Miscategorized SKU Policy

Ensuring that each SKU is properly categorized is an information management issue Newegg takes very seriously.  Proper categorization has an impact on search and navigation while also influencing Newegg’s branding.  By “categorization” we are referring to the subcategory.  Newegg has more than 2,000 subcategories that span several industries.  We provide both taxonomy documentation and seller support to help sellers categorize their SKUs properly.

Properly Categorizing SKUs

The seller is responsible for ensuring that the seller creates its SKUs in the correct subcategory. To determine the correct subcategory for an SKU, the seller must refer to the taxonomy.  The taxonomy includes a list of all Newegg subcategories, the industries to which they belong, the properties and property values for each subcategory, and information on required and group by properties. Everything you need is provided in the taxonomy document. 

The first step in properly categorizing SKUs is to learn taxonomy for the industries in which you will be integrating.  For example, if you are selling “Fishing Rods,” the proper industry is “Sports Goods.”  Once you determine the industry, acquire an understanding of the scope and structure of the Sports Goods industry. You will notice that there are several subcategories that pertain to fishing; you will also notice that there are several subcategories that pertain to boating. Understanding the conceptual layout of the taxonomy for the industry is essential. As you peruse the taxonomy for the Sports Goods industry, you will find that most of it are organized around particular sports.  Next, find the subcategories that are relevant to your product. You will notice that Newegg has some subcategories that could be relevant:

1. SG – Poles, Tools & Gadgets
2. SG – Fishing Rods & Bows
3. SG – Fishing Reels

The second step is to examine the specifics for each subcategory to which your SKU could belong by looking at the subcategory structure.  The best way to determine whether a subcategory is a proper fit for your SKU is to examine the “Type” property values as in “SGPoles_Type,” “SGFishingRods_Type,” and “SGFishingReels_Type”.  Upon examination, it becomes clear that the subcategory “SG – Poles, Tools & Gadgets” is not the correct subcategory.  The “SGFishingRods_Type” property demonstrates that the subcategory “SG – Fishing Rods & Bows” is the correct subcategory. 

Using the taxonomy document, let’s pretend that you have another SKU that is also a fishing rod, but it also includes a reel.  Because you are now aware of the different fishing subcategories, you decide to find the subcategory for Fishing Rod and Reel Combos.  However, you do not find it.  There are three possible reasons:  First, the subcategory exists in another industry, so now you have to find it; second, we just don’t have any taxonomy for fishing rod/reel combos so therefore you can’t sell this SKU; or third, it is not its own subcategory, but it fits into a related subcategory.  The structure of the fishing taxonomy shows you that there are two relevant subcategories:  one for fishing rods and another for fishing reels.  By examining those two subcategories further, you find that the “SG – Fishing Rods & Bows” subcategory has a property called “SGFishingRods_Feature” with a value of “Rod and Reel Combos.”  Therefore, all Rod/Reel combos belong in the “SG – Fishing Rods & Bows” subcategory. 

The final step is to make sure that you are authorized to sell in the “SG – Fishing Rod & Bows” subcategory.  If you are restricted from selling in this subcategory, this means you are not allowed to sell any SKUs that would belong to the subcategory.  By looking at the “SGFishingRods_Type” property, you can see that Bows, Bait Casting Rods, Downriggers, Fly Rods, Ice Rods, Spinning Rods, Surf Rods, Trolling Rods, and Spears” are SKUs you cannot sell. 

Qualifying Criteria:

In order to determine the appropriate consequences of miscategorizing SKUs, the criteria that will be used to make this judgment must be established. There are four criteria that are considered:  First, the specific type of miscategorization based on three scenarios; second, whether the seller is authorized to sell the SKU; third, the number of SKUs miscategorized; fourth, and the number of prior incidences.  The degree of each offense will be categorized as low, medium, and high.  See Table 1 in Appendix A for a table presentation of these criteria. Each criterion is elaborated below:

1. The specific type of miscategorization is based on three scenarios:
   • The correct industry but the wrong subcategory. Whether this is a low or medium offense depends on how far conceptually the miscategorization is. Referring to the fishing rod example above, if the seller had put the fishing rod and reel combo into another subcategory such as “SG – Fishing Reels,” this would be a low offense.  However, if the seller had placed the SKU in the subcategory, “SG – Sleeping Bags & Beds”, this would be a medium offense even though the subcategory is still part of the “Sports Goods” industry.
   • The wrong industry and the wrong subcategory, and SKU is authorized.  Referring to the fishing rod example above, if the seller had placed the fishing rod and reel combo SKU into “Toys – Outdoor Toys” in the “Toys Games & Hobbies” industry, this would constitute a medium offense if the seller was authorized to sell in the “SG – Fishing Reels” subcategory. 
   • The wrong industry, the wrong subcategory, and the SKU are unauthorized.  Referring to the scenario in 1B, if the seller was restricted from selling in the “SG – Fishing Rods & Bows” subcategory, the offense would be high. 
2. SKU Authorization.  This refers to whether the seller is authorized to sell in the subcategory/subcategories involved.  If the proper categorization for an SKU is to a subcategory the seller is not authorized to sell in, this is a violation.  The increase in severity is elaborated in the scenarios for the first criterion shown above.
3. The number of miscategorized SKUs.  This is determined in both absolute and relative terms.  The fishing rod example will be used to illustrate the criterion.  Let us suppose that a seller has a total of 10,000 SKUs, 1,000 of which are fishing rods, all of which are miscategorized.  The following are the factors that Newegg would consider in evaluating the degree of offense:
   • The extent to which the seller is the predominant seller for fishing rods.  If there are a total of 1,500 fishing rods on Newegg, the seller’s 1,000 fishing rods carry nearly all the weight.  This would constitute a high offense.
   • The scattering of 1,000 miscategorized fishing rods. If all the 1,000 miscategorized fishing rods were misplaced in the wrong subcategory such as “SG – Fishing Reels” that would be a lesser offense.  However, if the 1,000 fishing rods were placed in multiple subcategories across different industries, that would be a much higher offense.
   • The total percentage of miscategorized SKUs. If the 1,000 miscategorized fishing rods is the only miscategorized SKUs out of 10,000, then this is a lesser offense because only 10% of the seller’s SKUs are miscategorized.  However, if Newegg discovers that there are another 1,000 SKUs that are miscategorized, this would bring the percentage of total miscategorized SKUs to 20% which is too high.
   • The total number of miscategorized SKUs.  If a seller had a total of 100 SKUs and all of them were miscategorized, this would be a lesser offense than a seller with 10,000 SKUs with only 1,000 miscategorized SKUs.  Any number over 1,000 SKUs is important to Newegg and can either be a help or a detriment.
4. Aggravating factors.  If the miscategorized SKU(s) involved simultaneously violates another content policy, this will create an aggravating factor that will increase the severity rating of the offense.  Another aggravating factor involves the importance of the subcategories in question.  Subcategories that are particularly important for Newegg will increase the severity rating of the offense, whereas there may be no changes in severity for less important or strategic subcategories. For example, miscategorization that affects the “Memory (USB Flash Drive)” subcategory would be an aggravating factor contributing to a higher severity rating than a miscategorization involving the “Umbrellas” subcategory.  
5. The number of prior incidences.  An “incident” is defined as each time Newegg has determined that a seller has had one or more SKUs that violate our content policy.  The content policy includes not only the miscategorized SKU policy but also our offensive content and inaccurate information policies.  However, an incident in one policy does not contribute to an incident in another policy.  There is a maximum of one incident per day that can be counted for each seller.  The same incident may be counted twice if sufficient time has elapsed.  An incident can be defined in terms of days or it can be more conceptual such as “miscategorized SKUs in the HL – Decor subcategory”.  The following factors are considered:
   • First-time offense.  This is applied to the first time a seller integrates with us, as well as the first time any part of an industry is opened up to the seller.  The severity is low.
   • Second-time offense.  The severity is low.
   • Third-time offense.  The severity is medium.
   • Multiple offenses.  The severity is high.

Table 1.  Qualifying Criteria

*Aggravating factors may include: violation of content policy and/or importance of subcategory involved Severity may be increased/decreased based on: the number of prior incidences, number, and % of miscategorized SKUs

Sanctions:

Each incident that we establish will result in an email and/or call to the seller with information that specifies the details of the incident, the policy that is violated, the degree of severity, the sanction, and the seller’s role in rectifying the violation, and terms for reconciliation.  The offenses from the criteria above will be used to determine the sanctions Newegg will impose.  Although two incidences of the high offense may not be severe enough to warrant suspension or termination, it really depends on the severity of the offense.  See Table 2 in Appendix A for a table presentation of the sanctions. The sanctions that Newegg will impose are specified below.

1. Unofficial Warning.  This usually occurs for a first-time offense that is of low severity and that can be quickly and easily remedied.
2. Official Warning. This usually occurs for first-time offenses that may be low in severity, but are not quickly and easily rectified.
3. Deactivating SKUs. This usually occurs for any medium or high offense in order to take the offending SKUs off our website until we rectify the situation.
4. Deleting SKUs. This occurs when there is no easy way to rectify a situation other than to start over again. This may also occur if the seller cannot be trusted to rectify the situation in a timely manner.
5. Deauthorization. This means the seller will lose authorization to sell certain subcategories or will lose the ability to sell SKUs by a particular manufacturer.
6. Suspension. This means all the seller’s SKUs will be removed from our website, although they will remain in our system.
7. Termination. This means the seller’s account is terminated, and the seller will no longer sell on Newegg.

Table 2. Sanctions

NOTE: Nothing in this policy shall limit Newegg’s rights to sanction or terminate a seller for violation of the Newegg Marketplace Seller Agreement.  The Agreement shall control the extent of any conflict between this policy and the Agreement.