The Product variations feature allows you to set a separate image/price/SKU/quantity/low stock notification for each set of product options. When this set of options is selected, the store will always use the values (for example, an image) assigned to the variation instead of the default ones. Product options allows you to set multiple options to a product such as size and color. For more information, see Product Options.
Product variations can be used in many different ways. For example:
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Track inventory per option (stock based on options). For example, you can have one t-shirt available in “S” and “L” sizes, and then you can have a separate stock for each size. So for example, if “S” size is sold out, your customers will still be able to purchase the “L” one. This feature will be especially useful for merchants who sell apparel.
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Assign different images to your options. When a customer selects an option, the store updates the products main image. This will allow your customers to instantly see what they are going to buy and what the option looks like.
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If your options affect (raise/lower) your product price, the product variations feature will allow you to update your product price on the fly. Your customer will be able to see the new price immediately right on the product details page.
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Assign a different weight to your options. If you use options to sell products in different packs or bundles, then your shipping methods will return more accurate rates.
To configure product variations:
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In the left panel click Sell Online.
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Click Manage Store to go to the store control panel.
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Click Catalog, and then click Products.
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Click Edit Product next to the product you want to configure variations for, and then click Options.
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Click Variations.
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Click +New Variation.
The store allows you to set the same SKUs for a product and its variations unless the variation's stock differs from the base product's stock. In other words, if you set a different in-stock quantity for a variation, you'll have to set a different SKU for it. We based this logic on a reasonable presumption that if a variation has its own inventory, it is treated as a separate unique item, so it apparently should have a unique SKU.