Navigation:
Manage > Categories > Arrange Categories
or
Inventory > Manage Categories > Arrange Categories

Arrange
Categories

The ‘Show All’ button is not a button to show all
categories, but rather, once you have found a category, to return to the main
category.  

The first step is to click on the main category (‘Category Listing’ in the
demo shop).  You will then see an expanded list of categories.  From this list,
you will be able to arrange them to the right or click to the left on the
categories to arrange subcategories of those categories.

‘Alphabetize Categories’ allows you to arrange the categories listed
alphabetically.