Shopify Order Freight Calculation Rules Adjustment Details

Recently, Shopify has made important adjustments to its order freight calculation rules to help sellers optimize freight management, improve customer experience, and reduce shopping cart abandonment due to excessive freight. The following is a detailed interpretation and Chinadivision's third-party logistics solution to help your Shopify store save freight and improve competitiveness.

Shopify Freight Calculation Rules Adjustment Details

Uniform Rate Pricing

Before adjustment: For orders shipped from different locations in the same location group, freight will be calculated cumulatively, which may cause customers to see higher-than-expected freight at checkout and abandon the purchase.

After adjustment: Such orders will be priced at a uniform rate to avoid freight exceeding customer expectations, improve customer satisfaction and shopping conversion rate.

Orders from different location groups

Freight for orders from different location groups will still be calculated cumulatively.

Unaffected orders

Orders based on weight-based pricing, real-time carrier quotes, and third-party application-set shipping rates are not affected by this update.

Reasons for Shopify's shipping rate adjustment

The main purpose of Shopify's adjustment of order shipping rate calculation rules is to prevent shipping rates from exceeding customer expectations at checkout, which in turn leads to shopping cart abandonment. In e-commerce shopping scenarios, shipping rates are one of the important factors that influence customers' purchasing decisions. When customers have a rough expectation of shipping rates during the shopping process, but find that the actual shipping rates are much higher than expected at checkout, they are likely to give up the purchase because they feel it is not cost-effective. This will not only affect the conversion rate of the shopping cart, but also reduce the customer's shopping experience and have a negative impact on the seller's business. By changing the shipping rates of orders shipped from different locations within the same location group to a unified rate, shipping rates can be made more predictable, allowing customers to have clear expectations of shipping rates before shopping, thereby improving customer satisfaction and shopping conversion rates.

Core pain points and potential impacts of sellers

Risk of freight cost fluctuations:

The original multi-warehouse delivery strategy may reduce the actual freight due to the unified rate, but some sellers may miss the opportunity of lower freight due to failure to optimize the warehouse layout.

Logistics strategy needs to be adjusted quickly:

Sellers who rely on Shopify's default freight template need to reconfigure, otherwise the unreasonable freight setting may lead to profit compression.

Balance between customer experience and profit:

Although the unified rate improves transparency, if the freight is set too high, it may still lead to abandoned orders. It is necessary to accurately calculate the matching degree between freight and customer unit price.

Corresponding solutions for third-party logistics service providers

Optimize freight settings

Fixed freight: Set a fixed freight amount for all orders or orders that meet specific conditions.

Calculate freight by weight: Calculate the freight based on the total weight of the order.

Calculate freight by price: Calculate the freight based on the total amount of the order.

Carrier automatically calculates freight: If your store has enabled Shopify Shipping or integrated other third-party transportation services, you can choose to let the carrier automatically calculate the freight based on the detailed information of the order.

Integrate third-party transportation services

Shopify Shipping: Integrate mainstream carriers such as USPS and DHL to enjoy discounted rates.

Third-party plug-ins: Install ShipStation or EasyShip through the App Store to compare prices from multiple logistics providers and automate orders.

Localized delivery and time management

Multiple warehouse settings: If you stock in overseas warehouses, you can allocate inventory through Shopify Locations to shorten delivery time.

Time display: Use plug-ins (such as Delivery Date Picker) to display the estimated delivery time on the checkout page to reduce customer inquiries.

Freight optimization strategy

Free shipping threshold for full amount: Use the service provider's "Freight Tier Tool" to set up tiered free shipping (such as free shipping for orders over $50) to increase the average customer price, but you need to calculate the gross profit margin to avoid losses.

Regional differentiation: The free shipping threshold can be lowered in high-consumption areas, while it needs to be raised in remote areas.

Freight pre-calculation plug-in: Display "estimated shipping" on the product details page, and use the service provider's API to synchronize the shipping range of different regions in real time.

Optimize location group settings

Reasonably divide location groups: As a third-party logistics service provider, we can assist sellers to reasonably divide the shipping locations and optimize the location group settings based on factors such as the actual storage location of the goods, the frequency of shipment, and the target customer group. For example, the shipping locations with high shipping frequency, close geographical locations, and similar target customer groups are divided into the same location group, so that the advantages of unified rate pricing can be maximized and the additional costs incurred due to the accumulation of freight costs in different location groups can be reduced.

Regular evaluation and adjustment: As the seller's business develops and market demand changes, the shipping location and customer distribution may change. Therefore, it is recommended that sellers regularly evaluate and adjust the location group settings to ensure that the division of location groups always meets the actual business needs to minimize freight costs.

Optimize multi-warehouse layout and match unified rate rules

Merge inefficient warehouses: Analyze the order coverage and freight costs of each warehouse, and close redundant warehouses (such as small warehouses in remote areas).

Dynamic warehouse selection tool: Use the service provider's intelligent routing system to automatically select the warehouse with the lowest freight for shipment based on the customer address.

How to save Shopify shipping costs?

As a third-party logistics service provider, we recommend that Shopify sellers adopt the following strategies to reduce unnecessary shipping costs:

1. Choose the right shipping calculation method

Calculate shipping costs by weight, price or fixed rate according to product characteristics to ensure that shipping costs match transportation costs.

2. Enable third-party logistics calculator

Integrate third-party logistics calculator in Shopify to calculate shipping costs in real time and improve user experience.

3. Optimize packaging size

Set default packaging size in the Shopify backend to ensure more accurate shipping calculation.

4. Use Shopify's shipping rule setting function

Create personalized shipping strategies and set shipping costs based on order amount, weight, region and other conditions.

5. Choose the right carrier

Compare real-time quotes from different carriers and choose the most cost-effective shipping solution. Take advantage of bulk shipping discounts to reduce the shipping cost of a single item.

Shopify's shipping calculation rule adjustment provides sellers with a more flexible way to manage shipping costs, which helps improve customer experience and conversion rates. However, sellers still need to adjust their logistics strategies to ensure reasonable freight rates and efficient order fulfillment. By optimizing freight settings, integrating third-party transportation services, localized delivery management, and adopting freight optimization strategies, you can effectively save freight and improve your store's competitiveness. If you need to learn more about or optimize your freight settings, please feel free to contact Chinadivision.