eCommerce Taxonomy Automation

Ecommerce Product Categorization: How To Organize Products Through Machine Learning

Matt Payne
November 23, 2022

Do your customers’ experiences matter to you? Do you want to streamline their experience of online shopping, maximize sales, and boost your revenue?

If so, ecommerce product categorization is crucial for your store. By correctly categorizing all of your products into a consistent taxonomy, you will immediately improve your customers’ online shopping experience. Without a convenient and efficient system to find the products your customers are looking for, you will not be able to keep up with the competition.

But ecommerce product categorization is also tedious and time-consuming. Or at least it was when you had to do it manually. Now, thanks to time-saving AI like, you can automate your product categorization with no effort on your end.

In this blog post, we'll explain:

  • Technicalities of what ecommerce product categorization is
  • Limitations of traditional methods of ecommerce product categorization
  • Easy steps to automatically performing ecommerce product categorization with AI
  • Best practices for categorizing products in your ecommerce store.

What Is Ecommerce Product Categorization?

As the name suggests, ecommerce product categorization is the process of classifying your products in your online store into different categories and subcategories using some consistent system. Sounds simple and straightforward, right?

It could be… except for situations where you have a large range of products and too many variables to know how to categorize and create the most user-friendly, efficient system for maximum sales. If you have a large enough store, even the simplest tasks like product information management can become impossible hurdles and time-consuming blockers in your operations.

The Importance of Accurate Product Categorization

Accurate product categorization is central to ecommerce operations, marketing, and sales. Here are some of the main reasons why you should care about categorizing all of your inventory:

  • More sales

This is, of course, the bottom line: boosting sales. By improving your ecommerce site’s organization, you are going to reduce the number of hoops your customers have to jump through to buy your products. Making your customers’ lives easier will inevitably lead to multiple sales. After all, customers visit your site to buy stuff – you just have to help them do it.

  • Better search functionality and SEO

You should definitely have a search function on your site. But you already know that. What you might not know, though, is that product categorization will make your search function work much more effectively and precisely.

Not just that, but solid product categorization can also boost your website’s SEO for larger search engines. Don’t forget, many people still Google the products they want to buy – wouldn’t you want them to be directed to your site? Not to mention, this would also save advertising costs.

  • Easier Data Monitoring

Everyone wants to make more data-backed decisions. Product categorization will give you broader and more useful data on customer behavior and site traffic: you won’t just know which individual products are getting traction, but you can also analyze which categories are more popular than others. This crucial data will help you maximize your placement and further inform your categorization.

  • More convenient for customers

Finally, which shop owner wouldn’t want their customers to be happy and have a pleasant shopping experience? Product categorization will help your customers smoothly navigate your website and access whatever they’re looking for with ease.

The Difference Between Product Hierarchy and Product Taxonomy

Product taxonomy refers to the larger system of organization of your products, be it into categories or tags, that help customers find what they’re looking for. It is typically flat.

Product hierarchy, on the other hand, is a method of categorizing that starts with a broad need fulfilled by a group of products, gradually honing in more specifically under that umbrella into more subcategories, until you reach specific individual products.

Traditional Methods of Ecommerce Product Categorization

Product categorization is not a new concept. Stores, whether online or in-person, have been doing it for decades. But most stores have been using traditional and time-consuming methods, such as manual categorization and rule-based categorization.

Manual categorization

As the name suggests, manual categorization is when you yourself organize your products into different categories and decide which product goes where. This means you decide each of your categories and then personally allocate each product a category.

Rule-based Categorization

In rule-based categorization, you create a set of rules, or criteria, for how to categorize your products. Then you can automatically assign each of your products a category based on your pre-decided rules and parameters.

Limitations of Traditional Methods

These traditional methods of ecommerce product categorization obviously have several limitations. Their main limitation is simply how tedious these methods can be, especially manual categorization. Imagine you are selling thousands of products, belonging to at least a hundred categories. How are you going to spend time allocating each of them a category?

This brings us to the second limitation: scope for human error. While doing such a laborious task, you’re bound to make several errors as you navigate all the permutations and combinations for each individual product and corresponding categories.

Finally, time will keep ticking as you go through the process of trial and error to figure out the optimum product categorization for maximum sales. A complete waste of time and energy without the guaranteed rewards.

Machine Learning For Ecommerce Product Categorization

Machine learning is a type of artificial intelligence (AI) that programs machines and computers to process information like humans do, i.e. by learning and adapting based on new experiences. Imagine the immense potential of product categorization machine learning in freeing you from the burden of manually selecting the right category for every single item in your inventory…

Well, you don’t have to imagine. Instead, we’ll tell you: automating product categorization will help you scale and optimize efficiency in a way you never could have imagined. Here are only some of the many benefits of AI and machine learning algorithms like

  • Faster speed and efficiency
  • More accuracy and precision
  • Less time wasted
  • Cheaper operations
  • Less mental exhaustion
  • More guaranteed benefits by avoiding human error.

Easy Steps To Perfecting Ecommerce Product Categorization

By now, you’re probably sold on automating the product categorization for your ecommerce website. So here are some key steps to perfecting automated ecommerce product categorization:

Identify Data Sources

Find every source of data regarding your products. They will probably be siloed in different spaces. Locate and identify all of them. Maybe request information from your product suppliers if need be.

Gather / Centralize All Product Data

Organize and bring all product data together: centralize it in one place for easier analysis, classification, and management.

Create Product Relationships or Categories

Think intuitively like a shopper: in basic terms, how would you want products to be categorized?

Here are some suggestions:

  • See how other credible and successful ecommerce sites have done it.
  • Avoid being too specific and narrow. You don’t want too many categories.
  • Simulate being a shopper and use your classification.
  • Keep your product categories simple and clear.

Levels of Product Hierarchy

This refers to the six levels of product hierarchy: need, family, class, line, type, and unit.

This method of categorizing is easy and convenient because it starts with the broader category of needs the product fulfills, gradually honing in to the specific product.

Utilize Keyword Research For Product Optimization

Comb through every category and subcategory, down to each individual attribute of each product, including titles, descriptions, etc. This will help you be thorough in choosing names. Moreover, use specific tools like Semrush, Ahrefs, and Google Keyword Planner to improve your site’s SEO and search functionality of your products.

Consider The Shopper Experience

Focus on user behavior. Study user data and use it to imagine shopper psychology. How would they be thinking? How would they approach their shopping? This is ultimately the most important factor for you - focus on your customer.

Scale Your Product Categorization Through Machine Learning

Once you set the basic parameters, trust AI to scale this up and apply it to all your products.

Ecommerce Product Categorization Best Practices

Here are some best practices that can help guide you in the process (you’re welcome):

Figure out the temperature parameter

Remember, the temperature parameter has a direct impact on how random your outputs are. They are positively correlated: the higher the temperature is, the more random the outputs will be.

So, figure out the temperature parameter that works for your website: experiment, play around with different settings until you find the optimum one for your search results.

Stick to the use case

Each model works best for an individual product type. So avoid adding anything out of the box. If the model is made for men’s shorts, for instance, adding smartphones will confuse the machine.

Ready To Get Started With Ecommerce Product Categorization Through Machine Learning?

If it isn’t clear already, product categorization is the backbone of any ecommerce site. It gives customers a better, more convenient experience, and boosts sales immensely. automates your product categorization for you, making your life exponentially easier. Its effective AI technology will give you guaranteed results with complete accuracy.

What are you waiting for? Request Your Demo Today!