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GenAI to automate product category classifications
  • Growing assortment sizes present a challenge to the traditional approach of manually categorizing products 

  • Generative AI in the form of Large Language Models like ChatGPT can help improve the speed and quality of classifying products 

  • 94% accuracy of product categorization was achieved, along with years of manual labor saved 

  • High data quality and continuous improvement are vital for obtaining the best possible results; automated self-assessment and quality control were added to the model  

At a glance:

Manual categorization is overwhelmed by cost and volume 

Efficient product categorization is crucial for assortment management, especially for e-commerce and wholesalers. However, relying on product experts to manually classify categorizations is becoming increasingly difficult as assortment sizes grow rapidly. Imagine the labor-intensive process of manually classifying thousands of products across various levels. Each classification decision involves diligent analysis, often resulting in significant expenses and delays.

A leading wholesaler faced this challenge: Assortment managers were overwhelmed by the sheer volume of over 200,000 products requiring classification. The manual process was not only expensive but also limited in scalability. With an FTE (full-time equivalent) capable of classifying just 20,000 products per year, the costs of wages alone would amount to more than € 600,000. Furthermore, manual categorization’s lead time spanned multiple years. The wholesaler needed a solution that would streamline the product categorization process, reduce costs and accelerate decision-making. Enter the GenAI project.