This error occurs if you are trying to list an item on Etsy without specifying a category for the item. Etsy refers to categories as taxonomies. To fix the issue in SellerChamp simply click on the Category dropdown inside the manifest for the item, type of a few characters to pull back categories, and apply the correct category:
Instead of specifying categories individually for each item, you can also bulk update categories via CSV file upload. Simply upload a file inside the manifest with two columns:
SKU
Item Category ID
The Item Category ID is displayed right next to the category in the dropdown when you search:
Another alternative you can use if you majority of your items will go into the same category is to simply set the default category inside the manifest or even inside your Etsy account settings page:
