Structure decides whether customers find things.
CREATING THEM
Products > Categories. Add the name, the slug, and optionally a parent to make it a subcategory.
Add a thumbnail image, which many themes display on the shop page.
STRUCTURE
Six to ten top-level categories, each with a handful of subcategories if needed. Deeper than two levels and customers stop navigating.
Think how a customer searches, not how you store stock internally.
ORDERING
Categories can be reordered so the most important appear first, either by drag-and-drop where your theme supports it or with a sort-order plugin.
DESCRIPTIONS
Write a short description for each category. It appears on the category page, helps customers, and gives search engines something to index beyond a grid of product names.
MOVING PRODUCTS BETWEEN CATEGORIES
Bulk edit, or the category filter and bulk actions on the products list.
WHAT TO AVOID
A category with one product in it Uncategorised products, which appear nowhere in navigation Categories that duplicate what tags already do