Hello Naomi. Then, I believe you are on the right track by assigning extra categories which is due to them being more meaningful to the visitor. So therefore an example would be:
Site is about Fashion > Clothes > Tops > you can place any Product Here.
Having said this: do keep in mind this critical factor about SEO.
You rank for individual URL’s and content that is found on those URL’s.
When you categorize your WordPress site, how it help SEO is to let search engines better “crawl, as in follow links” to understand the structure of your website.
So to simplify your question. Create logical categories and place your products accordingly. Then work on Product URL optimization (unique engaging content, image/s, Title, and anything else)
SEO Tip for you to consider as an example:
Title = PRODUCTNAME Custom Made T-Shirts – Clothes You’ll Love
image file name = PRODUCTNAME-tshirt-by-yourbrandname-clothes.jpg
Content: PRODUCTNAME etc. etc.
Having said this: I would keep things simple on the site in terms of categories. Because as your website grows it can be cumbersome to manage if there are too many multiple categories.
Site about Fashion:
category could be Clothes
category could be Tops
category could be T-shirts
category could be Casual > T-shirts
category could be Clothes > Casual
category could be Tops > Casual etc. etc.
Although you can place T-Shirts in any (or all) of these categories. Ideally, you must answer this question for SEO and search engine ranking.
Example: which keywords you really want to rank for. Is it:
Tshirt Tops PRODUCTNAME, OR
Casual Tops PRODUCTNAME, OR
Casual Tshirt PRODUCTNAME etc. etc.
Once you answer this, then, where to place Products/Pages/Posts become more easier.
Meaning, although you could target and rank multiple keywords. It is wise to place URL’s under a category accordingly to target keywords.
IF PRODUCTNAME was a tshirt for casual wear. Then, category could be:
casual-tops > tshirt > PRODUCTNAME
But its great that you are asking this question Naomi, because having the right foundation is better in the long term (also helps search rankings). I hope this clarifies the question and that your WordPress built site is destined for greatness online. SEO Tip: make sure to publish blog posts regularly because you can link back to your Product URL’s
For example:
Top Ten Custom Made T-Shirts Designs in 2021.
Share your insights….. include images, make it easy to share the post, and also ask readers to share the Blog Post. Within the content use keywords-to-internal-link back to yoursite DOT COM / casual-tops / tshirt / PRODUCTNAMEWHICHTHENISATSHIRT
Long term results and better rankings basically assured ??