Similar to categories on your posts in WordPress, you can add, delete, and edit your product categories here. There are some added options on top of the normal category fields, you can also upload an image to be associated with the category:
Categories are managed from the Products > Categories screen.
Product tags work in exactly the same way as post tags. See http://codex.wordpress.org/Posts_Tags_Screen
The taxonomy is ‘product_tag’.
Tags are managed from the Products > Tags screen.
WooTheme’s Article: https://docs.woothemes.com/document/managing-product-taxonomies/
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