Great question — answering as the UphillTech team:
Most large e-commerce company use more or less similar strucutre, i.e Category → Subcategory → Product Type → Its attributes Each product type has its own attributes/sub attributes. ex - phones/laptop have RAM like 8, 16gb, Storage etc, and clothing has size, color, material like cotton, wool. When starting from scratch, companies create taxonomy manually from category experts help, then use supplier catalogs and standards like Google Product Taxonomy as references. And then once online, more products are added, the structure is continuously improved and expanded for scalability.
Full answer by Varun D: https://stackoverflow.stackexchange.com/a/79963225 (CC BY-SA 4.0).
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