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A2X for Shopify - Cost of Goods Sold - and the importance of Stock Keeping Units (SKU's)
A2X for Shopify - Cost of Goods Sold - and the importance of Stock Keeping Units (SKU's)

Why is using SKU's and Variants in Shopify so important?

Iona Bird avatar
Written by Iona Bird
Updated over a week ago

What is a SKU and why is it important?

You may have heard the term SKU (Stock Keeping Unit), Product Code or even Item Code. In general inventory terminology these often mean the same thing. They are the unique identifier for a single product and they are used to easily identify and track your inventory items. SKUs are generally made up of letters and/or numbers that help you identify your own products, therefore, they are unique to your business.

Let's say we are selling Men's and Ladies' shirts in different sizes and different colours, in total 12 different types. So, our inventory consists of the following:

We could choose to simply number our products and use the number as our unique product identifier. However, we can also simplify processes when managing inventory and increase efficiency by using meaningful, suggestive unique identifiers.

For example, for the Black Men's Shirt Size Small, we could use an unique identifier such as:

1 - product list number (optional)
MS - 'Mens Shirt'
BLK - 'Black Colour'
SML - 'Small Size'

We could then follow that same pattern for all of our products:

With the product SKUs in place, we can now easily identify our products, efficiently manage our inventory and more importantly, use the A2X's Cost of Goods Sold feature easily!

The A2X for Shopify's Cost of Goods Sold feature relies on either the Shopify SKUs or Shopify product variant titles to calculate your COGS entries.
If you don't have SKUs or at the very least individual product variant titles set up in Shopify, A2X will then group all products together and label them as 'No SKU'. This means that the A2X's COGS entries won't be split out on a per product basis as needed for an accurate COGS calculation.

In such scenarios, your COGS entries will look like this:

If you would like to use our Cost of Goods Sold feature, you'll need to have or add SKUs or identifiable variant titles for each individual product into Shopify. Click HERE to be directed to a Shopify support article which provides guidelines on this.

Important Note: When you add SKUs in Shopify, they will only apply to payouts generated from that day forward. Unfortunately, there isn't a way to apply them to the older payouts in Shopify as well. Therefore, when A2X fetches in your historical data, it won't contain the new SKUs you have added in.

Going forward though, all future dated payouts will include the new SKUs and A2X will be able to accurately calculate your Cost of Goods Sold on a per product basis.

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