Episode 36 - Setting up Shipping in Your Shopify Store

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Hey, Scott Austin here. In this episode, I'm going to talk about the different ways to set up shipping in your Shopify store. And this topic deserves a full episode, because setting up shipping is not easy in Shopify. That said, its not easy in any e-commerce platform as shipping is a complex beast. There are a lot of decisions that you will need to make. This discussion will be based on US examples as that is the market that I have the most experience with. But the same principles will apply to other countries.

So let's get started with a little background about shipping companies and charges.

In 2015, the main delivery services changed their shipping rules globally. Before the change, the shipping cost was based on the weight of the package and the distance the package was being shipped. But in 2015 a 3rd factor was added to the calculation, that factor is the size or dimensions of the product. You know, the length, width and height of the box you ship the order in. The term 'dimensional weight' or 'volumetric weight' is used here. What the carrier does is compare the actual weight of the package to the dimensional weight of the package. And they then use the higher of the two to calculate the shipping cost.

The equation used for dimensional weight is as follows. The length, width and height of the shipping package are multiplied together to come up with the volume. This is usually done in inches. That volume is then divided by a shipping factor. That factor is generally 139 inches cubed per pound or 12 pounds per cubic foot. The result is the dimensional weight whose units is pounds.

In effect, the dimensional weight process allows carriers to charge a higher price for larger but lighter packages. As these packages take up a lot of space in shipping trucks and planes thus the need to charge more for them.

So shipping rates are determined by the distance that a package is shipped and either its actual weight or its dimensional weight.

Let's talk about how Shopify handles distance.

Distance is determined by creating zones. And zones in Shopify are determined by countries and states or provinces inside some larger countries. Here is the current list of countries that Shopify can sub-divide into smaller zones:

China, Hong Kong, India, Indonesia, Japan, Malaysia, Russia, South Korea, Thailand, UAE, Ireland, Italy, Portugal, Romania, Spain, Egypt, Nigeria, South Africa, Guatemala, Panama, Argentina, Brazil, Chile, Colombia, Peru, Australia, New Zealand, Canada, Mexico, and the United States.

Now, this is a broad mix of countries. Some small, some large. I don't know why these countries can have sub-zones within them. Maybe shipping costs vary greatly within these countries. The rest of the countries of the world not listed, have just a single zone for the whole country.

So you'll need to determine how many zones you need for your store and how they'll be set-up. For example, a common setup that I'll do for a US store is create 5 zones for the US. One for the East Coast, a second for Middle America, a third for the West Coast, a fourth for Alaska and Hawaii and a fifth for American territories like Puerto Rico and Guam. Of course, you can have more or less zones for the US-based on your business. For example, a store in Australia may have only one zone for the US if their shipping is the same cost regardless of where it is going in the US. One thing to note about the US, Shopify treats Washington DC as a state. So if you are creating an East Coast zone, don't forget DC. Or if you are creating a zone for the lower 48 contiguous states, it will actually have 49 states in it.

Then you need to decide what countries you want to support with international shipping. You see, you don't have to ship to every country. Your country may not allow any businesses to ship to specific other countries. For example, the US currently sanctions shipping to these countries:

Cuba, Iran, North Korea, Sudan and Syria

Now, I recommend you also not ship to other countries for reasons like:

The country has complicated import taxes, in general, or for your specific products.
The country has notoriously poor or unreliable shipping in country. For example in my experience, shipping to Russia from the United States is highly unreliable.
If the shipping cost to a country makes the total cost for orders beyond reasonable.
If your products are illegal or somehow controlled in the other country.

If a given country or state is not within a shipping zone in your store. Customers from that area will see a message during the checkout saying shipping is not available. And the customer will not be able to complete their checkout. So you may want to look at where your abandoned carts are coming from to see if any of them are caused by shipping not supporting their location.

Once you have your shipping zones set-up, the next step is to determine your other dimension for shipping cost calculations. Those can be:

Based on the price of the order.
Based on the weight of the order.
Shipping rates calculated in real-time from the third-party shippers based on the order.

And these are not binary options. You can use one method or a combination of all of the methods. You can also use one method in one zone and a different method in another zone.

Now number 3, calculated shipping rates, sounds like the best one. But its more difficult to get right and is many times not the route that I go when setting up a store. First off, calculated shipping rates is a Shopify feature that is not enabled for all Shopify plans. If you are on Shopify Basic, the $29 per month plan, or Shopify, the $79 per month plan, you'll need to contact Shopify support and have them activate Calculated Shipping Rates, for which you'll be charged a monthly fee. Additionally, calculated shipping rates currently only works with a few carriers including:

Canada Post
FedEx
UPS
United States Postal Service

And here's the biggest issue with Calculated shipping rates. Remember when I talked about how the shipping companies look at both the actual weight and the dimensional weight of the package. Well, Shopify stores the weight of each product or variant, but it does not store the dimensions. Now in Shopify Shipping and delivery settings, you can define and save the different box sizes that you use in your business. But calculated shipping only uses the default package size. This is a pretty serious issue in the current system. Now, if you are selling generally heavy products then your dimensional weight is typically less than the actual weight, so this won't affect your store as much. But if you are shipping lighter products, say shoes, than this does become an issue. If you're selling shoes, then you'll probably pick an average shoe box as the default package. But then an order for 5 pairs of shoes will be calculated using the one shoebox size. And this skews the accuracy of the costs charged.

Shopify App Recommendation - Boxify

As with many issues with the Shopify platform, there's an app that helps solve the problem. In this case, where you want to use calculated shipping but ship boxes that greatly vary in size, I recommend using Boxify. I'll include a link to it in the show notes. Boxify starts at $19 / month and goes up to $99 / month based on your order volume. In Boxify, you'll enter the shipping dimensions for each of your products. And you'll specify how the product will ship. For example, does the product ship in its own box or can it be added to a bigger box with other products in the order. The app does a great job in making the Calculated shipping feature work across different ordering scenarios.

Now, here's a tip for you with Calculated Shipping. You can add every shipping rate from every carrier if you want to. But if you do, that will be a very confusing experience for customers and they could easily have to choose from a dozen different shipping options. So reduce the confusion by removing overlapping options from different carriers. Or even reducing the number of shipping options provided by a single carrier. Typically, I like to show no more than 3 shipping options.

Calculated Shipping is only available for North American stores. If you are outside of North America, or even for many stores in North America, you won't be using Calculated shipping. Instead, you'll be creating shipping tables on your own. Each zone has independent shipping tables. And the tables can be based on two different inputs, order value or order weight. Note, these tables are based on the total for the order and do not vary by product. Within one zone, you can create one table based on price and another table based on weight. Here's an example of why you might do that. You could build out a weight-based table that has a different shipping price every time the order weight increases by a pound or kilogram. And then you could have a second, price based table that provides free shipping on orders over $100. In that situation, let's say a given order has a total cost of $120 and a total weight of 2 pounds. Well in the checkout, the customer would be shown at least two shipping options. One would be the Free Shipping for being over $100. And the other would be the shipping cost for a 2-pound package. Shopify presents the shipping option with the lowest price first. So the free shipping option would be the default. The customer can still choose a paid option which they might choose for things like overnight shipping.

Shipping Tables allow many stores to build out sufficient shipping options for their business. Here are some best practices to apply to shipping table:

As with most things, less is more. Reduce the number of options that you are providing to the customer to help make the decision-making process easier.
Make the labels for the shipping options super simple and clear. Shippers have complex confusing names like Fed-Ex Super-Express Deluxe Delivery Premium. You could instead name that 3-Day Shipping.
Removing the carrier from the shipping option label, allows you to use any carrier. So if the customer picks 3-Day Shipping, you have the freedom to use Fed-Ex, UPS or USPS to achieve that goal.

Now so far, we've been discussing what I consider to be simple shipping. But many stores have shipping requirements that would not be met through the methods we've covered so far. Let's call this complex shipping. Here are some of the solutions available to you for complex shipping.

Shopify App Recommendation - Advanced Shipping Rules

The first solution is an app. It's called Advanced Shipping Rules. It starts at $9 / month and goes up to $99 / month based on the complexity of your shipping configuration. It allows you to create different rules for different types of products. Let's say your store sells books, electronics and pianos. Not a probable combination, but great to illustrate the power of the app. In Advanced Shipping Rules you would set up 3 different product groups, books, electronics, and pianos. And then you can create unique shipping rules for each product group. So books would get media shipping rates. Electronics would get normal by the pound rates. And electronics could be the only product group eligible for free shipping. The pianos would be subject to freight shipping rules. The app is also very useful when shipping from multiple warehouses or drop shippers.

The second solution is Shopify Plus. Shopify Plus allows you to present different shipping rates to customers based on rules that you define. For example, you could provide different shipping rates to retail and wholesale customers. Or different rates for VIP customers. Now Shopify Plus is an expensive proposition. To learn more, listen to my podcast episode on picking a Shopify plan, which I'll link to in the show notes.

The third solution is to create separate Shopify Stores. I've only done this to separate out shipping and other business rules for retail and wholesale. I covered it in my wholesale podcast episode which I'll link to in the show notes. It works well when retail and wholesale have completely different shipping rules.

So that's an overview in setting up shipping in your Shopify store. And this is just an overview. There's a lot more detail and nuance that you'll learn as you go through the setup process. Here are some final pieces of advice:

What you charge your customers for shipping does not have to be equal to what you pay the shipping companies for shipping. Free shipping is the most obvious example of this. Same with free plus shipping. So there are plenty of business best practices on how to use the shipping price as a lever in your overall business. That sounds like a future podcast episode to me.
As you set up shipping tables, they do not need to be perfect. Sometimes you'll overcharge while other times you'll undercharge. The goal is to have it balance out in the aggregate. Don't pursue perfection here, go for good enough.
Start simple and let your shipping rules evolve over time. As with most things, you'll learn a lot from your first, simple shipping implementation. That learning can inform your next steps.
Check your work. After you set up your shipping rules. Or after you update your shipping rules, check the shipping costs that your next orders are charging. Are the amounts what you expected?

That's all I've got for shipping this time. Thanks for listening.