The Importance of Product Categorization in a E-Commerce Business

By Anolytics | 26 September, 2022 in Product Categorization | 5 mins read

The Importance of Product Categorization in a E-Commerce Business

It is crucial to organize products into categories for e-commerce sites so that they can be found on a variety of online stores, such as Amazon, eBay, and Craigslist, for successful marketing and sale. Businesses list their products to enhance their searchability on the e-commerce stores and easy accessibility for buyers, so it is imperative that products are categorized correctly.

E-commerce product categorization relies largely on artificial intelligence (AI) to build a taxonomy tree containing product categories. As multi-level taxonomy trees often contain hundreds or even thousands of leaf categories, product classification requires access to the right training data to be deployed in AI algorithms for category integration in an e-commerce store.

E-commerce Product Categorization: What It is for

In many cases, incorrect product classifications are found on websites. It is due to the fact that merchants often have to manually enter their product information and choose categories on these sites. There are also times when the same product is classified differently by multiple merchants. A standard solution to this problem is to use automated product classification on eCommerce sites.

To help merchants choose the correct category, major e-commerce giants like Amazon, eBay, and others ensure access to automated product categorization tools. The AI-powered automated product classification system can automatically choose the correct category for merchants trying to list their products online on an e-commerce store.

E-commerce Categorization: Why It Matters

In order for customers to find the products that match their buying preferences, the right product category tagged to that particular product type matters a lot. However, manually adding multiple product categories to an e-commerce store is tiring and error-prone in nature, so it is wise for e-commerce platforms to invest in automatic product classification systems.

Product classification algorithms accurately integrated into an e-commerce platform also helps with site analysis and reporting to enable you to better understand which groups of products are performing well and which aren’t.
These are the keys to why classification is important for your e-commerce platform to supersede the competition:

  • Customers narrow down their search by using facets and filters created from your categorization;
  • Your website is intuitively navigated so that customers can find what they are looking for;
  • In addition to defining alternatives, synonyms, related products, etc., for all products in your structure, it is also essential to create a clear taxonomy upfront.
  • It also ensures that the search tool delivers accurate and relevant results when a visitor types a query into the search bar;
  • Products accurately classified enable search engines to index your e-commerce site on top in search engine ranking pages (SERP)

Users tend to buy more from your site when it is user-friendly, which increases your conversion rate. Users have a hard time navigating websites that do not use taxonomies. A significant share of shoppers prefers to leave an unorganized shopping site. Product classification, therefore, adds up to the value of the e-commerce site.

A Properly Classified Product Taxonomy Leads to a Correctly Categorized Product

Products are organized using a taxonomy so customers can easily find their desired products. The user experience can be improved and sales can be increased by accurate and intuitive product taxonomies. It is, therefore, critical to correctly categorize new products into a taxonomy to enforce category-specific listing and censorship policies, identify relevant product attributes, and charge handling and shipping fees accordingly. Additionally, consistency and accuracy of the taxonomy are crucial for user browsing and navigation of a catalog and when providing customer-facing services.

Due to their large-scale and error-prone nature, we need automated algorithms for categorizing new products into product taxonomies. Product categorization algorithms have been primarily modeled as machine learning classification tasks, which use a product’s description as an input and output a leaf node representing its most likely category based on its textual description. Since the taxonomy is a tree and every leaf node defines a unique path, these algorithms effectively display a root-to-leaf path.

E-commerce product categorization: How to Do It
Setting up product attributes and categories can be facilitated by following this basic process. Keep page scrolls and clicks to a minimum so that customers can quickly find what they are looking for. Here is how you can go step by step to integrate the product classification algorithm in your e-commerce store:

1. Get to Know Your Customers’ Shopping Habits
Providing a great user experience is crucial. How would they go about finding what they are looking for? Check your site analytics and your product inventory to get to know your customer buying preferences.

Remember that online and offline customers behave differently. Therefore, you may have to arrange your products differently on your e-commerce site than in your store.

2. Decide On Your First-Level Categories
Take into account the above points when reviewing your product range and deciding which group of products makes the most sense at the first level. On your home page, these categories can be displayed as a grid or a carousel, or you can display them in your top or side menu. These broad categories can be compared to aisles in a supermarket, which are analogous to brick-and-mortar stores.

You may organize your furniture products into first-level categories such as kitchens, bedrooms, bathrooms, lounges, and patios if your furniture products are best arranged by room. Clothing categories could include casual wear, sportswear, formal wear, underwear, and accessories based on what a garment is worn for.

If your product range is reasonably wide, you might have fifteen to fifty level one categories. It is wise to keep the primary categories and their attributes precise and short while ensuring their relevance to the industry and the buyers.

3. Identify Your Subsequent Categories
Put your products into subcategories according to their first-level categories. Subcategories that you want to integrate under the hood of the primary product category, i.e., level one category, must contain the relevant items such as when furniture is the level one category, the table, chair, dining, couch, and other such items need to be added in subsequent categories that will show in the dropdowns and submenus.

4. Add Attributes to the Categories to Specify the Product Specifications
The next significant thing while integrating AI algorithms for product classification in your e-commerce store is to provide merchants with options to add attributes and values to the items. These attributes and values define the product specifications while helping buyers to make the right purchase of the product of their choice besides enabling them to filter the products based on categories and specifications, e.g., color, measurements, length, width, weight, height, build quality, customers rating, speed, portability, etc.

5. Specify Your Attributes to Provide Buyers with Better Product Filtering
Start by describing each product individually and creating specific attributes, such as meter lengths, centimeter lengths, or millimeter lengths. Make sure each product is described individually and that specific attributes, such as the length in meters, centimeters, or millimeters, are created for each product.

Nevertheless, keep your attributes specific, so your customers understand what they’re purchasing. If your suppliers provide particular attributes and translating them would be too time-consuming, or if standardizing them would be challenging, it may just be easier to be specific.

The Bottom Line

Product categorization is an integral part of e-commerce when it comes to managing your product list for your business and helping your customers find what they wish to buy. Consider the buyers’ preferences as you set up the taxonomy that best suits your products. Taking the time to get it right up front saves you time and mistakes later. It also helps your customers more readily buy from you, which means the money in the bank.

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