{"id":388,"date":"2021-12-22T10:05:45","date_gmt":"2021-12-22T15:05:45","guid":{"rendered":"https:\/\/www.shipbob.com\/uk\/blog\/sku-rationalization\/"},"modified":"2025-09-18T16:34:00","modified_gmt":"2025-09-18T16:34:00","slug":"sku-rationalization","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/uk\/blog\/sku-rationalization\/","title":{"rendered":"How Can SKU Rationalization Help You Improve Business Performance"},"content":{"rendered":"\n

Table of Contents<\/p>

** Minutes<\/p><\/div><\/div>\n

What is SKU rationalization?<\/a><\/p>\n\n\n\n

Why should ecommerce businesses care about SKU rationalization?<\/a><\/p>\n\n\n\n

How to rationalize SKUs<\/a><\/p>\n\n\n\n

SKU rationalization is easy with ShipBob<\/a><\/p>\n\n\n\n

SKU rationalization FAQs<\/a><\/p>\n\n\n\n

<\/a><\/p>\n<\/div>\n\n\n\n

Ever felt the disappointment when you learn that a product you love has been discontinued?<\/p>\n\n\n\n

Whether it\u2019s your favorite ice cream flavour, a candle scent, a makeup item, or a unique tea blend, products come and go.<\/p>\n\n\n\n

That\u2019s because brands are always reevaluating their product line and optimising inventory based on profitability.<\/p>\n\n\n\n

SKU rationalization, also known as \u201cinventory optimisation<\/a>,\u201d is a key process designed to help increase profits and optimise costs. <\/span><\/p>\n\n\n\n

This article provides a deep dive into SKU rationalization, including why it\u2019s important, what it entails, plus what businesses can do to improve their overall SKU management<\/a> process. <\/span><\/p>\n\n\n\n

What is SKU rationalization?<\/h2>\n\n\n\n

SKU rationalization is the process of identifying whether a product on the SKU level<\/a> should be discontinued due to declining sales and overall profitability. <\/span><\/p>\n\n\n\n

By properly tracking SKU<\/a> performance over time, businesses can decide whether or not to continue selling a specific SKU<\/a><\/span> by putting systems in place to automatically track ecommerce KPIs<\/a> specific to a SKU, including procurement costs, customer acquisition costs, storage costs, inventory turnover rate, fulfilment costs<\/a>, and more. <\/span><\/p>\n\n\n\n

By understanding a product\u2019s profitability in addition to having the ability to track inventory performance, you can improve the SKU rationalization process and optimise inventory control<\/a>.<\/p>\n\n\n\n

Why should ecommerce businesses care about SKU rationalization?<\/h2>\n\n\n\n

The more inventory you have on hand, the more capital you have tied to inventory.<\/p>\n\n\n\n

And the more SKUs you have, the more complex your inventory management process is. You will need to make more time or hire employees to help with tracking performance for each item, optimising space and tracking the costs associated with each SKU.<\/p>\n\n\n\n

Most ecommerce businesses that have been around for a bit can benefit from reevaluating their current product line on a consistent basis. Taking the time do so allows better decision-making.<\/p>\n\n\n\n

While reevaluating, they can decide whether or not to discontinue items or even introduce items to meet customer demand, resulting in what\u2019s known as SKU proliferation<\/a> (i.e., the addition of new SKUs).<\/p>\n\n\n\n

As businesses look to improve and refresh their product catalogue <\/a>, SKU rationalization helps cut costs, streamline inventory processes, and ultimately improve profit margins.<\/span><\/p>\n\n\n\n

Taking the time to determine which SKUs should be discontinued and when results in:<\/p>\n\n\n\n