Category Management in eCommerce: Maximizing Sales and Improving Customer Experience

Best practices in price monitoring 4.5.2023. Reading Time: 5 minutes

Category management is a crucial process for an eCommerce business involving organizing and managing groups of related products to maximize sales and improve customer experience. Category management is not a one-time implementation. It is an ongoing process that requires a deep understanding of the marketplace and the buyer’s persona. 

Stick with me to learn about the eight-step process of category management in retail, eCommerce category management, the benefits of category management in eCommerce, and how to implement it.

Category Management in eCommerce: Maximizing Sales and Improving Customer Experience

What is Category Management?

Category Management was first mentioned in the 1980s by Brian F. Harris, a University of South California professor. This concept greatly influenced retail and supply processes at the time. It encouraged them to focus on consumers’ needs first. For the first time, retailers grouped similar products, and ever since, businesses have strived to manage products by categories and no longer as stand-alone.

Today, category management implies grouping similar products into categories for simpler management and optimization. The goal of this process is to provide an ideal shopping experience to its clients and maximize sales. Some continuous tasks leading to goal achievement are market and competitor monitoring, performance measurement, and product optimization, but we will get to that later.

The 8-Step Process of Category Management in Retail

  1. Define the category by identifying the products or services that belong to it
  2. Analyze the category by understanding customer needs, market trends, and competition
  3. Develop a category strategy by setting goals, identifying opportunities, and creating a plan to achieve them
  4. Determine the product assortment by selecting the right products for the category based on the strategy
  5. Develop a pricing strategy by setting prices that reflect the value of the products and the competition
  6. Develop a promotional strategy by creating campaigns that attract customers to the category and drive sales
  7. Implement and monitor the strategy by executing the plan and tracking the performance
  8. Evaluate the results by measuring the success and making adjustments as needed

eCommerce Category Management

This process in the online world implies managing product categories within an online store. Unlike physical retail stores, eCommerce stores have the added challenge of managing an unlimited number of products without the physical limitations of shelf space.  

eCommerce category manager manages the digital shelf, a digital way of finding, analyzing, and buying products. A digital shelf comes in many forms. Every time potential clients searches for a product, they get a digital shelf in the form of search results, product pages, descriptions, and social media accounts selling products, therefore people in charge should consider a digital shelf as a way to communicate with clients and potential customers and showcase your products.

eCommerce Category Management

The Role of a Category Manager

A category manager manages product categories within a store or website. This role entails overseeing the management of product categories. This role is responsible for developing and implementing category strategies, managing the product assortment, pricing, and promotions, and optimizing product listings.

In eCommerce, category managers manage the website layout and navigation, ensure product listings are optimized for search engines, and manage product information, including images, descriptions, and pricing.

Whether in-store or online, category managers must be able to analyze sales data, customer behavior, and market trends. Excellent communication skills are desirable when working with internal teams, such as merchandising, marketing, and operations, and with external partners, such as vendors and suppliers.

The Benefits of Category Management in eCommerce

Effective eCommerce category management can significantly benefit an online store. 

  • Increased sales: By optimizing product listings and improving the customer shopping experience, category management can lead to increased sales and revenue.
  • Improved customer experience: By organizing products into easy-to-navigate categories and optimizing product listings, category management can improve the customer shopping experience. Additionally, simplifying social login journeys can further enhance user convenience, streamlining the registration process and contributing to overall customer satisfaction.
  • Competitive advantage: Effective category management can give an online store a competitive advantage by offering a better customer experience than competitors.
  • Better inventory management: By analyzing sales data and managing product assortments, category management can help with inventory management and reduce stock-outs.
  • Better merchandising: By optimizing product listings and promotions, category management can improve merchandising and increase sales.

How to Implement Category Management in eCommerce

Implementing category management in eCommerce involves the following steps:

  • Analyze your sales data and customer behavior to identify patterns and opportunities for improvement.
  • Define your categories based on your products and customer needs. Categories should be organized in a logical way that makes sense to your customers.
  • Determine your product assortment for each category based on customer needs, market trends, and competition.
  • Optimize your product listings by using high-quality images, detailed descriptions, and customer reviews.
  • Develop a pricing strategy that reflects the value of your products and the competition.
  • Develop a promotional strategy that attracts customers to your categories and drives sales.
  • Monitor your category performance by tracking sales data and customer behavior. Make adjustments as needed to improve your results.
  • Evaluate your category performance by measuring the success of your strategy and making adjustments as needed.
eCommerce Category Management vs. Retail Category Management

eCommerce Category Management vs. Retail Category Management

While the category management process is similar in both eCommerce and retail, there are some key differences to consider. In eCommerce, there are no physical limitations of shelf space, and online stores have an unlimited number of products to manage. This means that eCommerce category management requires a more extensive approach to product organization and optimization of product listings.

In retail, physical shelf space is limited, and retailers need to carefully manage their product assortment to maximize sales and profits. Retailers also need to consider the physical layout of the store and the placement of products to improve the customer shopping experience.

Category Management Tools

There are several tools available to help with category management in eCommerce and retail, including:

  • Data analytics tools can help retailers analyze sales data, customer behavior, and market trends to identify patterns and opportunities for improvement.
  • Product information management (PIM) tools can help retailers manage their product information, including images, descriptions, and pricing.
  • Content management systems (CMS) can help retailers manage their website content, including product listings, promotional banners, and blog articles.
  • Marketing automation tools can help retailers develop and implement their promotional strategies, including email marketing, social media advertising, and retargeting campaigns.

Conclusion

Category management is a crucial process in both eCommerce and retail, involving the management of product categories to maximize sales and profits and improve the customer shopping experience. Effective category management requires a data-driven approach, including analyzing sales data, customer behavior, and market trends. By implementing the category management process and using the right tools, retailers can achieve a competitive advantage, maximize sales and profits, and improve the customer shopping experience.

Author

Marijana Bjelobrk
Marijana Bjelobrk is a Junior Digital Marketing Specialist, writing for Price2Spy since November 2021. She graduated BBA at Oklahoma City University in May 2020, majoring in marketing. While studying, she had a part-time job at the Economical Research and Policy Institute, where she gained experience in research, critical thinking, and writing professional articles.