventory check is
really a cumbersome job and also a time waste)
2.2.3 Helps in Researching Online
2.3.3 Replenish Inventory
When there are different shops of the same retailer, then the
retailer prefers to give the same SKU ID which has similar properties say company/brand, model number, color and manufacturer. Customer may search the item by the SKU ID and then check
out the prices in different store. There is always the difference
between the stores as price depends on location, demand and tax
applicable.
For big retailers like Amazon.com, it is very difficult to manage the inventory manually. So once the SKU ID is assigned to
each product in the store, this can be done by any system which
supports the replenishment process. Oracle product (Retail Merchandising System) support this while you create item. So set up
the parameter that once the quantity reaches the threshold limit,
raise the purchase order for the specific quantity so that you never get out of order.
2.3 Benefits and Usage for Retailer
2.3.4 Identify Damaged and Defected goods
With respect to the retailer, it is important to understand the
significance of the SKU. SKU makes the life of the retailer quite
easy and prevents from unpredictable losses of the customer due
to unavailability of the product. It also helps the retailer understand the inventory availability and non-availability, damaged or
defective goods and also for the forecasting which will help him
business and keep the goods in place as per the historic data vs
prediction.
Let us discus the benefits and usage of SKU in context to
Retailer in detail
2.3.1 Track Inventory
2.3.5 Demand Forecasting
When an item is received at the retailer warehouse, the item
has to be tracked with how much the quantity is available for sell
at his outlet/online application. The moment he provides the item
the unique identifier called the SKU ID, it can be tracked easily.
He can, at any point of time check what is the total stock available.
Net Inventory at Retail = Item Available for Sale – Net Sales
(+Returned Goods if sellable-In Transit Quantity- Damaged
Goods)*
* If any of these are applicable for the item
2.3.2 Perform Audit
This is usually to check whether the amount received by the
stores person is correct which also ensure the correct sale as expected with Sales price. Once the sale is done and the register, till
and store is closed for the day it is mandatory (usually for big
retailers) that they perform the sales audit to find the correct
ISSN No: 2250-3536
It is not mandatory that the quantity order and received from
the supplier is available for sale to customers. Also there could
be damaged to the goods while transferring the goods from supplier to retailer warehouse or retailer warehouse to retail outlet or
retailer warehouse to the customer. In any of the case, the system
has to adjusted according corresponding to the correct SKU so
that total sellable quantity is updated correctly failure to which
may lead to bad impression to the customer. Above formula used
in Track Inventory would be used to check the net available inventory for Sale.
Demand forecasting is the activity of estimating the quantity of
a product or service that consumers will purchase [4]. Demand
forecasting may include both formal and informal techniques.
Informal techniques are some guesses based on the experience
over a period of time and formal techniques may involve the historic sales data of the retailer or sometimes current data based on
some test market. It also helps the retailer to make a decision
whether to enter into the market or not with that particular item.
Typically, fine-tuning of forecasting accuracy can lead to [5] :
 10%-15% less inventory [5]
 2%-12% sales improvement [5]
 20%-30% shorter cash-to-cash cycle times [5]
 1/10th chance of stock-out [5]
3 Shipping and Availability Messages
Different retailers offer online application with almost the same
availability message. But, the button messaging may vary. But it
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is very important for the consumer/customer to understand the
shipping and availability message, at least at a high level. When
the customer enters the retail online application, he gets confused
or carried away with some of the features of the availability message such as when you search for the item and select the pickup
option then he might get the availability message and “Ship to
Store”. This may not be a familiar terminology with most the
consumers. This article will help them understand the major concepts of availability and button messages.
Though the shipping and availability messages could be almost
same (such as Shipping, Delivery and Pick Up) but the button
message are changed based on the combination of the messaging
for Shipping/Delivery and Pick Up Option.
Shipping And Availability message would look like
For Shipping and
Pick Up
For Delivery and
Pick Up
Shipping: Within 2-3 days.
Estimate Arrival Time
Pick Up At Store: Check Stores
Delivery: Most Areas. Check
Dates
Pick Up At Store: Check Stores
3.1 Availability Message
Majorly, there could be only three alternatives available for
purchasing and getting the order fulfilled, which can be termed
as - Shipping, Pickup at Store and Delivery. Whenever any of the
below method is selected, based on the availability of the good
and the method selected the application will tell you when the
item will be shipped or delivered or when you can pick your
item. If the item is not available in stock, then it will display you
the date by when the stock is to be replenished. These rules of
replenishment and the time it takes are all set by the business and
whenever the product goes backordered, the online application is
supposed to display the correct date.
3.1.1 Shipping Method
Shipping method is the way to fulfill delivery to customers of
the goods that they purchase on a website [2]. Usually the
items/SKUs that are being dispatched from the retailer’s warehouse to the customer will be shipped based on the method he
selected while placing the order online. The charges of shipping
methods will be based on the location, quantity and weight. Market has many applications which help to set up the different rules
for the item based on rules. Once the set up is done in Shipping
and Delivery application, this should be integrated with the onISSN No: 2250-3536
line application to reflect the same. There could be many types,
but most commonly used are
-
Standard/Ground: This method will take the maximum time
for delivery and the charges will be minimum/free
-
Expedited/One Day: This method will take usually less time
than standard but will be delivered later than Express (Usually takes 2-3 days). Also the charges will be higher than Standard method.
-
Express/ Next Day: This method is the fastest of all. Usually
if the order is placed after noon then it might get delivered the
next day itself but the charges are highest of all.
3.1.2 Pick Up at Store
As the method “Pick Up at Store” itself describes that customer goes and pick up the item at the store. While browsing the
item, customer has the option to select the nearest store to his
home. This is usually done by giving the pin code of the place/
state and country. It will get the information from the merchandising application and will display the result based on the inventory available. Also, if the customer is registered with the site
and has signed in before adding the item to the cart, he needs not
to enter the zip code also. Based on the address, it will display
the result. It will also provide you the information when the item
is available for pickup. There could be situations when the item
is not available for pick up on the same day when the order is
placed. Now what?
With the new era of online shopping and competition that
exists with all the major retailers, a new concept has been introduced. This is known as “Ship To Store”. So how does this concept work and what the customer will understand with this. With
this, customer should feel relaxed that they are going to get the
item at their nearest store but there could be some delay. When
the store is searched based on the search criteria, if the item is not
available at the store, retailer will ship the item from his warehouse to the store and then he can pick up the store. Since this
would need some time for the transit of the item, the online application will display the expected date when the item can be
picked up at the store. This makes the life of the customer easier.
When the customer shops the item at online application, he reserves the quantity for himself so that he can just take the order
receipt and collect the item from the store. It also gives relief the
customer from the long queue of payment.
3.1.3 Delivery
The term “Shipping” and “Delivery” are sometimes used interchangeably. But it is important that you understand the difference. The term delivery is used when the item that you placed in
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the order has to be reached to the customer directly from the
vendor. Usually the heavy items or the branded heavy item get
delivered from the supplier to customer (LG washing machine,
Refrigerator). The delivery method does not have the different
categories that we have in shipping.
When the order is placed online where the shipping method
is “Delivery” then after some specific status in the Order Management System, ROS Order Id will be tracked. This means the
item will be tracked with this id for the delivery in the ROS Delivery System. These orders will be fulfilled by the Retailers
trucks/services.
3.1.4 Backordered
Backordered is the special case when inventory is not in
stock for the online sale. When this situation occurs, you can see
the availability message with the status “Backordered” and still
you can see the date when the item is most likely to be in the
stock (get replenished).
Backordered
Check Shipping and Availability.
Click on the link, you will get the status “Backordered.
Ship in 3-4 weeks” Customer will be allowed to place the order
but the fulfilled date may be based on the availability date of the
item + the shipping time required fulfilling the order. Sometimes,
it may happen that the item is not available for fulfillment after
the date it has been promised, and then the retailer should inform
the customer on its availability. This may lead to either the cancellation of the order or the waiting for the order.
It is important to understand that every item is not backorderable item. There are some parameters while you create the
SKU. Based on the flag whether it can be backordered or not, it
will display the status. Any SKU can be moved to this status, if
the item was already selling by the retailer and now it is out of
stock.
4 Button Messaging Based on SKU
Type
How many of us know what the word “Button messaging”
would mean? Button messaging refers to the message that you
get on the button (which is usually “Add to Cart”) for the
item/SKU you want to buy online. This button messaging is applicable in the online world only. You need not to worry if you
are a store-picker. In this article, we’ll concentrate on most
commonly used button messaging for the items.
This messaging is the most commonly used approximately 60%) and without this, no online retail could work.
These rectangles, sometime simple and sometimes colorful,
when clicked help the customer to connect their product to their
shopping basket and are an extension of your branding [3]. There
are some other terminologies which are used for adding the item
to your shopping basket. Some of them are Add to Bag, Order
Now, Add to Shopping Bag, Buy Now, Buy, Add to Basket and
so on.
This is usually used when the item is available for sale
and does not some special features like special order. This button
can never be disabled. This may have the availability message
either for Shipping/Deliver and Pickup at Store. The button could
resemble as
Add To Cart
Figure 1. Add To Cart
4.2 Online Only
This message helps you to place the order online but
you may not be able to get the same item for pick up at store. So
customer places the order only and the item is shipped to the
customer. It can be displayed the below button
Online Only
Figure 2. Online Only
There are some offers also applicable which you receive
when you buy online but the same is not applicable when you
pick up at store. But this is totally different from the messaging
of the button. Online Only button messaging deals with only for
the placement of the order not anything else whereas the Online
only offer deals with the offer applicable while you purchase
through the online system
4.3 Special Order
Special Order is the messaging used for the Special Order items. When the SKU or item is not available at the retailer
and the customer wants to place the order for such item, then
these items can be fulfilled by the vendor directly. Every item
cannot be created as the special order SKU. There are some parameters which have to be set to make the item/SKU available
for special order. The button in the site may look like
Special Order
Figure 3. Special Order
4.1 Add To Cart
ISSN No: 2250-3536
When customer places the order with the Special Order SKU,
then in the Order Management System it is tracked in a different
Volume 3, Issue 1, Jan. 2013
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way from the normal SKUs. Initially the order will be the same
as the order number created at the online application. Then after
certain stage (after the fraud process is done, a new order will be
created which will be used to track the status of the order from
the vendor to the customer. This is called Purchase Order. As the
status of the Purchase order changes, the status of the main order
changes accordingly.
These are the items which are available for Store Pick up
only, will lie in this category. You cannot place the order but can
get the item/SKU id for your convenience and buy the item at the
store. These items are only available in the online catalogue for
the customer’s convenience. Also, you’ll have the option to
check for the availability at the nearest store by giving the zip
code of your area or based on state. The button would look like
4.4 Coming Soon
In-Store Only
There are some items in the online retail catalogue which are
expected to be soon in the market and the stock but these could
not be order as pre-oorder. These items will not be allowed to be
placed in the order as pre-order flag is not set. The button will be
displayed as “COMING SOON” and it will be disabled.
COMING SOON
Figure 4. Coming Soon
When the SKU was never sold and is out of stock then the
status is called Pre-Order. In retail, every SKU is not preorderable. This also has some attributes which has to be set in
order to get the status. Usually, books and CDs usually have the
pre-order status due to their large demand before it is being released to the market. Customers have the privilege to book their
copies well before in advance. When they place the order, the
release date may be displayed but sometimes the retailer display
the shipping date and sometimes not as it will be a bad impression when they don’t deliver on time. But still you can place the
order and get the copy shipped to your home while pick up at the
store option is not enabled for most of the pre-order SKUs. The
button message would look like
Pre-Order
Figure 5. Pre-Order
4.6 Sold Out Online
These SKU(s) will not have shipping and store pick up options available. When the pre-order limit (if applicable) and the
backorderable limit is exhausted, then item moves to the status
“Sold Out Online” In this, the button would be disabled.
Figure 6. Sold Out Online
We have discussed the major button or text messages that are
used by the retailers in their shopping applications. But of the
above mentioned, Online Only, In-Store Only and Special Order
might be the categories in their assortment but the working and
the message of it would be the same.
5. Conclusion
4.5 Pre-Order
Sold Out Online
Figure 7. In-Store Only
Online Shopping is the fastest growing field in today’s world
of computers. People have money to spend but do not have the
time and patience to go to the brick and mortar and buy out there.
In these circumstances, online shopping facility is a boon to
them. Though retailers try to give their customers a very user
friendly application but they cannot avoid using some of the terminologies of the retail such as SKU, availability message, button messaging and also Wish List.
Here, comes the challenge to understand better the retail and
waste no time in shopping. This article has tried to explain the
concept and importance of the store keeping unit (SKU) with
which most of the retailers deal with. It will help them to understand that the inventory which is the item in-stock is calculated
with the SKU as the unique parameter. Once they know the SKU
id of the item, customers can easily search and place the order. It
has also tried to help the layman understand the button messaging and the shipping and availability message which will help
them to understand and place the order based on the availability
message. They need not to go till the Submit/Cart page and see,
if that could be picked/shipped/delivered or not. This will save
the customer’s time making online shopping an easy task.
6. References
[1] Wikipedia, Stock Keeping Unit,
http://en.wikipedia.org/wiki/Stock-keeping_unit, retrieved December 29, 2012
4.7 In-Store Only
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International Journal of Advanced Technology & Engineering Research (IJATER)
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[2] Commerce Server 2007, What is Shipping Method?
http://msdn.microsoft.com/enus/library/ms943161(v=cs.70).aspx
[3] Linda Bistos, “107 add to cart buttons of the top online retailers”, http://www.getelastic.com/add-to-cart-buttons/, May
2007
[4] Wikipedia, Demand Forecasting,
http://en.wikipedia.org/wiki/Demand_forecasting, retrieved December 29, 2012
[5] Rahul Mittal, Navneet Sharma, Tarun Batra and Udit Maheswari, “SKU Rationalization: A Technique For Inventory Optimization in the Retail Sector” 2012,
http://www.tcs.com/SiteCollectionDocuments/White%20Papers/
Retail_Whitepaper_SKU-Rationalization-Technique-InventoryOptimization-Retail-Sector_0312-1.pdf
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7. Biographies
ROOPA SINGH, received the MCA degree from Aligarh Muslim
University, Aligarh, Uttar Pradesh (India), in 2007. Currently, she is a
Ph.D. research scholar in Department of Compute Science in JJT University, Jhunjhunu, Rajasthan (India). Her research areas include Ecommerce, Retail, Web application testing and software engineering.
Author can be reached at roopas1983@gmail.com
IMRAN AKHTAR KHAN, received the MCA degree from Aligarh
Muslim University, Aligarh, Uttar Pradesh (India), in 2007. Currently,
he is a Ph.D. research scholar in Department of Compute Science in JJT
University, Jhunjhunu, Rajasthan (India). His research areas include
Software Testing, Web application testing and software engineering.
Author can be reached at imran4bc@gmail.com
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