Planning your shipping strategy

Shipping your products to your customers costs money, and determining who pays for this cost impacts both your profits and a customer's likelihood to place an order. While your Shopify store comes with a set of shipping rates that are based on your store's location and insights from established merchants, adjusting these rates to best suit you and your customers will help your business succeed.

Before you start selling products, decide which shipping strategy you want to use and how much you want to charge for shipping. There are three main strategies for offering shipping rates to customers at checkout:

  • flat rate shipping
  • free shipping
  • carrier-calculated shipping

You can also offer pickup in store and local delivery for customers that are located close to your store location.

Overview of shipping strategies

In most cases, you want to balance your own shipping and handling costs with maintaining attractive prices for your customers.

Review the following table to learn more about different shipping strategies, and their benefits and drawbacks:

Shipping strategies benefits and drawbacks
Shipping strategyBenefitsDrawbacks
Flat rate shipping
  • Allows you to set clear shipping expectations before checkout and avoid checkout abandonment
  • Works with transit time and processing time that display exact delivery dates to your customers at checkout
  • You can offer discounted shipping based on the cart value that can increase your total order value
  • Shipping costs can fluctuate often, so you might need to adjust your flat shipping rates more frequently
  • You need to estimate the shipping costs by yourself. If you're buying Shopify Shipping labels, then you can calculate your shipping costs using the Shopify Shipping Calculator
  • Free shipping
  • Customers like free shipping and displaying free shipping early in your customer journey can drive more sales
  • Free shipping is a great marketing strategy that can have positive impact on your cart conversion rate
  • You can offer free shipping based on the cart value that can increase your total order value
  • Shipping fees need to be accounted for elsewhere and can affect your profit margins. A common practice is to include a portion of your shipping costs in your product prices
  • Carrier-calculated shipping
  • Displays exact shipping costs at checkout using Shopify Shipping, third-party carriers, or shipping apps
  • You don't have to estimate or calculate shipping fees by yourself
  • Your customers can select the exact shipping service they want
  • You can't display shipping rates before checkout. This might lead to increased abandoned checkouts and negatively impact your cart conversion rate
  • Requires exact product weights and package dimensions
  • Flat rate shipping

    You can use flat rate shipping strategy to offer consistent and predictable shipping costs to your customers at checkout. You can offer a single flat price for all products or set price-based or weight-based conditions that display a specific shipping cost at checkout.

    When you use this strategy, you need to calculate your shipping fees yourself. To avoid charging too much or too little for shipping, you need to consider the average price for shipping a package. An example of a flat rate can be charging 5 USD for all domestic shipments.

    Flat rate shipping is predictable and sets clear expectations for your customers. You can add a table with your flat shipping rates to your shipping and delivery page where your customers can check shipping costs before they reach the checkout.

    You can also activate transit time and processing time for your flat shipping rates and show expected delivery dates at checkout.

    Free shipping

    Free shipping usually has a positive impact on your cart conversion. You can use free shipping as a marketing tool and advertise it in your online store with a free shipping banner.

    You can combine free shipping with a flat rate shipping strategy. You can offer free shipping based on the cart value and increase your total order value. For example, you can offer free shipping for orders that are over a 50 USD value.

    However, shipping is never actually free and you need to include a portion of your shipping fees into your products' prices. To account for this, you can calculate the average cost to ship your product, and then add the buffer into your product prices. For more information, refer to Create free shipping rates.

    Carrier-calculated shipping

    Carrier-calculated shipping lets you charge exact shipping costs at checkout. If your business is still new and you have limited resources, then passing along the exact shipping cost can be an easy way to protect your profit margin.

    Calculated shipping rates are calculated only at checkout and the shipping costs depend on many factors, such as origin and destination country, product weight and size, and delivery time. You can't surface your shipping costs before checkout. This can lead to unexpected shipping costs at checkout and cause your customers to abandon the purchase.

    To use calculated shipping, you need to provide accurate weights of your products and packages.

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