Inventory Codes Explained: SKUs, Lot Numbers, Barcodes & QR Codes for Makers
Nobody tells you about inventory codes when you start selling handmade. Then tax time hits, or you get a recall question, and you realise you needed them all along. Here's the full guide.
Nobody tells you about inventory codes when you start selling handmade. You learn to make your product, open an Etsy shop, start getting orders. Then one day someone asks which batch of materials went into a specific order, or your accountant asks for your cost of goods, and you realise you needed a tracking system all along.
The good news: inventory codes are simpler than they sound. You probably already use some of them without knowing it. And getting them set up doesn’t require a warehouse management system or a degree in logistics.
Last updated: April 2026
Lot Numbers
A lot number is a unique identifier assigned to a specific batch of materials or finished products you make. The main reason for using lot numbers is to create traceability: a clear paper trail from the raw materials you bought through to the finished products you sold.
Think of it this way: if a customer has a reaction to a soap you made, you need to know exactly which batch it came from, which ingredients went into that batch, and who else received products from the same batch. Without lot numbers, that’s nearly impossible to trace.
What a lot number looks like in practice: A soap maker might assign lot number 240415-LAV to a batch of lavender soap made on April 15, 2024. The date prefix tells you exactly when it was made; the suffix identifies the product line. Simple, but completely traceable.
When to use them: Any time you make a batch of products from a set of materials. That includes the materials themselves. When you buy a new bag of fragrance oil or a roll of packaging ribbon, log it with a lot number too.
When you don’t need them: If you’re making truly one-off, custom pieces where each product is unique and there’s no shared batch of materials, lot tracking is less relevant. But for anyone making multiples of the same product (candles, soaps, cosmetics, food items, supplements), lot numbers are essential.
To use lot numbers properly, you’ll want a system that lets you:
- Record the lot number for each batch of materials when purchased
- Assign that lot number to the products you manufacture from it
- Link those products back to the orders you’ve shipped
Tools like Craftybase handle this automatically, so the traceability chain builds itself as you work.
SKUs
SKU stands for Stock Keeping Unit. It’s a code you assign to each product line you sell, used for your own internal tracking. Where a lot number identifies a batch, a SKU identifies a product type.
What it looks like in practice: A jewellery maker selling silver hoop earrings in three sizes might use SKUs like HOOP-S-SLV, HOOP-M-SLV, and HOOP-L-SLV. The structure is up to you. The only rule is that each SKU must be unique within your business.
You can build SKUs from whatever makes sense: product category, material, colour, size. A candle maker might use CAN-SOY-VAN-8OZ for an 8oz soy vanilla candle. Plenty of makers just use sequential numbers: 001, 002, 003. Either approach works as long as you’re consistent.
When to use them: As soon as you have more than a handful of products, SKUs save you from mixing up variants, losing track of which size sold, or having inventory counts that don’t add up. They’re also what Etsy, Shopify, and most selling platforms use to sync stock levels.
More on SKUs and how to set them up: What is a SKU on Etsy?
Barcodes and UPCs
A UPC (Universal Product Code) is the 12-digit number printed under the black-and-white barcode you see on most retail products. Unlike a SKU, which is just for your own internal use, a UPC is a globally recognised identifier. No two products from different companies can share the same UPC.
What it looks like in practice: A UPC comprises your company’s GS1 prefix (which you apply for through GS1, the global standards body) plus a unique product number. The barcode is just a visual representation of that number, readable by scanners at retail point-of-sale systems and warehouse sorting equipment.
When do you actually need one? Only when selling through channels that require them: retail stores, wholesale distributors, and Amazon. Etsy doesn’t require UPCs. Shopify doesn’t require them. If you’re selling direct-to-consumer or on handmade marketplaces, you can skip UPCs entirely until you’re ready to go into retail.
The cost note: GS1 registration is not free. As of 2026, a GS1 Company Prefix starts at around $250/year for small companies. If you’re just starting out, that’s not a cost worth taking on until there’s a specific retail buyer requiring it.
Read the full walkthrough: How to Generate UPC Barcodes for Your Products
QR Codes
QR codes are two-dimensional images (the small black-and-white squares you scan with a smartphone) that encode a piece of data, usually a URL. They were originally developed for tracking automotive parts in Japanese manufacturing in the 1990s, which makes them a natural fit for inventory work.
What they’re good for in a handmade context: QR codes shine as a low-cost alternative to traditional barcodes for internal inventory tracking. You don’t need to register anything or pay any fees. Generate a QR code pointing to your product or material record, print it out, and stick it on the shelf or storage bin. Scan it with your phone, and you’re straight into the record.
What they’re not good for: Retail. Retail point-of-sale systems and wholesale distributors use UPC barcode scanners, not QR code readers. If you’re selling into shops, you need UPCs, not QR codes. QR codes work well for your own workshop organisation.
A maker running a small ceramics studio might put QR codes on each materials bin (clay body, glaze, oxide pigments) so anyone in the studio can scan and instantly see current stock levels without touching a spreadsheet.
Read more about using QR codes to track your inventory.
FNSKUs (Amazon Sellers)
If you sell on Amazon FBA (Fulfilment by Amazon), you’ll encounter FNSKUs. FNSKU stands for Fulfilment Network Stock Keeping Unit: Amazon’s own internal tracking code assigned to each product-seller combination.
Why it’s different from a regular SKU: When Amazon receives your products into their fulfilment centres, they need to know that a specific unit came from your inventory, not from another seller who happens to sell the same product. The FNSKU solves this. It’s a code specific to you as a seller.
What it looks like: FNSKUs are alphanumeric codes starting with “X00”, for example X00ABCD123. Amazon generates them for you automatically when you set up a product listing. You then print the FNSKU barcode label and apply it to each unit before shipping to Amazon.
When to care about it: Only if you use Amazon FBA. If you fulfil orders yourself (FBM, Fulfilment by Merchant), or if you don’t sell on Amazon at all, FNSKUs aren’t relevant to you.
Material Codes and Part Numbers
Material codes (sometimes called part numbers) are internal codes you assign to the raw materials and components you use to make your products. They’re distinct from SKUs, which apply to finished goods.
Why this matters: Once you have more than a handful of materials, tracking them by name alone gets confusing fast. “Lavender essential oil” might appear from three different suppliers in different concentrations. If you assign each a unique material code (EO-LAV-1L, EO-LAV-500ML-B, EO-LAV-500ML-C) you can track stock, reorder points, and costs per supplier without mixing them up.
How they feed into your bill of materials: A bill of materials (BOM) is the recipe for each product you make, listing exactly which materials go into one unit and in what quantity. Material codes are what link the BOM to your actual inventory. When you manufacture a batch, the system deducts from each material code’s stock count automatically.
This is where dedicated maker software earns its place. Craftybase lets you set up materials with codes, build recipes (BOMs) from those materials, and manufacture against them, keeping your material stock levels accurate without manual counting.
Need help organising your physical storage? 7 tips for labelling your craft materials is worth a read alongside this.
Which Codes Do You Actually Need?
Here’s a practical starting guide based on where you are:
Just starting out, selling on Etsy or at markets:
- SKUs: yes, even now. Set them up before you have 30 products and they all blur together.
- Lot numbers: if you make food, cosmetics, candles, or anything where a recall is possible. Worth building the habit early.
Growing, selling on multiple channels (Etsy + Shopify):
- All of the above, plus QR codes for workshop organisation if you’re finding manual stock counts a pain.
Moving into wholesale or retail:
- Add UPCs. Get a GS1 Company Prefix when a retail buyer first asks for it.
Selling on Amazon FBA:
- FNSKUs: Amazon will walk you through these when you set up your first FBA listing.
Running a more complex operation with multiple product lines:
- Material codes and a proper bill of materials. This is where a tool like Craftybase pays for itself in saved time and fewer stock errors.
You don’t need all of these on day one. Start with SKUs and lot numbers. Add the others as your channels and volume grow.
Frequently Asked Questions
What's the difference between a SKU and a lot number?
A SKU identifies a product type and stays the same for every unit of a given product you sell. A lot number identifies a specific production batch and changes each time you make a new batch. You might sell 500 bars of lavender soap all under SKU SOAP-LAV-100, but those 500 bars might come from 10 different batches, each with a unique lot number. SKUs are for stock tracking; lot numbers are for traceability and recall management.
Do I need UPC barcodes to sell on Etsy?
No. Etsy does not require UPC barcodes for handmade listings. UPCs are only necessary when selling through retail channels (shops, distributors) or on platforms like Amazon that require them for their fulfilment systems. Most handmade sellers on Etsy and Shopify never need a UPC until they actively pursue wholesale or retail placement. When that time comes, you register through GS1, but there's no need to do it before a buyer actually requests one.
How do I create lot numbers for my handmade products?
There's no universal standard. You create a format that makes sense for your business. A common approach is date + product code: for example, 260425-CAN-VAN for a vanilla candle batch made on April 25, 2026. The date prefix (in YYMMDD or YYYYMMDD format) makes it easy to sort chronologically. Record the lot number when you manufacture each batch, and use a tracking tool like Craftybase to link that batch to the specific materials used and the orders fulfilled from it.
Can I use QR codes instead of barcodes for tracking inventory?
For internal workshop tracking, yes. QR codes work well and cost nothing to generate. You print them, stick them on bins or shelves, and scan with a smartphone. For retail or wholesale, no. Retail point-of-sale systems use UPC barcode scanners, not QR readers. So QR codes are a practical choice for organising your own storage and tracking stock within your workspace, but they won't replace UPCs if you're selling into shops or through Amazon FBA.
Does Craftybase support lot number and SKU tracking?
Yes. Craftybase tracks both SKUs and lot numbers, and links them through the full production chain: from material purchase through manufacturing batches to customer orders. When you record a manufacturing run, Craftybase automatically associates the lot numbers of the materials used with the finished goods produced, giving you a complete traceability trail without manual data entry. It also syncs with Etsy and Shopify so your stock counts stay accurate across channels.
Ready to get your inventory codes set up properly? Craftybase lets you track SKUs, lot numbers, and material codes in one place, with automatic sync to Etsy and Shopify. Try it free.
