Product Taxonomy 101: Categorizing Your Store Hierarchy to Increase Sales

The information is there. The challenge is to help customers find the right information quickly, efficiently, and smoothly. All too often, online retail stores have poor categorization and navigation structures. This leads to frustrating customer experience and diminishing sales.  

The solution?  

Create product taxonomies to categorize your store hierarchy and help yourself manage products better while enhancing customer experience.  

Here’s everything you need to know about creating a product taxonomy for your online retail store. 

Product Taxonomy 101: What is it and Why Do You Need it?  

Imagine this:  

You’re visiting an online store searching for a black iPhone case cover. Instinctively, you go to Phones -> iPhones -> Accessories but don’t see any listing for covers. When you type in the search query, the site results in case covers for all iPhone models, but just not for the phone you’re looking for. You spend the next minute scrolling through the dozens of items until you find it on Page 2 (patient browser!) 

If you’re the owner of this eCommerce store owner, expect customers to leave in frustration. You’d be losing revenue and sales fast. If they can’t find the product, they can’t buy the product.  

It’s not uncommon for eCommerce stores to have disparate product listing or categorization problems – and that’s understandable. Product data is challenging to categorize because of its ubiquitous nature.  This is where a well-planned product taxonomy comes in. You could have the best of both worlds – high sales and happy customers if your site can help consumers find relevant information easily.  

……What Exactly is a Product Taxonomy?  

It’s a logical, hierarchal structure to organize your products to facilitate the easy navigation of products. Much like a retail store’s product categorization, product taxonomy for online retail stores help consumers find relevant information easily. The fundamental purpose of a product taxonomy is to improve customer experience & in the process, making it easier for store owners to manage their product data.  

The taxonomy consists of two essential components:  

Categories: Groups into which common products will be classified. For instance, Phones is a category into which all phones will be grouped. In a product taxonomy, the category is organized into a hierarchy to enhance navigation.  


Home -> Phones -> Android -> Samsung  
Home -> Phones -> Apple -> iPhone  

Attributes: Additional information used to qualify the products in the same category. Attributes for Phones may be brand, model, storage (a 64GB or a 256GB), display size, camera resolution, just to name a few.  

Some products may even require a third, value list based on the attribute list. For instance, iPhone X -> Color -> Pink with pink being the value, attributed to color.  

Understanding the relationship between these three components is essential to the building of an accurate taxonomy design

The Purpose of a Product Taxonomy  

A fancy website, year-round promotions, and all the glamor in the world cannot make up for a site that lacks a specific structure. In an age when consumers want instant information at the touch of the screen, they cannot be made to wait. If a user doesn’t find your product the moment they are on your website, you’ve lost them. This is why product taxonomies are so important. It combines product information with consumer browsing habits to create an efficient navigational structure.  

While optimal consumer experience is the basic purpose of a product taxonomy, it is also beneficial to product data management – it helps merchants store, organize & manage their product data with ease. Merchants don’t have to go ballistic organizing their data every time they need to run an audit or work with vendors and suppliers.  

Organized product data is not just beneficial to customers but also to store owners.

Product Data and Product Taxonomy  

When merchants conduct activities like supplier and vendor comparisons or catalog data review or classification of items sold for reporting or tax purposes, they will need accurate product data.  

Far too many merchants get trapped in a complex maze of product data. They are unable to extract relevant data or define data elements that suppliers need to provide. Moreover, they are also unable to verify information if they receive inconsistent data from suppliers.  

A product taxonomy works not just as a structure, but also as a framework for ensuring product data quality.  

For instance, when a merchant can classify their products according to a well-defined hierarchy, they will also be able to identify missing elements, duplicate product listings, and evaluate the quality of information they have for each product.  

At the time of an internal audit, a catalog review, or an annual report, the team will not have to extract multiple Excel sheets and ponder over every field to ensure consistency. A product taxonomy can very well be considered as an automation process that takes care of data quality and management. Once a hierarchy is defined, it’s all about adding new products to the list without having to define everything again.

Why Create a Taxonomy? I Already Have Product Categories Sorted.  

Merchants classify product categories intuitively. It’s obvious that an accessory for phones should go into the Phone category, but what if you have separate tabs for Accessories? Which of the following do you think would be the best choice? 

Home -> Tech -> Phones -> Accessory 

Home -> Phones -> iPhones -> Accessories  

A classification like this cannot be done intuitively and if you are simply just looping stuff together, you’re creating a world of chaos for yourself and your consumer. Therefore, to create an effective taxonomy, you have to know both your consumer and your product data.  

Let’s turn our attention to product data.  

Product data is generally unstructured data, made of long and short descriptions (Samsung Note 10 Black 256 GB) and storing them in a spreadsheet with this description does nothing to help with the classification.  

You will need to break this structured data down to item and attribute level, so you can easily classify information.  

For instance, if you break a Samsung Note 10 Grey 256 GB 6.3” description, you now have four components: Brand name, Model, Color, Storage capacity.  

Now when a user specifically wants a phone with a screen size of 6.3”, they’ll get all the products listed according to this size which will also include Note 10 if you’ve classified it according to screen size. If the user ends up buying the Note 10 without having thought of it, you’ve succeeded in helping them make a purchase based on one key spec.  

A product taxonomy is equally valuable for search and category browsing. If a user is performing a keyword search, the product taxonomy components act like filters or refiners that help clarify a search result. This example is just a basic overview of what can be achieved when product listings and categorization are done according to defined rules. 

How Does a Product Taxonomy Increase Sales?  

This is the big question. Is all this effort of creating taxonomies worth it?  


The data says it all.  

  • Poorly architected retailing sites sell 50% less than organized sites. 
  • 40% of employees or knowledge workers cannot find the information they need on data sources  
  • 68% of companies we’ve worked with spend time cleaning duplicate product data information  

Put simply, an organized product data structure benefits your consumer, your staff and your store.  

Think about it.  

Every hour your team spends in manually reviewing, cleaning or removing duplicate records from your database is an hour wasted. It increases operational costs but does not contribute to ROI. A taxonomy, in this case, can improve productivity and also customer service by helping employees find information faster and more reliably.  

Every minute the user spends in navigating your site to find for their product is a massive lost sale figure for your business. Imagine a user leaving your site to make a $$$$ purchase at another site. Imagine this user who may also be a frequent online buyer making up their mind not to buy from you. These problems directly impact your sales and revenue.  

It’s also important to understand that visitors to your site may not necessarily be determined buyers. Most people are browsers who don’t exactly know what they’re looking for. They might want to browse different categories and attributes. They would also want a list of alternative selections. A well-built taxonomy will allow your site to display related products and enable the user to make a purchase even if what they are looking for may not be available. Instead of losing a sale, you’re getting a conversion by offering an alternative.  

Conversions and sales don’t only happen at the time of consumer activity. It also happens as a result of accurate insights, analytics, and reporting. When you have accurate information on your product, it’s well classified and categorized, you can focus on acquiring deeper insights or finding hidden opportunities. You can even conduct product and catalog match activities at an item level. Say you want to match purchased items against several suppliers to determine which supplier can give you the best rate. You can also match items sold to specific classification standards for reporting and tax purposes. If the data is not classified, you’re spending millions of dollars in taxes.  

How Do I Begin with Creating a Taxonomy?  

The big guns of the retail world employ taxonomists to sort their product data. But that’s not possible for the average company. What do you do then?  

Luckily, there are enterprise solutions available that can help you sort and classify data, while making a hierarchy for your products. Data Ladder’s ProductMatch is one such enterprise-level, automated solution that lets you take control of your data by allowing you to implement:  

  1. A taxonomy – build category tree structures and defining attributes  
  2. Data governance – monitor newly entered or imported product data for compliance  
  3. Product information management – match, merge and standardize the data to get a single source of truth  
  4. Data migration – from lower to higher versions  
  5. Cleansing and normalization – fix product descriptions according to a defined structure  
  6. Competitor analysis – extract competitor lists to analyze product price 

Here’s how your product taxonomy would look using ProductMatch.

ProductMatch product taxonomy At a time when there are 2.05 billion online shoppers, you cannot afford to lose them because of disparate data or inefficient processes. Automation is key. And that’s exactly what Data Ladder delivers with the ProductMatch solution.  

King Fisher – A Case Study  

Kingfisher plc is an international home improvement company with 1,302 stores in 10 countries across Europe, Russia, and Turkey, supported by a team of 79,000 colleagues. 

The company offers DIY and home improvement products and services to nearly six million customers who shop in-store and via online channels every week. 

Their customers are everyone wanting to improve their home, as well as the experts and trade professionals who help them.  

Kingfisher faced two challenges in terms of product data management:  

  • Merge different platforms (394K products in total) in order to have a uniform set of attributes between all products. 
  • Categorize all products to an internal set of product codes. This involved categorization and analysis of where there were inconsistencies.

ProductMatch™ was able to derive a hierarchy in Excel and import over 60K lines of attributes and categories. This, in turn, was used to categorize 394K records of unstandardized product data. Once the data was categorized, ProductMatch™ matched duplicate products and enriched the data between the match group members (duplicate products).  

ProductMatch™ implemented King Fisher’s internal product codes as a hierarchy and classified the same 394K products. PM™ was then able to see which products had been incorrectly classified in their SAP system. By using the classification module, King Fisher was able to correct thousands of misclassified products. 

Conclusion – Organize Product Data to Enhance Customer Experience Leading to Increased Sales and Revenue  

It’s a ripple effect.  

Bad product data classification causes bad consumer experiences leading, poor internal productivity, leading to poor sales and growth.  

Conversely, well-built product taxonomy leads to enhanced customer experience, optimal productivity, leading to increased conversions, sales and consumer loyalty.  

What do you want for your business?  

Let us walk you through how our platform can help you make sense of your product data. Book a demo today.  

If you’re wondering about our customer success, here are some numbers:  

  • 5% increase In Market Share.
  • 2% increase in Price.
  • 10% increase in online conversions.
  • 2.5% increase in online add-on product sales.
  • $2.1 million increase net profit in first year.

Let’s get you the numbers you need.  

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