The SKU Mix-Up That Sank a Rapidly-growing Startup
When I first met the business owner, he was riding high on the early success of his new venture. Sales were increasing steadily, customer interest was growing, and he was full of optimism about the future. But just a few months later, that optimism gave way to frustration and confusion as customer complaints and return requests suddenly spiked.
He brought me in to investigate the issue. On the surface, his Shopify storefront appeared functional, and the third-party fulfillment service he used seemed reliable. But it didn’t take long to uncover the root cause of the chaos: a fundamental inventory management error in the Shopify setup.
As I reviewed his product listings, I noticed something unusual—six SKU codes had each been used twice. In other words, a SKU was assigned to two entirely different products. This mistake had been made 6 times, thereby impacting 12 products. This created a ripple effect through the entire order fulfillment process.
At the warehouse, where inventory is stored and picked based on SKU codes, products sharing the same SKU were placed in the same bin. In total, there were 6 bins where two products were mixed together in the bins because of the duplicate SKU issue.
To make matters worse, the two products under each shared SKU had nearly identical packaging, making them visually indistinguishable to warehouse staff who aim to pick products quickly. So, when an order came in for that SKU, the warehouse team simply pulled any item from the bin… often the wrong one. Additionally, since the products were being produced by an external supplier, they were being received into the warehouse under the same SKU, essentially replenishing the mixed-up bin inventory.
Customers received products they hadn’t ordered. Understandably, they reached out to customer service, who, unaware of the misconfigured SKUs, assumed it was a one-off fulfillment error. Their solution? Have the warehouse send the item again… again pulled randomly from the same mixed-up bins. Many customers ended up receiving the wrong item twice and even three times.
Because this issue affected 12 products across six duplicated SKUs, the scale of the problem was significant. Complaints escalated, returns mounted, and social media reviews turned sharply negative, eroding the brand’s hard-earned reputation.
I corrected the SKU assignments in Shopify and advised the owner to immediately travel to the warehouse to physically sort and relabel the inventory. Unfortunately, he did not make that trip. The backend systems were now clean, but the warehouse remained disorganized, and the inventory confusion persisted.
Within two months, his sales plummeted as the negative brand image took hold. With supplier and warehouse bills still to pay, the business failed and closed.
Lessons Learned:
Each SKU Must Be Unique: No matter how small the business or how fast it’s growing, duplicate SKUs will wreak havoc on inventory and fulfillment.
Visual Similarity Adds Risk: When multiple products look alike, any system confusion is amplified during physical handling.
3PLs Need Clear Instructions: Third-party logistics providers can only perform as well as the data and guidance they receive. Ambiguities lead to errors.
Customer Service Requires Root Cause Analysis: Re-sending orders without understanding the original issue can worsen the problem.
Act Quickly and Decisively: When fulfillment issues arise, being hands-on, or literally going to the warehouse if needed, can prevent lasting damage.
In the fast-moving world of e-commerce, operational missteps can scale just as quickly as sales. This story is a reminder that strong systems, clean data, and direct oversight are critical… not just for efficiency, but for protecting the customer experience and brand reputation.
