I held a poll in my Facebook group asking store owners the number of products needed to justify a new category. Of the four provided options, 60% of people chose 20 or more as the number of products that would justify the creation of a new category.

10+ and 15+ were both chosen by 20% of the respondents while nobody thought having less than nine products justified having categories at all. 

Why do we need categories?

People need categories because they provide a sense of direction and control. Having an understanding of our environment is a hardwired human instinct. You may not consciously think of it but whenever you enter a room, the first thing you always notice is the position of everything, especially exits.

Traditional stores have a very specific layout. Products are not just arranged haphazardly. Cake is usually close to the bread and so are spreads like apricot jam and peanut butter while butter knives are sold alongside pots and pans.

The existence of a search bar might make you think categories aren’t that important for an online store but they are. The search bar is only useful for a customer who knows what he wants. A customer who is just “window shopping” will need categories for navigation. Otherwise, your site will be unusable.

Categories depend on your niche

If you go to a place like Walmart, you may just find a single category titled “Outdoor Boots.” If you go to a dedicated outdoors retailer like REI, you will find “Hiking Boots,” “Skiing Boots,” “Climbing Boots,” and the like. That’s because an average REI customer is more likely to know a lot more about the minute differences between different types of boots than the average Walmart customer

So, how many items for a category?

Seven. Seven is the list of items an average human can keep in his working memory. A gifted one can keep nine and a less lucky one can only remember five.

That means if Johnny scrolls through 20 items, he’s only going to remember seven of them. To reduce mental strain, you should start creating new categories once you start hitting four or five unique items.

Uniqueness is an important consideration here. Just because you sell 100 types of bread doesn’t mean you should break the list down into 20 categories with five breads each. It’s all bread at the end of the day. You can have brown bread vs white bread or plain bread vs cinnamon bread and the like as subcategories but do not create categories and subcategories your customers may struggle to understand. It is perfectly acceptable to have 1,000 items in one category as long as all the items share similar attributes.