17 Different Shipping Strategies For Your Business (2024) - Shopify (2024)

As a business owner, feeling apprehensive about shipping and delivery is expected. Even though you can pick, pack, and mail your product as soon as a sale comes in, you’re relying on a shipping carrier to deliver the package on time and in good condition.

The courier you choose significantly shapes a customer’s experience and how they ultimately feel about your business. Customer experience aside, shipping is also expensive. The average online store owner spends 8.7% of their annual expenses on shipping. More than one in three said shipping was the most unexpected cost of starting a business.

Fortunately, there are ways you can take your shipping strategy into your own hands and deliver incredible customer experiences every time—without sabotaging your profits. This guide shares how to do it, with examples from retailers who use each shipping strategy effectively.

What is a shipping strategy?

A shipping strategy is a plan that helps online retailers streamline the shipping process. It involves partnering with shipping carriers, selecting which shipping methods to offer, and determining the shipping prices for each type of order. The goal is to optimize the shipping process to meet customer expectations while minimizing shipping costs and protecting profit margins.

Why you need to choose the right shipping strategies

Imagine this scenario: A new customer visits your online store, finds a product they love at a price they like, and adds it to their cart. They get to the checkout page, see the shipping price, and second-guess their purchase. Suddenly, a product they thought was well-priced seems expensive.

More often than not, the shopper abandons their cart. Research from Baymard Institute shows unexpected costs are the top reason for shopping cart abandonment, accounting for almost half of all exited checkouts.

Because of this, shipping isn’t just a cost of doing business—it’s a strategic lever that can influence your business.

With the best shipping strategy in place, you can:

• Enhance the customer experience. Setting clear expectations with your shipping strategy ensures customers have a consistent and positive experience when they shop with you. Be transparent about shipping delays caused by factors outside your control, such as natural disasters, carrier delays, the impact of peak volume, and any other issues that might hold up your customers’ packages.
• Boost your average order value (AOV).Promotions and offers related to shipping are excellent ways to encourage shoppers to buy more and can effectively increase your average order value. Studies show that 78% of consumers are willing to buy more to qualify for free shipping.
• Grow your business. With a solid international shipping strategy, you can sell to more people in more places around the world, expanding your business’s reach.
• Improve your conversion rate. Customers who know what to expect at a fair price are more likely to complete their purchase. Giving them options also encourages a sale—you can provide customers with a choice of carrier, delivery time, and even fulfillment method, including options like local delivery and curbside pickup. It’ll help you win back the 23% of shoppers who abandon their shopping cart because delivery was too slow.

17 different shipping strategies for your business

Free shipping

Your ability to provide free shipping depends on knowing two numbers: the cost to ship an order and your profit margins. While predicting this for every potential order is difficult, you can look at your current AOV and the cost to ship your most common products and orders.

Free shipping without conditions is best for high-margin products, where you can account for shipping expenses for the overall price of your products.

Incorporate free shipping into your pricing strategy

If free shipping is a competitive must-have in your niche, one strategy to remain profitable is to plan for the cost when you price your products. Remember, many factors can influence your pricing strategy; covering shipping costs is only one. You’ll also have to consider your niche, the competitive landscape, and whether you’ll frequently be shipping internationally.

The weight of your packaging is a significant factor in your shipping costs, and luckily, it’s somewhat within your control. Consider how much packaging you need to ensure your items arrive at their destination safely and undamaged.

For delicate items, you might need heavier packaging like cardboard to protect them, but for items like clothing, you can opt for lightweight packaging, such as poly mailers or ePackets, to save money on shipments. Merchants can also benefit from free packaging provided by carriers like USPS.

Of course, if you primarily rely on international shipping, the costs will be different than domestic, so consider that when establishing your margins.

💡 Note: If you’re using Shopify, you can add product costs directly to each product to see its profit margin. You can use that information to help make strategic decisions about shipping, promotions, and more.

Set a minimum spend threshold

The most common strategy for offering free shipping over a certain amount is to get some sales under your belt, determine your average order value, and then offer free shipping on all orders X% greater than your average order amount.

One beauty and hair care brand had its minimum order at $80 to qualify for free shipping. It found that more than half of people would get past the shipping stage but drop off at the payment stage—likely because of high shipping costs. So, it decided to adjust the condition for free shipping, lowering it to $45, the average cart size for abandoned checkouts. As a result, the brand doubled its revenue and almost tripled its sales.

Use free shipping as a special promotion

If free shipping isn’t sustainable year-round, consider using it as a promotional lever to boost sales. For example, if you can’t offer free shipping during your busiest times, use it as a promotion to clear out older inventory at full price during a slower time of year. Plus, many carriers add surcharges during the holidays, so you can end the promotion in time to avoid eating that additional shipping expense.

Similarly, large or cumbersome products like furniture may not fit your shipping strategy. If you offer luxury or handmade one-of-a-kind items, rolling in an extra percentage for shipping and handling probably isn’t too much of an issue, and it will be hard for consumers to notice.

However, if you’re in a highly competitive market where free shipping and the lowest prices are the norm, marking up your products to cover shipping may not be the best idea, as consumers will immediately notice the increased product cost. In this case, you have to consider either a different option entirely or absorbing the shipping cost on most of your items.

💡 Note: If you’re selling in the US, Canada, or Australia, Shopify Shipping offers negotiated rates to help defray the cost of shipping. Learn more about Shopify Shipping.

Upsell shipping insurance to make a profit on free shipping

One way to profit from free shipping is to upsell shipping insurance. Considering one in three Americans has had a package stolen, shipping insurance can give people peace of mind at checkout. They’ll get a full refund or replacement if they’ve purchased the add-on and their item arrives damaged or goes missing in transit.

For example, Tabs sells an item prone to melting in transit: chocolate. Online shoppers can add melting protection, a type of insurance that costs $4.99 and guarantees that if a product melts, they’ll get a free replacement.

Offering shipping insurance as an upsell is a smart way to offset the cost of free shipping while still allowing customers to protect their purchases. Customers feel more secure about their orders, and you can generate additional revenue to help cover your shipping expenses.

Flat-rate shipping

The flat-rate shipping strategy involves setting a fixed price for every package or flat rates for weight ranges and order totals. Estimating shipping rates is easier when boxes of each size have a predetermined cost.

Some preparation is required to determine the average cost of shipping a package with flat rates. This is a best practice you should be doing anyway to ensure that you don’t drastically undercharge or overcharge your customers. When you hit the right price for your flat-rate shipping, you’ll probably be slightly over or under the actual shipping cost, but it should balance out in the end.

Record parcel sizes accurately

If you’re basing your flat-rate shipping prices on box size or weight range, it’s crucial to accurately record each product’s weight to ensure parcel sizes are billed correctly. Many merchants with similar-sized items use this shipping strategy because boxes don’t differ much in size or weight.

You can do this in Shopify by ticking “This is a physical product” and entering the weight into each listing. When a customer adds these products to the checkout, Shopify will automatically calculate the appropriate box size and charge the customer for the flat-rate shipping rate that applies to their order. You can then buy shipping labels from flat-rate carriers like UPS and USPS directly inside your Shopify admin to post your parcel.

Accurately recording product weights and using Shopify’s built-in features can help you streamline your flat-rate shipping process and ensure you’re charging customers the right amount. This approach helps you maintain profitability while providing customers a simple and predictable shipping experience. It’s a win-win situation that allows you to create a smooth and efficient shipping process that benefits your business and your customers.

Offer flat shipping rates for paid returns

While free returns are seen as the norm in some industries, offering them can do more harm than good. Fashion customers, in particular, are notorious for “wardrobing”—purchasing multiple items of clothing to wear at once and returning them for a full refund. Charging customers a flat rate to return their goods can deter this type of return fraud while nudging shoppers to be more sustainable and mindful of their purchases.

If you offer paid returns, flat-rate shipping is a great option. Two out of five online shoppers would pay extra for an eco-friendly and sustainable return process. And when customers know exactly how much it will cost them to return their product before they buy it, they won’t be caught off guard by unexpected fees later on. This flat-rate return fee could even help you cover the reverse logistics cost of accepting returns, offsetting some expenses associated with processing and restocking returned items.

Set flat rates for standard and expedited shipping

Fast shipping is a close second to free shipping on an online shopper’s priority list. Some 88% of online shoppers are willing to pay for same-day (or faster) delivery services. You can cater to a broader range of customer preferences and budgets by offering flat rates for standard and expedited shipping.

For example, a customer who needs an order to arrive before a specific date may be willing to pay $20 for expedited shipping, but a customer who’d rather save money might be more likely to convert if they can choose a $5 shipping option that will take a bit more time.

As part of your shipping strategy, consider setting flat rates for expedited shipping while keeping your standard shipping options free. This approach allows you to upsell your customers and improve satisfaction by allowing them to upgrade if they can’t wait for a free-shipped product to arrive.

Table-rate shipping

Table-rate shipping gives you a rubric to follow when calculating shipping costs. Parcels are charged by weight, size, volume, location, or shipping class so that shipping rates can differ massively—even from one customer’s order to the next.

The most significant advantage of table-rate shipping is that you can find the most cost-effective way to ship your parcel. Customers can also see the shipping price upfront at checkout, limiting their chance of abandoning their shopping cart once extra fees have been added.

That said, table-rate shipping can get complicated, especially if you ship items of varying sizes and serve customers in multiple locations. The shipping price you’re charging customers for each item might also not reflect carrier rates. To mitigate this, consider grouping your products based on similar shipping characteristics, such as weight, size, or fragility, to create more accurate shipping rate tiers in your table.

💡 Note: Using shipping profiles in Shopify makes this strategy pretty straightforward. You can set shipping rates for specific products, shipping locations, and shipping zones that will automatically adjust for you.

Create product segments

When using table-rate shipping, grouping your products based on similar shipping characteristics, such as weight, size, or fragility, allows you to create more accurate shipping rate tiers in your table. This approach improves transparency and reduces the likelihood of overcharging or undercharging customers for shipping.

Let’s put that into practice. Say you’re selling art online. You paint canvases in three sizes, but each painting differs, so you’ll need unique product pages for each. Group together your smaller canvases to use for one shipping rate and calculate the cost of shipping each one to your most popular destinations. Repeat the process for all canvas sizes to get a more accurate estimate of how much it’ll cost to ship every product. This segmentation helps you create a more efficient and cost-effective shipping strategy.

Mention country-specific shipping rates on localized storefronts

Given the complexities of table-rate shipping in multiple countries, it’s worth localizing your storefront and showing simpler versions of your shipping rates on each one. This way, customers don’t have to compare options in the table; they’ll simply see a list of shipping options already filtered to their location.

Localizing your storefront also allows you to tailor your shipping rates and options to customers’ needs and preferences in different regions. For example, you might offer faster shipping options in countries where customers expect quick delivery while focusing on more affordable options in price-sensitive markets. By presenting country-specific shipping rates on localized storefronts, you can create a more targeted and effective shipping strategy that resonates with customers in each market.

💡 Note: Shopify lets you sell to anyone, anywhere, from a single online store. With Shopify's international sales tools, you can accept multiple currencies, preferred local payment methods, and personalize storefronts for overseas customers.

Real-time carrier rates

Real-time shipping rates can change regularly depending on what the carrier is charging. These fluctuations can be risky, as external factors might inflate shipping costs and eat into your profits. That said, it insulates you against any price hikes, since you’re not charging the customer more than you pay for shipping.

Consider embedding a real-time shipping rates calculator into your shipping policy page to build customer trust. This calculator shows that you’re not inflating your quoted shipping fees or raising your item prices to cover the charges. Real-time shipping rates are also an excellent option for heavy or oversized shipments that you simply can’t or don’t want to ship for free, as they ensure you’re not shouldering the full cost of these expensive shipments.

Absorb handling costs in product pricing

Since real-time shipping rates are pulled directly from the carrier and only include shipping, they don’t account for the costs associated with packaging or handling (like the price you’re paying staff to pick and pack orders). Relying solely on this shipping strategy could result in loss of money and sacrificed profit margins.

To work around this issue, consider absorbing extra logistics costs into your product pricing strategy to work around this issue. For example, if you’re making $9 in profit on a product you’re charging real-time rates for, you could add another $1 onto the retail price to absorb handling costs. Factoring these additional expenses into your pricing will help you maintain profitability while still offering competitive shipping rates to your customers.

Negotiate better shipping rates with major carriers

One way to make shipping more sustainable for your business is to reduce the cost of each shipment. Research shipping options in your area to see if there are ways to save money by securing lower rates than retail pricing on the mail classes and services you need.

Real-time shipping can get pricey, and when a customer can order the same product at a higher price point but with shipping included, they might opt for a competitor. That’s why it’s crucial to negotiate the best rates and partner with companies that can give you the best shipping discounts.

💡 Note: With Shopify Shipping, you can purchase shipping labels directly in Shopify to simplify your shipping process and receive the lowest rates with USPS, UPS, or DHL Express in the United States, Canada Post in Canada, and Sendle in Australia.

Local delivery

Ecommerce shipping is no longer limited to third-party carriers. Some 27% of customers take a hybrid approach by blending online and offline channels while shopping.

If you have retail stores or a warehouse that can deliver products in the area local to that location, consider incorporating these local delivery options into your ecommerce shipping strategy.

Offer free local delivery over a particular spend

Local delivery gets orders directly to customers nearby and skips using a third-party shipping carrier. Not only is it a great way to decrease shipping costs and take shipping into your own hands, but delivering orders yourself can encourage more local sales with the draw of free or lower-cost delivery.

Consider how much it’ll cost to deliver items yourself, including the vehicle, appropriate insurance, and fuel. To protect your profit margins, set a minimum order threshold where you can absorb this cost for local shoppers who meet the threshold to qualify for free local delivery.

Incentivize click-and-collect over local delivery

Local and curbside pickup allows customers to purchase your products online and visit your store for a quick pickup—sometimes, never even having to leave their vehicle. It’s much cheaper to offer this service than local delivery, as customers come to you rather than incurring the costs of having you deliver the items yourself.

One clever workaround is to offer free click-and-collect on all orders and charge a small fee for local delivery. This strategy incentivizes people to visit your retail storefront, where they might make additional impulse purchases after speaking with your team, boosting your average order value.

Prepare your ecommerce business with a return shipping strategy

You can have the best product pages in the world, but no matter the industry or niche, there will always be cases where a customer gets their product in hand and decides it’s not right for them. Up to 30% of all online-bought items end up back with the retailer. And even if the reasons for a return have nothing to do with you or your product, you still need to be able to handle them.

There’s no one correct answer when pricing your return shipping, but you can choose from a few standard options. They mirror the main shipping pricing options you worked through to price outgoing shipments.

Figuring out which return shipping option is best for your business boils down to a few key questions:

• Which options are financially feasible? Feasibility includes how often you anticipate getting a return, and information about your margins and generous return policy will likely result in more returns.
• Which option do you want to offer? The correct shipping options depend on the competitive environment and your customer service strategy within the subset of affordable options you just identified.

Once you’ve figured out how to price your return shipping, you can move on to your process for accepting a return. Return procedures can include your communication about return shipping with your customers and the method you use to make the shipping labels available to them.

Make sure your shipping strategy is right for your business

What you choose to charge customers for shipping can have a significant impact on your conversion rates as well as your overall profitability. You’ll need to decide what will work best for your brand, business, and customers, and you’ll likely have to test a few methods before you settle on the one that’s best for your business.

The key to finding the right shipping strategy for your business is to closely examine your unique needs, what your competitors are doing, and what your customers want. As your business grows and changes, feel free to switch things up and try new approaches. By staying flexible and keeping your finger on the pulse of your business, you can create a shipping strategy that keeps your customers happy and your bottom line healthy. And that’s what it’s all about, right?

Shopify Fulfillment Network takes the hassle out of shipping. It connects your online store with Flexport, a leading supply chain and logistics company that picks, packs, and ships orders directly to your customers. Start using Shopify Fulfillment Network today to secure competitive shipping rates and flexible delivery options.