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May 16, 2024 | 7 minute read

The Ticking Time Bomb of SKU Explosion (SKU Proliferation)

written by Seamus Roddy

Maybe you’ve been here before: You’re merchandising for a fast-growing brand. Your day-to-day goals are clear: boost conversions and AOV, delight customers, and earn more revenue fast. You propose more dynamic product bundling on your site, so that buyers get to choose specific product options to bundle together, instead of having fixed, pre-selected bundles.

As an idea, everybody is onboard. But as your merchandising and marketing team starts to set up your site to support dynamic bundles, you find yourselves adding hundreds, even thousands of stock keeping units (SKUs) to accommodate for every potential bundle variation. Alarm bells go off as your boss (or boss’s boss) asks you: Can we really afford to add all these SKUs?

You and your team are experiencing a dreaded SKU explosion.

SKU explosion, also known as SKU proliferation, is when the number of SKUs in your system skyrockets, often overwhelming your team and making merchandising more difficult. Learn about SKU proliferation, why SKU explosion is such an impediment to AOV-boosting merchandising like dynamic bundling, and how Elastic Path’s SKU-less merchandising capabilities help boost efficiency, customer satisfaction, and profit.

What is SKU Explosion/SKU Proliferation?

SKU proliferation is when, in the process of offering new products and product variations to consumers, you add more and more SKUs to your catalog management system. Eventually, you find yourself with a huge number of SKUs.

Consider our customer, Serena & Lily, a luxury, design-driven home interiors brand. Serena & Lily’s products include furniture, bedding, rugs, and pillows. These products are highly-configurable – consider a sofa offered in three sizes, four leg colors, and 168 different fabrics.

sofa storefront

The result is that this individual product, a Barton Sofa, has more than 2,000 SKU variations depending on the size, fabric, and leg color consumers choose. Product by product, variation by variation, those SKUs add up, leaving brands like Serena & Lily with hundreds of thousands or even millions of SKUs.

Why SKU explosion can be a problem for brands

The upside of being able to support a huge number of SKUs is that brands can offer a large number of product variations and cater to varied consumer desires. For Serena & Lily, which needs to have configurable product options, SKU proliferation is managed through Elastic Path Product Experience Manager, a commerce PIM, catalog management, and product management solution. An API-first, decoupled architecture opens up flexible, scalable, complex merchandising, such as merchandising by variant, even with a large number of SKUs.

The problem is that many brands don’t have a merchandising solution with the ultra-flexible data structure and merchandiser-friendly management capabilities of Product Experience Manager. So, when SKUs proliferate, these brands have to deal with the challenges of manual merchandising for thousands and thousands of individual SKUs. The challenges include:

  • A high risk of errors and discrepancies in product listings, description, labeling, and packaging
  • Huge storage costs, slower order fulfillment, and unhappy customers
  • An out-of-date product catalog, as removing or altering SKUs takes time and organization
  • Difficulties supporting dynamic pricing or even just adjusting prices on all live products as the market changes

These challenges compound. Merchandisers spend untold hours on basic updates and tasks. Developers are tasked with lengthy, manual, burdensome workarounds. IT teams are called in for custom work. Time is wasted, exciting new merchandising ideas and tactics are left to languish, and revenue is left on the table – week after week, month after month, and year after year.

Ready to bring your best merchandising ideas to life?

Elastic Path Product Experience Manager helps you merchandise every unique product experience, without custom dev work.

SKU Proliferation and Dynamic Bundles

One merchandising tactic significantly affected by SKU explosion is dynamic bundling. Consider how dynamic bundling could further proliferate a SKU count. Serena & Lily offers pillow inserts as an add-on for customers who purchase a pillow cover.

In this dynamic bundle, buyers are given the choice to add different types of pillow inserts, across a range of sizes. If each plausible bundle option across all products and size variations had an individual SKU, Serena & Lily would add thousands of additional SKUs for this product alone. Spread across all products, it’s possible that hundreds of millions of additional SKUs would be required to scale dynamic bundle offers.

Fortunately, by using Product Experience Manager, Serena & Lily has the ability to launch SKU-less dynamic bundles, boosting AOV and revenue without increasing overhead by adding unnecessary SKUs.

Overcoming the Ticking SKU Explosion Time Bomb with Elastic Path

Brands that want to overcome (or avoid) SKU proliferation and pursue revenue-generating merchandising like dynamic bundling can turn to Elastic Path.

That’s because leading brands like Serena & Lily use Product Experience Manager to launch SKU-less bundles, in which each individual option in the bundle has its own price and is listed separately in a catalog for purchase.

Sometimes, the total cost of a SKU-less bundle is set by adding the standalone prices of each product. Other times, the individual options can be discounted if they are purchased in a bundle. The result, as seen below, is a merchandising experience that is fully customizable and flexible for business users.

With dynamic bundles from Elastic Path, buyers are more satisfied and brands move stock and increase AOV. No additional SKUs need to be created, added to your system, or managed by your team – saving time and money now, and allowing for scalability and more merchandising initiatives in the future.

Interested in seeing more? Sign up for an Elastic Path free trial, and experiment with our bundling SKU-less bundling capabilities for yourself. If you’d prefer, you can also get in touch with us, and a member of our team can demo our bundling capabilities for you live.

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