How to Choose a Shipping Strategy for Your Online Store

How to Choose a Shipping Strategy for Your Online Store


It's the all too familiar story. 

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 they abandon their cart and leave your website disappointed. 

So what can you do to influence this decision? 

Let's take a look at some shipping strategies and how you can use them in your business. 

Shipping Rates and Abandoned Carts

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 you're going to want to get right. Studies have shown that shipping and handling fees are the number one factor driving shopping cart abandonment. 

With this information in mind, let's look at the three most common shipping options and the pros and cons of each. 

Option 1: Offer Free Shipping

Offering free shipping - usually just for domestic orders - is a sure-fire way to get your customer's 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 don't 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. Chubbies offers 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 isn't too much of an issue. However, if you're 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.

There are, of course, exceptions.

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.

Option 2: Charge What You Get Charged

In some shopping carts (like Shopify) it's 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 on Shark 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 aren't inflating your quoted shipping fees or raising your item prices to cover the charges.

This strategy doesn't have the same persuasion power free shipping does but it's an easy way to make sure that you're 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.

Option 3: Offer Flat Rates

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 don't drastically undercharge or overcharge your customers.

When you hit the right cost, you'll probably be over - or under - the actual shipping cost by a little, but it should even out in the end. 

Truly’s Natural Deodorant takes the flat rate approach, and has a simple $2.99 charge for a single product order.

Angela Collison, the founder of Truly’s 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 don't 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.

You'll 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 like SumAll, StitchLabs, ShipStation, 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 at ShipStation - a web-based shipping solution that streamlines the order fulfillment process for online retailers.  Check out the ShipStation Shopify app here.


  • @Shopify Mark Macdonald
    Mark Macdonald
    July 23 2013, 11:31AM

    Hey Ollie – thanks for sharing how you handle your shipping. It’s great to hear from merchants about what works for them. I really like the surprise shipping upgrade idea – great stuff.

  • Louise Demirbaş
    Louise Demirbaş
    July 23 2013, 01:12PM

    Is it possible to add a main shipping price and an additional item shipping price like Etsy?

  • Kathy
    July 23 2013, 01:44PM

    Shipping is a huge issue with my bakery. It’s 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. It’s also higher because of the packaging and that its food products. I’ve not found a way to resolve it but am definitely open to suggestions.

  • @Shopify Mark Macdonald
    Mark Macdonald
    July 23 2013, 01:49PM

    Hi Louise, here’s a video tutorial and more information on how to set up shipping rates with Shopify »

  • @Shopify Mark Macdonald
    Mark Macdonald
    July 23 2013, 01:51PM

    @Kathy – figuring out your shipping strategy can definitely by tricky and there’s no one size fits all approach. I think testing is the only real way to determine what works and what doesn’t.

  • Yotam
    July 24 2013, 09:39AM

    Interesting. I’m 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, it’s 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, it’s 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, I’ll be glad to hear it!

  • Antonio Vaughn
    Antonio Vaughn
    July 24 2013, 11:54AM

    Great Article. What about combining Flat rate with Free Shipping. Say like under $50 is $5 shipping, and $50 and over is Free shipping.

  • Adeel Vanthaliwala
    Adeel Vanthaliwala
    July 24 2013, 11:57AM

    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.

    I’d be interested in finding out because I have a few clients who have the same concerns.

  • Andrew
    July 25 2013, 01:23PM

    This article, while somewhat helpful, really annoyed me because it disguises one of the Shopify’s 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), it’s completely impractical for anyone who wants to sell a wide assortment of products of different weights and sizes.

    Using an item’s cost to determine shipping isn’t helpful because a wooden wagon that costs $150 has a totally different shipping cost than a $150 piece of jewellery. Likewise, weight isn’t 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 I’ve discovered is to manually calculate the volumetric (or dimensional) weight of each item and then enter that as the product’s physical weight. It goes without saying that this is a clumsy method that involves more than a little bit of math. It’s also very annoying and time-consuming.

    While upgrading to the Unlimited Plan with real-time carrier shipping might solve the problem (I haven’t worked on a Shopify store with that plan) I think it’s 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 you’re 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.

    It’s a shame this problem exists, because Shopify is otherwise a very elegant, easy-to-use eCommerce solution for small business with great support.

  • Andrew
    July 25 2013, 01:35PM

    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.

  • Misty
    July 28 2013, 03:12AM

    I use a few drop-shippers and they use different rates and carriers. How do I set this so there’s 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.

  • Margherita Caruana
    Margherita Caruana
    July 28 2013, 08:03PM

    I have a Shopify website, but not sure if shipping is set for Australia.
    Are you able to provide further info on this.


  • Craig
    July 29 2013, 11:26AM

    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?

  • Lindsay
    August 02 2013, 03:12PM

    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 sku’s 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” .

  • Michael
    August 12 2013, 01:20PM

    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.

  • Gotama
    August 14 2013, 11:33AM

    Nice page

  • Fiona
    August 17 2013, 11:07AM

    We just launched our site at

    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 don’t 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 don’t 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.

  • Kat Ondrova
    Kat Ondrova
    October 10 2013, 08:44PM

    I can’t 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 would make things way easier.

  • Gary D
    Gary D
    October 18 2013, 11:18PM

    I,m setting up an ecommerc site and considering using priority mail to ship my orders. The items are small and light. I’m 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.

  • Evan W
    Evan W
    December 10 2013, 12:07AM

    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

  • Stephanie
    January 14 2014, 01:55PM

    I’m 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 they’re doing it.

  • Justin
    February 07 2014, 02:31PM

    Our company didn’t think that moving to the highest plan, just to calculate real time shipping presented enough ROI, and it just wasn’t 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.

  • amy j.
    amy j.
    March 20 2014, 11:29AM

    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 don’t fit into the largest flat rate box, shipping has to be calculated ‘by hand’

  • Chad
    April 14 2014, 12:47PM

    Good article. One suggestion (or maybe I’m missing it). Can you add an email option to your share bar? I’m trying to easily email this article to a friend of mine but it’s only social shares.

  • amy
    April 20 2014, 05:39PM

    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.

  • Ben
    April 27 2014, 09:13PM

    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.

  • Caitlin
    May 08 2014, 07:29PM

    Another FedEx Rate Hike…Here is what you can do about it.
    FedEx just announced it is raising prices by about 41% for one-third of their ground shipments. They’re 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).

    Is there a good option?
    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, users retain more profit and provide a better transit experience to their customers. If you’re still shipping with FedEx or UPS, contact us for a free shipping analysis. We’re here to help.

    May 08 2014, 08:31PM

    I am interested in your products

    My name is Beugger Daniel a boutique store owner
    in IVORY COAST. (CI)

    West Africa with a registered name is
    Goldyboutique de Stores .I’m 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
    joy if you ready to sell for me.

    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
    expecting your reply.

    Shipping location.

    ZIP CODE; 00225
    TEL: +22542154350

  • Michelle Crumpler
    Michelle Crumpler
    May 13 2014, 10:27AM

    We use Volusion which has built in UPS shipping lookup and products are entered with dimensions so we don’t 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 you’re interested our site is for industrial woodworking equipment we import from Italy.

  • Patrick
    May 20 2014, 12:56AM

    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….

  • Andrea
    May 20 2014, 02:57AM

    I can’t stop reading these blogs…very 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

  • Inna Bogdanova
    Inna Bogdanova
    May 30 2014, 10:04AM

    I don’t know about you guys, but I was able to find an independent shipping company to do all my shipping for me. It’s . It’s 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

  • Bob
    June 23 2014, 10:31AM

    Very helpful information everyone. I’m 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). I’ve experimented with increasing prices to cover a flat fee to ship, as well as considered free shipping. Does anyone have experience in this area they’d be willing to share? Thank you!

  • Dianne
    July 03 2014, 09:39AM

    I’m a newbie at this and articles like this are so helpful and informative. Thank you! Between your posts and this ebook ( I feel like I’m finally starting to get shipping. Thank you!

  • Jose
    July 26 2014, 02:58AM

    Hi Guys,
    I am a data-nerd and created a matrix in excel to calculate our shipping costs—we only have two products at the moment with different variants—and 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 shopify—what a pain—but 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 question—what takes precedence—cost 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 order—the weight price or the specific price value?
    Thanks in advance

  • stephen
    August 09 2014, 11:03PM

    Hey Andrew, you are right. I was going to switch to Shopify from ProStores, but their items database doesn’t even store the LWH for dimensional pricing.
    Shopify does use the products LWH to get a real live carrier bases dimensional weight shipping price.
    Shopify’s real time shipping doesn’t store nor send this info through the API to UPS/Fedex/USPS… so no go here.

    Did you ever find a solution that does? I’m testing Volusion now and their database stores the LWH columns, but doesn’t 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.

  • Ashley
    September 11 2014, 07:56PM 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.

  • Dale
    October 13 2014, 03:59PM

    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.

  • catherin
    November 29 2014, 11:45AM

    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.

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