A new customer comes to your website, finds a product they want at a price they like and adds it to their cart.
They get to the checkout page and then it happens. They get hit with the shipping and handling rates and all of a sudden they start second guessing their decision to buy.
Suddenly a product they thought had a fair price is starting to seem a little expensive. One of two things happens next. Either they decide to press on despite the increased costs, or theyabandon their cartand leave your website disappointed.
So what can you do to influence this decision?
Lets take a look at some shipping strategies and how you can use them in your business.
The real challenge when figuring out your shipping strategy is determining a solution that cuts into your margins as little as possible yet remains attractive to your customers.
And this is something youre going to want to get right.Studies have shownthat shipping and handling fees are the number one factor driving shopping cart abandonment.
With this information in mind, lets look at the three most common shipping options and the pros and cons of each.
Offering free shipping – usually just for domestic orders – is a sure-fire way to get your customers attention, however, depending on your margins, it can also potentially cut into your profits.
That said, the marketing punch that displaying Free Shipping on your website provides can be a significant advantage over any competitors that dont offer the same perk. Deciding to offer free shipping will require you to either absorb the cost or slightly increase your prices to cover it.
You could also try offering free shipping with a minimum order amount or minimum number of items. This should drive up your average order value and help you have more profit dollars to apply the shipping cost against.
Prominently advertising that you offer free shipping can be an effective way to drive up conversion rates.Chubbiesoffers free shipping on all their shorts (including return shipments) and which they proudly display on their website so customers shopping know that the price they see is the price they pay.
Determining whether to offer free shipping or require a minimum threshold often comes down to your margins and the niche you operate in.
If you offer luxury or handmade, one-of-a-kind items, rolling in an extra percentage for shipping and handling into the cost of your products probably isnt too much of an issue. However, if youre in a highly competitive market where both free shipping and the lowest prices are the norm, like refurbished cell phones for example, marking up your products to cover shipping costs may not the best idea. This is where you have to consider either a different option entirely, or absorbing the cost for shipping on most of your items.
Large or particularly heavy items like full tower PC cases or furniture can cause some problems for your Free Shipping promotion. Doing your research and knowing your numbers about things like how much each of your products actually costs to ship, how your competitors handle shipping, and your allowable profit margin can help you make the right decision.
In some shopping carts (like Shopify) its possible to setup real-time shipping quotes – in other words, your customers more or less pay exactly what you would pay to ship your products.
There are always small discrepancies that can happen, of course, but in many cases you can end up breaking even between the shipping charges you collect and what you ultimately have to pay to ship the package.
Simple Sugars, a store that was recently onShark Tank, employs this tactic, offering real-time shipping quotes to their customers at checkout. Once a customer gets to the checkout, they select where they want their order shipped to, and the calculator does the rest.
Using a real-time calculator like this can win you a lot of trust with your customers. It shows that you arent inflating your quoted shipping fees or raising your item prices to cover the charges.
This strategy doesnt have the same persuasion power free shipping does but its an easy way to make sure that youre not draining shipping costs out your ears, and that your customers are getting the best deal possible.
This is also a good option to use for heavy or oversized shipments that you simply cannot or do not want to allow to ship out under a free shipping promotion.
Your third option is to offer a flat rate for every package, or flat rates for weight ranges and order totals.
This particular method of charging for shipping requires a bit of preparation as you need to figure out your average cost of shipping a package. This is a best practice you should be doing anyway to make sure that you dont drastically undercharge or overcharge your customers.
When you hit the right cost, youll probably be over – or under – the actual shipping cost by a little, but it should even out in the end.
Trulys Natural Deodoranttakes the flat rate approach, and has a simple $2.99 charge for a single product order.
Angela Collison, the founder of Trulys says her main focus in setting up my shipping prices was to make it as inexpensive as possible while still delivering the product in a reasonable amount of time. My products are relatively inexpensive and I dont think anyone wants to pay as much for shipping as they do for the item ordered. USPS was a good fit for us as they are very affordable for single items and their flat rate priority options allow me to ship out multiple items for one flat rate regardless of the weight. I was able to set up price-based shipping as I have only a few different products, but I am not sure how that would work out for someone who has a large number of products.
The above quote highlights an important point about the nature of flat rate shipping: figuring out what flat rate works for you, and if you need to do it by order totals or weight ranges will require some testing.
Luckily, USPS does offer a few different sizes of flat rates boxes, and if you have particularly small, but heavy objects, taking advantage of the cost savings from cubic shipping prices can help to bring your flat rates into a comfortable range.
Of course, every business is different and only through testing will you find out what works best for you.
Youll need to find out the statistics on your products and the best ways to ship them to be able to make the most strategic decision possible. This is where additional apps likeSumAllStitchLabsShipStation, and others can help you find information and alternatives (both with shipping carriers and methods) that you may not have had access to previously.
About the Author:Erika Jarvi is the Social Media and Content Manager atShipStation- a web-based shipping solution that streamlines the order fulfillment process for online retailers. Check out the ShipStation Shopify apphere.
Get free online marketing tips and resources delivered directly to your inbox.
Youll start receiving free tips and resources soon. In the meantime, start building your store with a free 14-day trial of Shopify.
Get free online marketing tips and resources delivered directly to your inbox.
Youll start receiving free tips and resources soon. In the meantime, start building your store with a free 14-day trial of Shopify.
Hey Ollie thanks for sharing how you handle your shipping. Its great to hear from merchants about what works for them. I really like the surprise shipping upgrade idea great stuff.
Is it possible to add a main shipping price and an additional item shipping price like Etsy?
Shipping is a huge issue with my bakery. Its easy if they order one item but with multiples its trickier. I lowered my costs for shipping but in some instances had to put out $10-$15 of profit to cover it. Its also higher because of the packaging and that its food products. Ive not found a way to resolve it but am definitely open to suggestions.
Hi Louise, heres a video tutorial and more information on how to set up shipping rates with Shopify »
@Kathy figuring out your shipping strategy can definitely by tricky and theres no one size fits all approach. I think testing is the only real way to determine what works and what doesnt.
Interesting. Im now helping (as Shopify Partner) a company based in Switzerland sell in the US. All their products are handmade and shipped from Switzerland using express delivery.
Since the difference between US states is marginal we are offering a flat rate. Still, its a high flat rate ($40!) so this is our number one challenge now, which we will probably solve in the future by using a domestic US fulfilment service, while keeping some stock there.
Knowing that shipment rates are the 1 abandonment factor will help in making this decision.
Still, its very tough to run a test program with such high shipping costs.
If anyone has feedback on solving a similar issue with expensive international shipping, Ill be glad to hear it!
Great Article. What about combining Flat rate with Free Shipping. Say like under $50 is $5 shipping, and $50 and over is Free shipping.
Thanks for the post. Has any one tried a discount model to shipping discount eases many purchasing decisions.
75% off shipping cost. Actual shipping $25, you pay $6.00.
Id be interested in finding out because I have a few clients who have the same concerns.
This article, while somewhat helpful, really annoyed me because it disguises one of the Shopifys great weaknesses, which is the way it calculates shipping costs (at least with the Professional and Basic plans). The only options for determining shipping rates is to use either cost or weight. This is a major flaw that prevents me as a developer from recommending it to a lot of people.
Carriers USPS, Canada Post, FedEx, etc. all use volumetric/dimensional weight to calculate shipping rates, but Shopify does not offer a method for inputting the dimensions of a product. While this might not matter to a ecommerce store that sells a limited range of very similar products (an online T-shirt shop for example), its completely impractical for anyone who wants to sell a wide assortment of products of different weights and sizes.
Using an items cost to determine shipping isnt helpful because a wooden wagon that costs $150 has a totally different shipping cost than a $150 piece of jewellery. Likewise, weight isnt very useful either because a small object weighing 5kg has a different shipping cost than a much larger item that is also 5kg.
The only workaround Ive discovered is to manually calculate the volumetric (or dimensional) weight of each item and then enter that as the products physical weight. It goes without saying that this is a clumsy method that involves more than a little bit of math. Its also very annoying and time-consuming.
While upgrading to the Unlimited Plan with real-time carrier shipping might solve the problem (I havent worked on a Shopify store with that plan) I think its ludicrous for anyone to pay an extra $100/month for the privilege of being able to build a reasonably accurate table of shipping costs. Not everyone needs the Unlimited Plan, but every ecommerce owner needs to be able to calculate reliable, reasonably accurate shipping costs.
If youre building an ecommerce store and planning to sell products with a wide variety of weights and sizes, I would recommend taking a good, hard look at these limitations and understand how they will affect your business before committing to it. Either that, or consider the $179/month Unlimited Plan.
Its a shame this problem exists, because Shopify is otherwise a very elegant, easy-to-use eCommerce solution for small business with great support.
My previous rant notwithstanding, one of the eCommerce companies I work with uses Shopify and has experimented with several different approaches to pricing shipping.
What seems to work best for them is free shipping with a minimum order. They have a 100% margin on most products and determined that anytime they shipped a product above $50 or so they always made a profit, even if they had to partially subsidize the cost of some shipments. Their strategy is to use sales volume and increases in the average size of an order to make up for any losses.
Previously, when they offered free shipping they were losing a lot of money on small orders, and absolutely getting killed on overseas orders.
I use a few drop-shippers and they use different rates and carriers. How do I set this so theres no problem at check out? For instance, when someone orders a gift basket(shipping cost is weight dependent)or orders a t-shirt (shipping cost is cost dependent) does the appropriate shipping options show up? I want to figure this out before I launch my store.
I have a Shopify website, but not sure if shipping is set for Australia.
Are you able to provide further info on this.
It would be useful to allow a discount code to offer free shipping for a particular SKU or for a cart value over a particular amount. Right now with discount codes you can create a code for a shipping amount over. I realize you can fudge weights to try to achieve SKU based Free shipping, however that hack has other adverse effects. Can you create a free shipping by SKU discount option by the holidays?
I wish there was a way to price individual products as free shipping. My shop is currently on the price based method and with over 300 skus switching to weight based is far too much work.
I dont want to have to pay for an app either, just wish there was an option to offer free shipping on products that i can pick and choose .
Thanks for the insightful article, Erika! And I like the new site redesign @shipstation
Also, anyone who runs a webstore should check out a free app that simplifies the exchange/syncing of data (orders, product info) with ecommerce partners.
I spent a lot of time here trying to figure out shipping methods and rates.
Up until this week we have always been wholesalers, selling large quantities of product to retailers around the world. After 7 years of doing it I think I understand most aspects of exporting, importing, brokering, air freight, customs, bla bla bla.
But this whole new world of direct to consumer e-commerce has left me with my head spinning. To top it off we are in Canada and most of the shipping apps available to Shopify really dont work well in Canada, especially if most of your shipments are heading south across the border.
So we decided that we are just going to wing it using the weight method to charge flat rate shipping. Already, since we launched on Thursday, we have noticed our errors in calculating the flat rates(ahem, total understatement ha!)But we will persevere.
My bit of advice that I can offer is to watch the shopping patterns of your buyers this is how we figured out much of what we know about shipping large volumes. After a few weeks and months it becomes fairly obvious what sells, how many, where your most frequent buyers are located etc and it gives you a much more clear picture of where you can cut shipping costs and where you need to increase them. I dont think you can figure this stuff out right away.
Also I just want to add that as a Canadian wholesale buyer I am always really disappointed when US sellers overcharge for sending shipments to Canada and then also expect us to pay the clearing costs at the border. You definitely need to know how much your cross border buyer is going to have to pay to clear it through customs(the duties they pay at the PO) You may be unaware that your buyer had to fork out another $20 on a package only worth $150 on top of your non discounted international shipping rates.
Just a thought. Customers may think twice about ordering from you again if they get the shock of additional clearance costs.
I cant seem to find the right informations about USPS flat rates not using their packaging or boxes. I wish this shopify would have a real USPS calculator..it would make things way easier.
I,m setting up an ecommerc site and considering using priority mail to ship my orders. The items are small and light. Im concerned that since there is no signature required customers can claim they never received it. USPS
policy is that if tracking shows the order was delivered their insurance will not cover the claim. Insurance is only good for lost, missing or damaged packages.
If anyone has experience shipping this way please share your thoughts.
The one thing i can not find is hints on Customs charges. Most products do not come from North America and customs charges might be charged to the person ordering. How do i find this information? I found one site and helps calculate but is their a way not to have custom charges
Im glad you mention offering shipping discounts for a certain number of products but unfortunately that is not possible with Shopify. I just spent an hour trying to figure this out even using Shopify Live Chat and they could not figure out how I could offer Free Shipping on the purchase of 4 bottles of wine in a specific Collection I was featuring ridiculous! It seems like this would be website 101 any idea on how to do this? Every other website that sells wine offers this and I have no idea how theyre doing it.
Our company didnt think that moving to the highest plan, just to calculate real time shipping presented enough ROI, and it just wasnt a feasible alternative. We are a very small shop, been in business less than a week, but our products range heavily in weight and size.
I stumbled across this (link at bottom) while scouring the internet though. It needs updated, but provides a good idea of adding a fixed shipping price model. To update the information we ran a USPS and UPS calculator to our farthest shipping locations, took the mean number, and adjusted the spreadsheet by weight. Since we just started we are unable to determine if this is the best model or not, but it is what we are currently using.
to answer Kat Ondrova: USPS priority flat rates can only be used with the USPS flat rate envelopes & boxes.
if you use your own packaging Priority rates are calculated by weight, shape and distance.
I have that problem with my larger orders if they dont fit into the largest flat rate box, shipping has to be calculated by hand
Good article. One suggestion (or maybe Im missing it). Can you add an email option to your share bar? Im trying to easily email this article to a friend of mine but its only social shares.
Monty, for sure that is how the story goes for many: they mistake the idea of enjoying making something with the reality of running a business that sells that. The skillsets and challenges are NOT the same.
I was evaluating Shopify in search of a better shipping function. My established business ships a wide variety of box sizes and weights. Currently we only use UPS, but would like to offer better pricing options for our customers by offering USPS First Class for very small items, USPS Priority Mail Flat Rate, or UPS. Of course, this hinges not on price or weight, but on VOLUME of the item. The cart which can incorporate this will win my heart and my business.
Interesting article. Being an Australian site and being subject to the most expensive shipping rates in the world unfortunately makes free shipping just about impossible unless it is for items we can put through the post in an envelope.
One of the biggest downsides of Shopify is that it is not possible to adjust shipping into zones. Within Australian states there are different mailing zones depending on the location of the customer. Some states can have up to 4 zones which can vary quite considerably in shipping costs. The zones are set by postcodes/zipcodes so it could be possible to set up the shipping depending on the postcode the customer enters but everytime I bring this up with Shopify I am ignored or sent a standard response on how its just tough cookies. this is costing our business considerable amounts of money each month and is a massive downside to the Shopify program.
Another FedEx Rate HikeHere is what you can do about it.
FedEx just announced it is raising prices by about 41% for one-third of their ground shipments. Theyre doing this by charging for box size instead of weight. See article:
Who is impacted and what can they do about it?
Lighter weight products requiring a larger size box will cost more to ship. Product examples are diapers, paper towels, shoes, light toys, promotional materials, bulky household goods, fragile items requiring padded packaging, and many others. This increase will dramatically affect online retailers and small businesses the most. Merchants will have to choose to either raise product prices (sales will decrease), pass on shipping fees (cart abandonment will increase), or absorb the fee entirely (not competitive long-term).
Yes. While FedEx is raising rates, has lowered the price of shipping via USPS 2-Day Priority Mail with an innovative New Blue program now available at The company already saves shippers about 20% from their previous bills with FedEx or UPS by giving them access to pricing designed to compete with market leaders such as Amazon. By offering 2-day service for less than FEDEX 5-day ground, PostageAnywhere.com users retain more profit and provide a better transit experience to their customers. If youre still shipping with FedEx or UPS, contact us for a free shipping analysis. Were here to help.
My name is Beugger Daniel a boutique store owner
West Africa with a registered name is
Goldyboutique de Stores .Im really interested in
your product and would like to be one of
your international customers.We deals in all kind
of women,men,handbags and kids clothing,jeans,
tshirts jewelries & accessories etc.It will be my
I will also like to let you know that am going to
pay with my company credit card as my mode of
payment while shipping method should be either be
USPS EXPRESS MAIL SERVICE or FEDEX.I will be
We use Volusion which has built in UPS shipping lookup and products are entered with dimensions so we dont end up with dimensional weight added fees as a surprise after the fact. We have two fixed price ship methods for our larger LTL products but that special is for only continental United States. So far has been reasonably accurate. There is very little available for ship cost automation for larger size products. Anyone with a good solution?
if youre interested our site is for industrial woodworking equipment we import from Italy.
Im from New Zealand and I have also gone through this situation before with my own website, I am now working in an ecommerce logistics provider who help online retailers with 1/ providing the best solution for your website and customers and 1/ being able to offer some very competetive rates for a range of different services.
I now have this company look after all my inventory management and all international deliveries.. I have managed to get a break down of all freight costs per weight break.. this is for smaller items and for anything over 2kg we have another product that fits into these weight breaks perfectly, so our customers only pay shipping based on the total weight of each item and not a flat rate.
For my job now, to be able to help local companies on growing their sales and providing a better service for their customers shows me there is potential for myself to further grow my business.
if you are interested in talking about this to see if i can help your business send me an email. patrick.
I cant stop reading these blogsvery helpful. Any comments on rewards for customers? I found this website after looking for how to reward a customer after an issue with an order for example, order arrived later than promised.
What would customers like more a gift, refund the postage or a discount on the next purchase? Thank you
I dont know about you guys, but I was able to find an independent shipping company to do all my shipping for me. Its vipparcel.com . Its the same as shipping through USPS but with far better rates and i can insure all my packages for only 3%. My account manager actually asked me that I write a review about them. But, I don;t mind. His name is Peter and email is
Very helpful information everyone. Im wondering if anyone has thoughts about how to deal with shipping costs for large, framed pieces of art? Actual shipping costs can be upwards of $200.00 for very large pieces (approximately 60 inches tall, and 42 inches wide). Ive experimented with increasing prices to cover a flat fee to ship, as well as considered free shipping. Does anyone have experience in this area theyd be willing to share? Thank you!
Im a newbie at this and articles like this are so helpful and informative. Thank you! Between your posts and this ebook ( I feel like Im finally starting to get shipping. Thank you!
I am a data-nerd and created a matrix in excel to calculate our shipping costswe only have two products at the moment with different variantsand the result was that shipping costs for quite a range of our products were within the same cost (we are in Australia and use AustPost). I was really struggling with adding all the shipping costs manually into shopifywhat a painbut once I looked at the data it became really manageable. I ould suggest looking at your data first for how much shipping costs and look for patterns which may make it easier to NOT lose money on shipping.
One questionwhat takes precedencecost or weight. If I say an order is $22 (it weighs 200g) and charge $5 for postage BUT I also have a weight postage of between 150g and 200g of $7 what does shopify use for that orderthe weight price or the specific price value?
Hey Andrew, you are right. I was going to switch to Shopify from ProStores, but their items database doesnt even store the LWH for dimensional pricing.
Shopify does use the products LWH to get a real live carrier bases dimensional weight shipping price.
Shopifys real time shipping doesnt store nor send this info through the API to UPS/Fedex/USPS so no go here.
Did you ever find a solution that does? Im testing Volusion now and their database stores the LWH columns, but doesnt seem to pass it on to Shopify, like Amazon and Ebay both do!!! what a pain, since as you say the entire industry is going to volumetric shipping charges!!! really guys, get with the future of shipping.
Let me know if you have found a solution, since we also sell a huge variety of items from small expensive one to huge bike suitcases that are OS3.
ShipHawk.com now offers instant packing and shipping rates for any item, even items too big for UPS/FedEx/USPS. Check out their API that allows businesses to integrate shipping data with online shopping carts.
We are Chrome Battery, an eCommerce company that specializes in power sport batteries. We were given the opportunity to use discounted rates from the United States Postal Service on our products for one year. In that time, we saved more than $300,000 selling roughly 400 pieces a day. Now, we have been granted a contract through USPS to offer their products, which means the same economic rates previously only allotted to high volume shippers are available to smaller businesses exclusively through Chrome Shipping Group (CSG). We at CSG would be happy to talk to you about how it works and give you a quote on options that would best fit your specific company.
Thank you for sharing the information on the shipping strategy for the online shopping store and for more online shopping and services you may try to one more site
here all your shopping will be enjoyable.
Hi, I am based in Sydney Australia. I have a small online store selling hats but I dont want to ship them myself anymore. Does anyone know of businesses whereby I can send the bulk hats to them and they ship them individually for me as the orders come in??
How do implement the free plus shipping method for my store.
Thanks for making us aware with the minute things to keep in our mind while choosing a shipping strategy for online store, I am very happy that I have found this during my search.
I over shipping cost one kg parcel $17 and two kg parcel $22 dollars price
Since the comments above, there are a lot of apps on Shopify that do all this from discounted USPS walk-in rates usually reserved for high volume accounts to free shipping calculators (in which you can stipulate an order minimum) to calculators in real time that plug into the store including customs forms and shipping tracking numbers. USPS First Class rate also comes with some tracking now. I plan to offer a minimum purchase free ship offer in the header AND allow customers to chose their method during checkout using shipping apps (some are free or very low cost). Overall, my spreadsheet margins do cover this to a degree, but I realize it would be very hard if done as an afterthought with already published pricing.
WHY is it that only Etsy, ebay, and I believe Zibbet actually have a place to SHOW the shipping charges to the shopper? AND to merge that with the sites shopping cart? We have tried Shopify, Big Commerce and Weebly and they act puzzled when we ask them. If Etsy and Ebay can do it why not e-commerce web hosts. We are ending our 30 day guarantee with Weebl