Product categorization, sometimes referred to as product classification, is a field of study within natural language processing (NLP). It is also one of the biggest challenges for ecommerce companies. With the advancement of AI technology, researchers have been applying machine learning to product categorization problems.

In this article, we will discuss what product categorization is, why it is important, and how it relates to ecommerce sites. Lastly, we will briefly discuss companies that provide product categorization outsourcing and their position in the market.

What is Product Categorization?

Product categorization is the placement and organization of products into their respective categories. In that sense, it sounds simple: choose the correct department for a product. However, this process is complicated by the sheer volume of products on many ecommerce platforms. Furthermore, there are many products that could belong to multiple categories.

For example, the item “Mens Basketball Sneakers” could use the following path and categories:

Clothing, Shoes & Accessories > Men’s Shoes > Men’s Athletic Shoes

However, it could also follow this path:

Sporting Goods > Team Sports > Basketball Equipment > Shoes > Men’s Basketball Shoes

The correct path, or whether you employ multiple paths to the same item, depends on how you expect customers to search for that product. It also depends on which departments you have available. In addition to choosing the correct department, product categorization also deals with the intricate organization of those departments.

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