Category Management is a function in retail and e-commerce businesses wherein related products are grouped together under distinct categories. This is done in order to manage their performance in an efficient way by all means.

As a matter of fact, the e-commerce industry is enormous. Still, it functions in a smooth way. You might be wondering how it is possible in this competitive world. There is a secret recipe behind it, and it is ‘e-commerce category management. There is a specific group of experts who predominantly deal with matters of concern in various categories. These e-commerce category managers are the guardian angels of your business. They are in charge of everything- right from the pricing to space allocation, and much more. The list is endless.

Moreover, when a retail or an e-commerce business reaches a level, where there are thousands of SKUs across many different product departments, there will be a change in the scenario. The category Manager should assign tasks for his team members, and he will be solely responsible for the ROI, subsequently.

Category Management is often doled out by big retailers, such as grocery stores, home improvement stores, and major e-commerce players like Amazon, in particular.

Category Management predominantly stands for the organization of product categories, which provides solutions for everything in our modern world. Just recall your last trip to the Super Market: how long did it take for you to find the PANEER? You very well know that it belongs to the category of dairy products. Hence, it is located on the shelf next to the milk.

Just Imagine if the Paneer was classified, for example, as a dessert; how long would it take for you to find it? It will be really time-consuming, isn’t it?

Category Management regulates the organization of retail space, both offline and online! It is the categories you need to shape up when molding online store browsing and developing your website design.

In addition, Category Management involves working with procurement. For instance, knowing what is included in every category of your products and what KPIs it is supposed to meet allows you to choose only the best suppliers. Apart from that, you can also negotiate the most favorable collaboration terms in a professional way.

One of the shocking revelations is that owing to poor category management,  an online business can lose up to 30% of its customers. Hence, a professional category manager is worth their weight in gold, undoubtedly. So, what are their duties/responsibilities? How do they contribute and bring maximum results to your business? Let’s take a look.

How to Become a Category Manager?

A Category Manager is visualized as an independent business unit manager. Hence, in order to become a category manager, you should possess good business acumen and managerial skills. You will also be expected to have an extensive experience with or product knowledge of the category you will be managing.

Vital Skills Required :

• Relationship Management 
• Communication Skills
• Business Acumen
• Analytical Skills
• Presentation Skills
• Excel Knowledge
• Category Knowledge

 Category Manager’s Role in e-commerce?

The phenomenal responsibilities of a Category Manager in the e-commerce arena include:

• Data Analysis to determine the market trends and consumer requirements
• Strategy Development for category management
• Developing tactics for promoting specific product items
• Communication with suppliers
• Building long-term relationships 
• Concluding favorable terms of cooperation with an excellent price-quality ratio;
• Order Placement
• Procurement Dealing
• Placement of product categories 
• Determination of the most competitive as well as the profitable prices for product categories
• Demand Forecasting
• Budgeting and cost optimization
• Stock Replenishment

Benefits of Category Management:

The preeminent goal of the category management function is to make sure that each category’s performance is maximized to its fullest potential. This can be achieved by implementing different strategies and tactics. It includes supplier management, visual displays, and sales performance management.

In general, each category is treated as a stand-alone business unit and extra care is provided to the different product SKUs under that category. This determines that the products don’t get neglected, and inventory return is also maximized as much as possible.

Furthermore, each category will have it’s own Open to Buy, and managers will render extraneous insights into the sales forecast of the category’s products.

Another sovereign benefit of category management is a consolidation and achieving savings through economies of scale.

The reason behind this is, the purchasing for all the stores of the same retailer will be centralized through the category manager.  Hence, instead of buying for one or two stores, the manager will be procuring for a chain of 50 or 100 stores and will be negotiating for better product prices. Ultimately, an enormous bargaining power will be transferred to the retailers. This will pave way for further negotiation in addition to product cost savings.

Vital strategies:

• Traffic Building
• Transaction Building
• Turf Defending
• Profit Generation
• Excitement Generation
• Image Building

Category Management Tools 

Open to Buy Plan: One of the most important Category Management tools to plan and manage inventory is this OTB. Open to Buy (OTB) is a planning tool that gives an overview of the inventory levels in the category. Further, OTB also gives us an idea of the requirement of the inventory in order to deliver future sales goals.

Google Trends: Another tool that is utilized by marketers and that we have found to be of utmost use in category management is Google Trends. This tool aids the category manager or buyer in spying out specific trends inside their respective category. 

Category Management Considerations:

The primary goal of category management in the first place is to devote more attention and resources to each category in the business. However, since category management is a function of a bigger business, it is very imperative for the top-level management to ensure that the different product categories do not cross swords with each other or endanger each other’s plans. 

In the end, all the categories have to assure- that they communicate the same message of the business to the end consumer and also render their due in brand image building. This is especially important when it comes to the implementation of different pricing and promotional strategies. 

In a nutshell, we can say that the importance of Category Management is growing by leaps and bounds. For the enhancement of business, it is vital to follow a proper category management strategy. You can also reach us at www.infognanasolutions.com for further clarification.