Proper categorization plays an important role in product discoverability, how your product listings are displayed, and how sales tax is calculated. Accurate product categorization can even improve your ad campaigns and operational procedures.
Product categorization is how a marketplace or ad platform groups your products into distinct, hierarchical groups. Similar to classification within the animal kingdom, channels have broad categories (or taxonomies) that branch into more and more specific groups.
You may think it’s trivial and tedious to granularly categorize your products, but here’s why it is well worth the effort:
#1 Improve the customer experience
Accurate product categorization improves the customer experience and helps merchants reach the right shoppers.
For example, if a customer searches for a wooden coffee table on Amazon, and your wooden coffee mug shows up in their search results because it’s miscategorized, you are not reaching the customers who want to buy your mug.
If you are selling a wooden coffee table that is not correctly categorized with the other coffee tables, again, you’re missing the opportunity to reach somebody who is browsing through coffee tables.
#2 Unlock category-specific attributes
In addition to assisting with common search phrases, product categorization determines what product attributes are included in listings.
Referring back to the search for a “wooden coffee table,” many channels know that consumers like to view size dimensions while they shop for furniture. However, if your wooden coffee table is not listed within the furniture category, you will not have a well-structured way to share the product’s dimensions in your listing.
The more specific your categorization is, the more opportunities you have for supplying detailed attributes in your listings. Inadvertently omitting relevant attributes can cause shoppers to select a competitor’s product instead, simply because the listing includes more helpful product information.
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#3 Aids in advertising campaigns
Marketplaces and ad platforms also use product categorization to group products in ad campaigns and remarketing efforts. Amazon and Google promote products and provide recommendations to customers based on their search history, previous purchases, and on pages of related products. Accurate product categorization increases the likelihood of your product getting recommended to potential customers.
#4 Improves operational processes
Proper product categorization benefits merchants on an operational level. Creating your own product groups can streamline inventory distribution across marketplaces and improve bid strategies on ad channels.
For instance, if your online shop sells equipment and apparel for various winter and summer sports, you can create broad categories internally based on the season. By doing so, you can organize your product ads and heavily promote ski pants during the months when more customers are actively searching for winter sports equipment.
Alternatively, if you find that snow apparel sells better on some marketplaces than others, creating a “Snow Apparel” category in your internal data can help you reserve inventory for sale on those specific channels.
You can read the full blog to learn how to get started with product categorization.
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