Improve user experience with category management in the online shop
In stationary retail, so-called category management has been an established marketing standard for many years. In the online sector, on the other hand, it is only just emerging, but is still rarely implemented. Yet there is great potential in the product categories of an online shop to sustainably improve the user experience, increase customer satisfaction and generate more sales. Category management is as simple as it is ingenious: by strategically arranging the products in your online shop, you already compile a shopping basket for your customers and place items in such a way that they complement each other in a meaningful way.
If you take advantage of category management, you will be surprised how well the approach works in practice. Everything you need to know about the theory of product categories in the online shop can be found in the following article.
What is Category Management?
In category management, you create product categories within your assortment. These have the characteristics that they are distinct, independently controllable and appear to belong together in the eyes of the customer or prospective customer. They are thus regarded as a business unit. You can group both products and services into product categories in the online shop. The important thing is that you group them strategically so that the user’s needs are met. Meeting the customer’s needs is the primary goal of category management. Retailers and manufacturers work together on this. An example of category management in retail is the placement of chips, popcorn, cola and beer next to each other or the combination of bratwurst, grilled meat, baguette and ketchup.
In stationary retail, the formation of product categories has long been part of everyday life, let’s think here of the shelf with cheese, milk and yoghurt or the bread assortment, which is directly followed by the cake and biscuit section. Both are usually popular breakfast companions.
Why product categories in the online shop?
The advance of digitalisation and the push of online shopping in the last few pandemic years have ensured that numerous platforms vie for the favour of online shoppers and the variety of products seems to have become endless. An opaque selection, high demands and fierce competition ensure that it pays to take a different approach and use new opportunities. Category management is one of them.
On the one hand, the formation of product categories in the online shop creates transparency about the assortment, simplifies the search for products and thus satisfies the wishes of customers and potential buyers much more efficiently.
Category management thus always addresses the needs and expectations of consumers. The basis for decision-making, the formation of product categories based on sound key figures, data and facts. If possible, retailers and manufacturers work together on this. Category management is also a permanent process and not a one-off project.
You should make online shop optimisation a workflow to ensure long-term success. The strategic approach is important when implementing product categories in the online shop. This has resulted in an 8-step category management process that can be implemented both offline and online.
Find out below how category management works and how the 8 steps can help you.
How does category management succeed?
The aim of category management: to improve customer benefits, to facilitate the shopping process, to shorten search and decision-making times and ultimately to increase purchase satisfaction. In the long term, increasing sales revenue is thus made easy. In combination with the focus on merchandise, category management is one of the most underestimated tools at your disposal. Category management can be applied to almost any area:
- Fashion
- Food
- Cosmetics
- Electronics
The customer finds it satisfying that everything he needs for a barbecue evening is already in one place and at the same time is encouraged to buy more than he might have intended. A good and well thought-out product group can significantly draw attention and interest to certain items. If you are strategic, you can use catgeory management and call-to-action cues to create an optimal shopping experience that takes customer needs into account in every way.
If retailers and manufacturers work together, potentials of certain product categories in the online shop can be easily identified and the right measures can be taken. The 8 steps are an important orientation for this.
Step 1: Category definition
The first step is analysis. Which products belong together from the customer’s point of view? How do they differ from other categories and how can the segments be structured. The buying decision criteria for later tactics are also taken into account.
Step 2: Category role
The second step focuses on which categories are most important and most likely to be relevant. Feel free to look around at your competitors as well.
Step 3: Category assessment
This is followed by the analysis of the ACTUAL situation using important performance KPIs such as the conversion rate. How efficient are the current product categories in your online shop and where is the hidden potential? Through the assessment, you lay the foundation for the target definition.
Step 4: Category Targets
As with any well thought-out marketing strategy, so also in category management, it is important to set concrete and measurable goals. They form the basis for measuring success and optimisation. A classic goal of creating product categories in an online shop, for example, is to increase the value of the shopping basket.
Step 5: Category strategy
Once goals have been set, these, as well as the data from the analysis, are used to shape the strategic approach. Always consider online merchandise categories as flexible and not static. They can change due to the seasons, among other things.
Step 6: Category tactics
Now the concrete optimisation measures for category management are worked out. The previous steps are decisive here. Those items that fit into the product category are identified and transferred to the online shop accordingly. You create a virtual category and add those elaborated products here. With most online shop software solutions, this can be done conveniently in the backend. The trader himself determines the pricing.
In addition to the placement, make sure to integrate other sales-promoting measures. For example, the visual design with high-quality product images and an informative descriptive text is important. Finally, you have to overcome the barrier that the customer cannot touch your articles haptically, unlike in retail.
Tips for promoting category management in the online shop:
- Describe already in the text which products and why they can complement the selected item. Include the link to it directly.
- Produce videos in which you show the application and integrate the complementary articles at the same time.
- Add a list with “Customers who bought this item also bought” at the bottom of the corresponding product page.
- Use newsletters to draw the attention of your customers and interested parties to the product categories in your online shop. You can easily win new newsletter customers with the newsletter popups from uptain. How? We will gladly tell you in a personal conversation. Or have a look at our website.
Step 7: Category implementation
In the penultimate process step, the final implementation takes place. In other words, your defined product categories go live in the online shop. At the same time, you can start a promotion. Give a discount on all or certain items of the product category. Ensure attention in the social media. Give visibility to your new category management. Translated with www.DeepL.com/Translator (free version)
Step 8: Category review
The last step is primarily about the ongoing evaluation of category management. Look together to see whether the defined goals are being achieved, how the current situation is looking and where there is a need for further optimisation.
An important part of online shop optimisation: category management
Use category management to your advantage. So far, not too many online shops see the potential of product categories. It is important to take a strategic approach. Go through the 8 steps. If you are not a manufacturer and retailer yourself, get your suppliers on board. Category management always takes place in cooperation between retailer and manufacturer. Don’t forget to support your category management with complementary measures such as newsletter marketing and embedding direct referrals. Your strengths lie in the shorter paths of the product categories compared to the stationary trade.
Frequently asked questions about Category Management
How does category management succeed?
Success comes from a strategic, data-based approach rather than gut feeling. Base your product categories on sound key figures, data and facts, and work through the eight-step category management process from category definition to category review. Cooperate with your manufacturers and suppliers wherever possible, and treat category management as a permanent process, not a one-off project.
How do you promote product categories in your online shop?
Describe in the product text which items complement the selected article and why, and link to them directly. Produce videos that show the application and feature the complementary products at the same time. Add a “Customers who bought this item also bought” list at the bottom of the product page, and use newsletters to draw attention to your categories.
What are the 8 steps of the category management process?
The process runs through category definition, category role, category assessment, category targets, category strategy, category tactics, category implementation and category review. It starts by analysing which products belong together from the customer’s point of view and ends with the ongoing evaluation of whether the defined goals are being met. The sequence works both offline and online.
What is an example of category management?
A classic example from stationary retail is placing chips, popcorn, cola and beer next to each other, or combining bratwurst, grilled meat, baguette and ketchup. The same logic applies to the cheese, milk and yoghurt shelf or the bread section followed by cakes and biscuits. Transferred to an online shop, everything for a barbecue evening sits in one place.
What is category management?
Category management means creating product categories within your assortment that are distinct, independently controllable and perceived as belonging together by customers. Each category is treated as its own business unit and can contain products or services. By arranging items so they complement each other meaningfully, you effectively pre-assemble a shopping basket. Meeting customer needs is the primary goal.
What goals does category management pursue?
Category management aims to improve customer benefit, facilitate the shopping process, shorten search and decision-making times and ultimately increase purchase satisfaction, which makes rising sales revenue much easier to achieve. A well thought-out product group draws attention to specific items and encourages customers to buy more than they originally intended. Typical measurable targets include increasing the shopping basket value.
Why are product categories important in an online shop?
Because the selection online has become almost endless and competition is fierce, a clearly structured assortment is a real differentiator. Product categories create transparency about what you offer, simplify the product search and satisfy customer expectations far more efficiently. In stationary retail this has been standard for years, while in e-commerce the potential is still largely untapped.
