Product options and product variations: Understanding the difference

Get more digital commerce tips

Tactics to help you streamline and grow your business.

In the world of logistics, there are many terms and phrases that are used to describe the various aspects of a business, and it’s not uncommon to associate certain terms with the wrong meaning. Take product variation and product options, for example. At first glance, product variations and product options appear to have the same meaning, but that is a common misconception.

Variations are used to identify specific products, like when you select a color or size of an item. Options are products that can be customized, like choosing to engrave an item you order.

Retailers who are unfamiliar with this concept will create unnecessary issues for themselves and their company. Understanding the difference between product variations and options will make your SKU system more organized and efficient.     

What are product variations?

Product variations are the attribute used during checkout to identify specific products.

For example, imagine you sell apparel online and a customer orders a t-shirt, and it comes in various sizes and colors. In this instance, the size and the color are the product variations for this t-shirt.

Variations are usually limited to only a few options. Continuing with the earlier example, let’s say that the t-shirt ranges from sizes S through XXL and only comes in blue, red, or green. The customer can’t choose any other version of this shirt other than the variations that the seller has specified on the website. Thus, limiting the options customers have to choose from.

What are product options?

Product options, on the other hand, are individual products that can be altered in some manner upon customer’s request.

Let’s say you would like to buy your wife a bracelet. You go to the website of your favorite jeweler to browse their selection. After finding the perfect bracelet, you proceed to checkout and see that you have the option to add a custom message on the bracelet. In this example, the message acts as the product option.

Another example of a product option can be seen in various software. A computer software may have a tier system where their product’s features and prices are different, but ultimately it’s still the same product. And because it’s the same product it will have the same SKU number regardless of what features are included.

The common mix-up

It’s all about the SKUs. SKU is short for Stock Keeping Units, and is one of the unique identifiers used by warehouses to track different products that are in stock. SKU is defined as a set of letters and numbers given to a product by a seller. Typically, the letters and numbers in a SKU are abbreviated attributes that distinguish one product from another product, such as manufacturer, description, model, material, size, color, packaging, and warranty terms.

SKUs for product variations vs. product options

Product variations each have unique SKUs to identify all variations of that product.

Using our t-shirt example from earlier, each shirt color and size combination receives its own individual SKU to help pickers locate and select the right product. If these products were labeled with the same SKUs, pickers would have difficulties selecting the correct size and color shirt associated with each order.

In contrast, product options only require one SKU.

Although product options give a unique touch to a product, it is still just one product. When an order is placed, pickers only have one product to choose from, and only have to retrieve that item and move it along in the shipping process. There’s no possibility that the wrong product will be selected because there is only one product to choose from.

There are some instances where products can have both variations and options.

For example, you may be shopping for a hockey jersey that comes in various colors and sizes, but also allows you to customize the name and number on it. In this case, the jersey would be considered to have both variations and options. However, as far as the SKU is concerned, you would identify this item like a product variation.

Product kits

A product kit is a package made up of several pieces of equipment.

Together, they cost a lower price when in comparison to the same goods bought separately. All items in your kits will be accessible to you separately, but are shipped to the customer as a single product. It is also important to note that kits are considered product variations, and require individual SKUs.

For example, if I offer a 3 pack of baseballs and my color variations are traditional, chartreuse, and black, and can make any combination, each combination has to have it’s own variation SKU and would not be considered options.

See our full guide on inventory kitting to learn more about this practice.

Bad practices

Retailers who are unaware of the distinction between product variations and product options often make the mistake of treating product options as product variations. Every time an order is placed they assign a new SKU to each custom order. The problem with this method is that retailers are creating multiple SKUs for the same product. This is a very inefficient process and is a habit that will create long-term inventory management issues for any retailer. Retailers who do not distinguish between these two terms will experience:

  • Loss of time from inefficient picking
  • Loss of revenue from mis-ships
  • Difficulty scaling their business
  • Difficulty checking against human error
  • Mishandling of products
  • Accounting issues

It’s funny how a minor misunderstanding can affect a business, but like the old saying goes, “the devil is in the details.” While confusing these terms is an honest mistake, it’s one you will want to quickly rectify. The longer you continue to misuse your product options, the more time and effort it will take to fix.