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Categories (also called hierarchies or nodes) form a hierarchical tree structure to organize items and services into intuitive groups. Organizing items this way simplifies item discovery on your e-commerce platform (website or app).
Categories is the original tree of Product List with nested levels of categories. Each item is placed where it belongs within a category. For example, Computers is a parent category with Laptops and Desktops as children categories, and MacBook Pro is an item within Laptops. This organization can be represented as Computers -> Laptops -> MacBook Pro.
Collections serve as alternative organizations of Category system, which is the original, single source for all items and categories. Their main purpose is distribution management by displaying items on your e-commerce platform based on browsing structures you need to achieve various merchandizing objectives, such as organizational requirements, multi-regional assortments, multi-channel assortments, and collections. For example, a company that sells, repairs, and supports computers and related items and services will have a Category system with a complete list of SKUs. Because Category system is not granular enough to be used on Storefront, multiple Collections are created to target specific shopper segment experiences. For laptop consumers, you might have one collection that lists all the laptops and PCs. For large businesses, you will have another collection that lists all commercial laptops, PCs, printers, and servers. Both of the collections will act as filters of the Category, tailored to the purpose of a merchandising strategy.
Find out more about Products (previously called PIM)