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AI Powered Product Taxonomy: What Is It and How To Leverage It?

Gouri ChoubeyNews

In the ever-evolving landscape of e-commerce, one of the most crucial aspects that determine success is the ability to provide a seamless and personalized procurement experience for customers. As industrial suppliers, catering to a diverse clientele with varied needs and preferences can be a challenging task. However, advancements in technology have opened up new possibilities to tackle this challenge head-on through AI-powered product taxonomy.

It leverages the power of artificial intelligence to transform how products are organized, searched, and presented to procurement shoppers. In this blog, we will explore the world of AI-based search technology and its immense potential to revolutionize the ERP and web-enabled quoting solutions sector, specifically for industrial suppliers.


Additionally, in the fast-paced global market, multilingual capabilities are becoming increasingly crucial. According to a report, businesses with optimized supply chains have 15% lower supply chain costs, less than 50% of inventory holdings, and 3X faster cash-to-cash cycles. Thanks to AI, Personalization and accessibility have improved customer satisfaction and opened up new avenues for international growth and market expansion for suppliers. 

So, whether you are a seasoned e-commerce player or just stepping into the digital realm, understanding the potential of AI-based solutions for your business is essential. So, let’s embark on this journey of exploring the world of AI solutions for e-commerce, and uncover how they can empower industrial suppliers to thrive in a competitive online market. Let’s get started!

How Does AI Powered Product Taxonomy Work and Why It Matters

Product taxonomy is the hierarchical classification and organization of products into logical categories and subcategories based on their attributes, characteristics, and relationships. It serves as the backbone of an e-commerce platform, enabling efficient search, navigation, and presentation of products to customers. Here’s how product taxonomy works and why it matters for industrial suppliers:

Organizing Products

Product taxonomy begins with creating a structured hierarchy of categories that align with the offerings of an industrial supplier. These categories are then further divided into subcategories, creating a tree-like structure. For instance, if a supplier deals in industrial machinery, the top-level category might be “Machinery,” which can be subdivided into “Construction Machinery,” “Manufacturing Machinery,” and so on. This organization allows customers to quickly find relevant products, even in large and diverse catalogs.

Attribute Mapping

Each product in the taxonomy is associated with specific attributes, such as shape, size, color, brand, material, and more. Attribute mapping ensures that relevant product information is captured, making it easier for customers to filter and narrow down their search results based on their preferences. For example, a customer seeking a specific type of industrial tool can use filters to quickly locate the desired product within the “Tools” category.

Enhancing Search Capabilities

With a well-structured taxonomy, search capabilities are significantly improved. AI-powered search engines utilize the product taxonomy to deliver accurate and relevant search results, even when customers use different search terms or synonyms. This means that customers can find the products they need more efficiently, leading to higher customer satisfaction and increased conversion rates.

Personalized Recommendations

By analyzing customer behavior and preferences, AI-driven product taxonomy can offer personalized product recommendations. When customers view or purchase products, the system can suggest complementary or related items, encouraging upselling and cross-selling opportunities. Personalized recommendations not only enhance the procurement experience but also increase the chances of repeat business.

Streamlining Inventory Management

A robust product taxonomy also aids in inventory management. Suppliers can track product performance within specific categories, identify popular and slow-moving items, and adjust their inventory accordingly. This data-driven approach allows suppliers to optimize stock levels, reduce carrying costs, and make informed decisions on product assortment.

Related: How to Structure your Product Catalog with Product Taxonomy?

Why It Matters

Product taxonomy plays a pivotal role in shaping the overall e-commerce experience for both suppliers and customers. Here are some key reasons why it matters:


  • Improved Experience: A well-organized taxonomy enhances the usability of an e-commerce platform, making it easier for customers to find what they’re looking for quickly. 
  • Increased Sales and Conversions: When customers can easily find relevant products, they are more likely to convert into paying customers. The enhanced search capabilities and personalized recommendations offered by AI-powered product taxonomy can significantly boost conversion rates.
  • Competitive Advantage: In the highly competitive e-commerce landscape, offering a seamless procurement experience sets a supplier apart from the competition. A well-structured product taxonomy helps in delivering a superior customer experience, thus giving an edge over competitors.
  • Data-Driven Insights: The data generated from customer interactions with the taxonomy provides valuable insights into customer preferences and behavior. These insights can be used to optimize product offerings, marketing strategies, and overall business operations.


Best practices for AI Powered Product Taxonomy


  1. Visualize Your Taxonomy Structure: Before implementing your product taxonomy, it’s essential to create a clear and well-structured visualization of the taxonomy hierarchy. Use visual tools such as flowcharts or diagrams to map out the relationships between main categories, subcategories, and attributes. This visualization helps you to ensure that the taxonomy is logically organized, avoids redundancy, and is easy for both customers and internal teams to comprehend.
  2. Name Your Categories the Right Way: Choosing appropriate and user-friendly category names is crucial for a successful taxonomy. Use clear and descriptive names that accurately represent the products within each category. Avoid jargon, acronyms, or ambiguous terms that might confuse customers. Category names should be intuitive and aligned with how your target audience searches for products. Conduct user testing and gather feedback to ensure that the category names resonate with your customers.
  3. Automate Processes: To maintain an up-to-date and efficient product taxonomy, consider automating taxonomy processes using AI-powered tools like JAQi. Automating tasks such as categorization, attribute mapping, and synonym recognition can save time and effort while ensuring consistency and accuracy. AI-driven automation also allows for dynamic updates as new products are added or attributes change, making your taxonomy adaptive to your evolving product catalog.
  4. Test more.: Regularly test your product taxonomy and search functionality to identify potential issues and areas for improvement. Conduct usability testing with real users to evaluate the taxonomy’s effectiveness and ease of navigation. Test the search functionality to ensure it provides relevant results and recognizes synonyms or variations. Continuously gather feedback from customers and internal teams to refine the taxonomy based on actual user behavior and preferences.

The role of AI in Product Taxonomy

AI (Artificial Intelligence) plays a fundamental role in transforming and optimizing product taxonomy for web-enabled quoting and ERP solutions. With its advanced capabilities, AI enhances the efficiency and accuracy of product categorization, search, and recommendation processes. Here’s a closer look at the key roles AI plays in product taxonomy:


Automated Categorization

One of the primary functions of AI in product taxonomy is automating the categorization process. AI algorithms can analyze vast amounts of product data, including descriptions, attributes, and images, to intelligently classify products into appropriate categories and subcategories. This automation significantly reduces the manual effort required for taxonomy management and ensures consistent and accurate organization of products.


Semantic Understanding and Natural Language Processing (NLP)

AI-driven product taxonomy systems are equipped with NLP capabilities, allowing them to understand the context and meaning of user queries. This semantic understanding enables the search engine to deliver more relevant results, even when customers use natural language or synonyms in their searches. As a result, customers can find products more efficiently, leading to an enhanced user experience.


Attribute Extraction and Mapping

AI-powered systems excel at extracting and mapping product attributes. When new products are added to the catalog, AI algorithms can automatically identify and extract relevant attributes from product descriptions and data feeds. These attributes are then mapped to the appropriate categories, making it easier for customers to use filters and refine their searches based on specific criteria.


Personalized Recommendations

AI leverages customer behavior and historical data to offer personalized product recommendations. By analyzing the browsing and purchase history of individual customers, AI-driven product taxonomy systems can suggest products that align with their preferences and past interactions. This personalized approach not only enhances the procurement experience but also increases the chances of upselling and cross-selling.

Dynamic Updates and Adaptation

Product catalogs in e-commerce platforms are dynamic, with new products being added and existing ones updated regularly. AI-powered product taxonomy systems can adapt to these changes in real-time. As the catalog evolves, AI algorithms continuously learn and improve their categorization and recommendation capabilities, ensuring that the taxonomy remains up-to-date and relevant.


How to Use AI Powered Product Taxonomy for eCommerce Business

  1. Analyze Product Categories: Begin by analyzing your product offerings and identifying key categories and subcategories.
  2. Define Attributes: Determine relevant attributes for each product category, such as size, color, and brand.
  3. Hierarchical Structure: Create a hierarchical structure to organize products into logical categories.
  4. Attribute Mapping: Map specific attributes to corresponding categories and subcategories.
  5. Utilize AI Tools: Leverage AI-powered tools to automate and optimize the taxonomy creation process.
  6. Refine and Test: Continuously refine and test the taxonomy to ensure accuracy and user-friendliness.
  7. Dynamic Updates: Ensure the taxonomy can adapt and evolve with changing product offerings.
  8. Optimize for SEO: Consider SEO best practices to enhance search engine visibility.
  9. Customer-Centric Approach: Prioritize the user experience and align the taxonomy with customer preferences.
  10. Data-Driven Insights: Utilize data insights to make data-driven decisions and improve the taxonomy over time.


How can JAQi help you 

JAQi, with its advanced AI-powered search capabilities, is a game-changer for e-commerce businesses looking to optimize their product taxonomy. By automating categorization, JAQi efficiently organizes products into appropriate categories and subcategories, saving time and ensuring a well-structured taxonomy. 

Its intelligent attribute mapping enhances filtering options for customers, making product discovery a breeze. Additionally, JAQi’s synonym recognition eliminates missed opportunities by accurately mapping products with similar meanings. 

Constantly adapting to changes in the product catalog, JAQi’s dynamic updates keep the taxonomy relevant. The AI-driven search engine fine-tunes search relevancy, providing customers with precise results in no time. With personalized product recommendations aligned with taxonomy categories, cross-selling and upselling opportunities abound.