Ecommerce Product Categorization: How to Organize Your Products To Increase Conversions

Aug 22, 2022

Published by: Pohan Lin
set of branded ecommerce products

Product categorization is vital for a good customer experience. Poor product categorization is a common e-commerce problem. It’s critical to solve this issue because without it, your customers will struggle to find what they need on your site, and you will lose sales.

But what is product categorization? And how can you do it effectively? This guide is here to teach you everything you need to know.

What is product categorization?

Product categorization is the process of organizing your goods and services into their respective departments. You can use an API for product categorization and integrate it with other APIs that your business uses by using the best API integration platform for your needs.

Think of your online store, whether you sell from your own website, Instagram, or other social media platform, as a physical store. Product categorization not only helps with forecasting in inventory management, but it's also great for helping customers find what they need quickly and easily. 

Don’t you hate when your favorite supermarket reorganizes its stock? You go in expecting to know exactly where to find your groceries - and everything has changed. 

You have to hunt around for the stuff you need. People don’t like the hassle. And this is especially true online - where other, better-organized e-stores are just a click or two away. 

E-commerce product categorization - also known as taxonomy - will keep your online store organized and help customers to find what they need in record time.

Think of your categories as supermarket aisles and bays. Some online stores even refer to their departments as ‘aisles’ to make things super-clear for the customer, like online grocery Morrisons does here:

grocery store aisles online

Why is product categorization so important?

The benefits of product categorization go beyond simply having a well-organized store. Here are some other benefits:

It benefits your SEO

Categorization doesn’t just help customers to browse your site. It also helps search engines. Among other things, product categorization should always factor into your SEO strategy.

Let’s say you sell sneakers. If a customer types ‘Ladies blue sneakers’ into Google, Google’s bots will crawl ecommerce ‘categories’ on websites in much the same way that a customer would (only much, much faster!) 

If the blue ladies’ sneakers you sell are better-categorized than your competitors’, they’ll be easier for the bots to index, and your blue sneakers will get a higher ranking on the results page.

Gives accurate product recommendations

Improving your site’s SEO often leads to a boost in sales due to increased traffic. But it goes deeper than that. Product categories also act like tags. 

The better ‘tagged’ your product is, the more accurate your (or a search engine’s) site recommendations will be. You can even add an email marketing popup to appear on products of certain categories.

Back to those blue ladies’ sneakers: The more you categorize, the closer that recommendation gets: Clothing>Women’s clothing>Women’s shoes>Women’s sneakers>Women’s sneakers Blue.

Furthermore, this system will tell your recommendation algorithm more about what this customer likes. In the future, rather than just offering them recommendations for ‘clothing,’ the recommendation will be far more tailored. You can even edit your categories to take account of online shopping trends, ensuring that you’re always giving your customers the best ecommerce shopping experience.

Improves user experience

Never underestimate the importance of your online shopping experience. You could have the best product in the world, but if your customers find your site frustrating, you’ll still lose sales.

Good product categorization makes your site a lot easier for customers to navigate. A smooth, easy, and accessible shopping experience will endear you to your customers. And good product categorization plays a big part in providing that streamlined, easily-navigable experience.

Prevents abandoned carts

Cart abandonment is a big problem in ecommerce. Companies lose billions in potential sales each year because of it. Improving your product categorization can help, however.

cart abandonment statistics

Image source

Delay is the enemy when it comes to cart abandonment. It’s impulsivity that carries someone through to the sales screen. This is why things that speed up online processes, such as 1-click checkouts and PandaDoc signature technology are so popular.

The longer it takes for your customer to find the product, bag it and check it out, the more likely they will lose that impulse and abandon their cart. By following these check-out tips, and organizing your products into categories, you speed up the online shopping experience a lot. This means fewer abandoned carts and a lot more revenue in the bank.

How to ace product categorization

So, product categorization is worth doing! But how can you make it work for your business? 

1. Identify all product data sources

Work out where you’re storing your current product data. For example, are you currently using Elasticsearch to store all your product data?

Make sure that you’re thorough in digging out all your product data. It’s not uncommon - especially in larger operations - for product data to get spread around various departments in different formats. So, check everywhere! You could use a qr code pdf to easily categorize and sort your product data.

2. Organize product data

Once you’ve dug out all your data, compile it in one place. Many companies use a PIM (Product Information Management) platform for this. Once all your product information is in one place, you can lay it out and see what you’re working with. 

If you’re unsure how to do this properly, you could either hire a data expert or get yourself some apache kudu books. Don’t worry - it’s not as complex as it sounds!

3. Categorize your product based on hierarchy

Now, you need to set up a taxonomic system that assigns products to pre-defined ‘boxes’ according to your categories. Many PIM systems will do this for you automatically if you feed them your product information in the right way. Build a ‘hierarchy’ by starting with ‘big’ categories and then breaking each into smaller subcategories. 

For example, if you sell clothing, your ‘Big’ categories might be Men’s, Ladies, Unisex, and Kids. You can then break each of these into things, like tops, pants, socks, footwear, etc. Then, within these smaller categories, break it down further - sweaters, t-shirts, jeans, sneakers, formal shoes, etc. 

Once you’ve built your taxonomic hierarchy, you can start tagging product data accordingly.

This may all sound like a lot of work initially, but it gets easier. As you refine and streamline your categories, the best platforms will start tagging and assigning products automatically. A well-optimized checkout process can even update your inventory with each sale.

4. Personalize your category name 

Naming conventions are more important than you might think for this kind of thing. It’s important to make your category names:

  • Consistent

  • Logical 

  • Easy to search

  • Relevant

  • Follow consistent spelling conventions (for example, either capitalize all or none of your categories)

  • Provide all the needed information

5. Refresh your categories every now and then

The world of ecommerce is constantly changing. So, it’s worth giving your product categories a refresh.

If you’re not sure whether you need to change things up, why not employ a manual tester? They can go through your site and tell you how findable your products are, and how intuitive your categorization system is.

3 Product Categorization Mistakes to Avoid

1. Overcategorization

Getting specific with your categories is always good - but don’t add too many layers. Too many clicks are off-putting. If your customers have to go through a load of submenus to reach the product they want, they’ll click out. So, be clever with your categorization, and don’t go overboard.

2. Duplicates or similar category

Duplicate categories are a common problem, especially if you keep your data in multiple locations.

Try and make sure that your categories are both different and distinct. Streamlining your data in one location and regularly checking for errors can help. If you have to keep your product information in various locations, inventory management multiple locations software can help make sure it’s all clean and consistent.

3. Misidentified products 

If your products aren’t labeled and categorized properly, your customers won’t be able to find them.

Furthermore, making amateur mistakes like misidentifying products gives a bad impression of your brand and will reduce consumer confidence in you. So make sure that you’re careful and precise when identifying products! 


Product categorization is vital for:

  • Having an efficient online store

  • Improving your customer experience

  • Boosting sales

  • Boosting your SEO

So, what are you waiting for? Dig into that data and get categorizing today.

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