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How Can Effective Product Categorization Benefit Your Business?

Gouri ChoubeyNews

In the fast-paced world of B2B e-commerce, staying ahead of the competition and maximizing efficiency are top priorities for industrial suppliers. One often-overlooked strategy that can make a substantial difference in streamlining operations and improving customer experience is effective product categorization. Whether you refer to it as product categorization, product classification in e-commerce, or simply item categorization, this seemingly small aspect of your online business can have a significant impact on your bottom line.

Related: What is Product Taxonomy & which industries use them?

Something to know:

Only a mere 10% of e-commerce stores have tackled the vital aspect of product categorization. If you find your online store lacking in this area, you’re not alone—joining the majority of businesses that have yet to establish a structured approach to organizing their product offerings.

Doing more than customer service

While providing a positive customer experience is undeniably vital in the realm of online sales, there’s more to the story. It’s not just about meeting modern customer expectations; it’s also about staying competitive in a crowded digital marketplace. Research even highlights that a staggering 75% of online visitors make a swift exit if they can’t locate what they’re seeking within the first 15 seconds. However, the significance of product taxonomy extends beyond enhancing customer satisfaction. Continue reading to uncover the broader implications of this essential business practice.

Best ways to enhance product categorization 

Well, Begin with Broad Categories

Start with high-level categories that encompass your entire product range. These broad categories serve as the foundation of your taxonomy.


Hierarchy and Subcategories

Create a hierarchical structure with main categories and subcategories. Subdivide your product catalog logically to help users drill down to specific products. For instance, if you sell electronics, you might have main categories like “Smartphones,” “Laptops,” and “Accessories,” with subcategories like “Apple iPhones” or “Dell Laptops.


AI-Powered Search

Implement AI-powered search functionality to enhance the user experience. AI algorithms can understand user intent, suggest relevant products, and even correct spelling errors, making it easier for customers to find what they’re looking for.



Implement cross-referencing between related categories or products. This allows customers to explore complementary items easily, increasing the likelihood of cross-selling.


Regular Maintenance

Continuously review and update your taxonomy. Remove obsolete categories, add new ones as needed, and refine existing ones based on user feedback and changing trends.


Accessibility and Mobile Optimization

Ensure that your taxonomy is accessible to all users, including those with disabilities. Optimize your taxonomy for mobile devices to provide a seamless browsing experience.



Design your taxonomy to be scalable as your product catalog grows. Implement automation and robust content management systems to handle large inventories efficiently.


How AI translation and search can improve user experience 


Integrating AI-powered translation and search functionalities into your e-commerce platform can transform the user experience by replacing outdated search methods and enhancing unstructured product catalogs. Users benefit from accurate multilingual search capabilities, semantic search understanding, and personalized recommendations, making product discovery more efficient and satisfying. 

Moreover, AI-driven systems contribute to a structured taxonomy, ensuring products are logically organized, and content can be translated and localized in real-time, broadening your global reach. Overall, this transition significantly improves user satisfaction, boosts conversion rates, and enhances the overall shopping experience, ultimately driving business success in the digital marketplace.


Eliminate Manual Data Entry Errors 

 The manual interpretation of abbreviated descriptions and measurement units is not only time-consuming but also prone to errors that can have costly repercussions. By embracing automation and AI-driven solutions, companies can automate data extraction, ensuring accurate and consistent interpretation. This, in turn, reduces the risk of human errors, such as misinterpretations and typos, streamlines workflows, and leads to more precise and efficient quoting processes. Ultimately, this transition enhances operational efficiency, minimizes costly mistakes, and contributes to improved customer satisfaction.


Boost Digital Buyer Adoption 

To boost digital buyer adoption, it’s crucial to enhance the e-commerce experience by offering a superior product search and matching tool that accommodates industry shorthand, lingo, and specialized terms.

Professionals often use industry-specific jargon, abbreviations, and unique terminology when searching for products and services. However, traditional search engines may struggle to understand and deliver accurate results for these specialized queries.

By implementing an advanced search and matching tool powered by AI and machine learning, businesses can cater to the unique language of their industry, providing users with a more intuitive and efficient search experience. This tool can recognize and decipher specialized terms and match them with relevant products, even when users employ shorthand or industry-specific lingo.

As a result, digital buyers can find precisely what they’re looking for faster and with fewer frustrations, ultimately accelerating the adoption of e-commerce platforms. This enhanced user experience not only increases customer satisfaction but also drives higher user engagement and conversion rates, benefiting both buyers and sellers in the digital marketplace.


How does it help in faster decision making

Streamlining decision-making is pivotal in the world of e-commerce, and a well-organized product taxonomy plays a crucial role in this process. By providing customers with a clear and structured categorization of products, businesses empower their clients to make choices more swiftly and confidently.

Within the same product category, a clear taxonomy ensures that customers can easily compare items. They don’t need to wade through unrelated products or hunt for essential details like features, specifications, or prices. Instead, this information is readily accessible and consistently presented, allowing users to make informed decisions efficiently.


Boosts sales

Boosting sales in the e-commerce realm often comes down to providing customers with a seamless shopping experience, and a well-structured product taxonomy plays a pivotal role in achieving this. When products are organized logically and intuitively, it leads to tangible benefits for businesses.

One of the most significant advantages is a reduction in cart abandonment rates. When customers can effortlessly find the products they’re interested in, they’re less likely to abandon their carts due to frustration or confusion. Moreover, the user-friendly navigation and streamlined access to product details provided by a clear taxonomy contribute to boosting conversion rates.

Related: Top 5 open-source tools specific to e-commerce product catalogue management

Bottom Line…

Picture a scenario where a customer walks into a physical store only to find a complete lack of signs in the aisles. It would undoubtedly be chaotic and frustrating. The same principle applies to your e-commerce store. To prevent such a disorganized experience, consider the value of a Product Information Management (PIM) system.

A PIM system simplifies the intricate task of product categorization. How does it achieve this? Well, PIM software represents a contemporary solution designed to streamline the creation, editing, management, and distribution of product content, including product taxonomies. PIM systems incorporate automation features that can efficiently handle the auto-categorization of taxonomies. With a top-notch PIM tool tailored for e-commerce, you can eliminate the need for laborious manual work that could otherwise consume hours of your valuable time.