We talk to Shopify store owners every week, and the same pattern keeps showing up: someone launches their store, picks a flat $5.99 shipping rate because it "sounds right," and then slowly bleeds money on every order that weighs more than a pound or ships farther than two states away.
Shipping setup is one of those things that takes maybe 45 minutes to do properly, but most people rush through it during the excitement of launching their store. Then six months later, they wonder why their margins are so thin.
Let's fix that.
What Shopify Gives You Out of the Box
Shopify has actually built a pretty solid shipping infrastructure, and it's gotten significantly better over the past couple of years. Here's what you get on any paid Shopify plan:
Shopify Shipping gives you pre-negotiated discounts with USPS, UPS, and DHL Express. We're talking up to 88% off standard retail rates. That's not a typo. A package that would cost you $11.50 at the post office counter might run you $4.80 through Shopify Shipping. On the Basic plan, you'll see discounts up to 77%. Advanced and Shopify Plus merchants get the steepest discounts, up to 88%.
You also get:
- Shipping label printing directly from your admin dashboard
- Automatic tracking number emails to customers
- Shipping insurance options at checkout
- Package pickup scheduling for USPS and UPS
Most small store owners don't realize they already have access to competitive carrier rates just by being on Shopify. Before you start shopping for third-party shipping tools, make sure you're actually using what's included.
Setting Up Shipping Zones (Get This Right First)
Go to Settings > Shipping and delivery in your Shopify admin. The first thing you'll configure is shipping zones, which are geographic regions where you'll ship.
At minimum, most US-based sellers need two zones:
- Domestic (United States) — your bread and butter
- International — if you want to ship outside the US (start with Canada if you're testing the waters)
Within each zone, you'll set your shipping rates. This is where most people go wrong.
The Three Rate Strategies
Flat Rate Shipping — You charge every customer the same amount regardless of what they order. Simple, but dangerous. If you set a flat $6.99 rate and someone orders three heavy items going to Alaska, you'll eat the difference. Flat rates work best if your products are similar in size and weight, like t-shirts or small accessories.
Calculated (Carrier) Rates — Shopify pulls real-time rates from USPS, UPS, or DHL based on the package weight, dimensions, and destination. This is the most accurate approach, but it can scare off customers when they see a $14.87 shipping quote at checkout. Available on Advanced Shopify plans, or through third-party apps on lower plans.
Free Shipping with a Threshold — Offer free shipping on orders over $75 (or whatever number makes sense for your margins). This is the conversion-boosting sweet spot. You absorb the shipping cost, but the higher average order value usually more than makes up for it. Roughly 68% of online shoppers say free shipping is a deciding factor.
Our recommendation for most new stores: Use a tiered flat rate approach. Something like $4.99 for orders under $50, and free shipping above $50. Then review your actual shipping costs after 60 days and adjust.
Connecting Your Carrier Accounts
Even with Shopify Shipping, you might want to connect your own USPS, UPS, or FedEx account. Why? A few reasons:
- You may have negotiated rates that beat Shopify's discounts (common once you're shipping 500+ packages per month)
- You want access to FedEx, which isn't included in Shopify Shipping
- You need specific service levels or account features
To connect a carrier account, go to Settings > Shipping and delivery > Carrier accounts. Shopify supports direct connections with UPS, FedEx, and others through their carrier-calculated shipping feature.
When to Bring In Third-Party Shipping Software
Shopify's built-in tools handle the basics well, but there's a point where you'll outgrow them. Here's when it makes sense to add a dedicated shipping platform:
You're shipping more than 100 orders per week. At this volume, batch printing labels, automation rules, and rate comparison across multiple carriers start saving you real time and money.
You sell on multiple platforms. If you're on Shopify, Amazon, and eBay, you need a central hub. Shopify's tools only handle Shopify orders.
You need advanced automation. Things like automatically selecting the cheapest carrier for each package, applying specific packaging rules, or splitting orders.
The three most popular options that integrate well with Shopify:
ShipStation ($9.99/month and up) — The most feature-rich option. Best for sellers on multiple channels who need automation rules and detailed reporting. Connects directly to Shopify and pulls in orders automatically.
Shippo (free with $0.05/label or $19/month) — Great middle ground. Clean interface, solid Shopify integration, and competitive USPS rates. The per-label pricing is perfect if your volume fluctuates.
Pirate Ship (completely free) — If you just need cheap USPS and UPS rates without paying for software, Pirate Ship is hard to beat. No monthly fee, no per-label fee. The Shopify integration is straightforward.
Product Weights and Dimensions: The Step Everyone Skips
Here's the single biggest mistake we see: store owners don't enter accurate weights and dimensions for their products.
Go to any product in your Shopify admin and scroll down to the Shipping section. Fill in the weight. If you're using calculated rates, also fill in the package dimensions.
If you skip this, Shopify can't calculate accurate rates, your customers get charged wrong amounts, and you end up subsidizing shipping out of your margin. Buy a $25 postal scale from Amazon. Weigh everything. It takes an afternoon and it'll save you hundreds over the next year.
Don't forget to account for packaging weight too. A product that weighs 12 oz becomes 15 oz once you add the box, bubble wrap, and label.
Real-World Cost Savings Example
Let's say you're running a Shopify store selling candles. Average product weight: 1.2 lbs. You ship about 150 orders per month, mostly within the continental US.
Without Shopify Shipping (retail USPS rates):
- USPS Priority Mail average: ~$9.45 per package
- Monthly total: $1,417.50
With Shopify Shipping (discounted rates on the Basic plan):
- USPS Priority Mail average: ~$6.20 per package
- Monthly total: $930.00
Savings: $487.50 per month, or $5,850 per year.
Now add a third-party tool like Pirate Ship that offers cubic pricing for small, heavy items like candles:
- USPS Priority Mail Cubic average: ~$4.90 per package
- Monthly total: $735.00
Total savings vs retail: $682.50 per month, or $8,190 per year. That's real money, and all it takes is picking the right rate structure.
Common Mistakes to Avoid
Using one flat rate for everything. Your 4 oz bracelet and your 5 lb lamp set shouldn't have the same shipping cost. Use weight-based tiers at minimum.
Ignoring the free shipping threshold. Study after study shows this increases average order value. Even if you're padding your product prices by a few dollars to cover it, the conversion lift is worth it.
Not testing the checkout experience. Place a test order. See what shipping options your customers actually see. We've seen stores where the only option showing at checkout was $24 Priority Mail Express because the zones were misconfigured.
Forgetting about packaging costs. Boxes, tape, bubble wrap, labels — this stuff adds up to $1-2 per order. Build it into your pricing.
Staying on retail carrier rates too long. There's zero reason to pay retail postage rates when Shopify Shipping and tools like Pirate Ship give you commercial rates for free.
Getting Started Checklist
- Enter accurate weights for all your products (buy a postal scale)
- Set up at least two shipping zones (domestic + one international)
- Enable Shopify Shipping for discounted carrier rates
- Consider a tiered rate strategy or free shipping threshold
- Test your checkout with orders to different ZIP codes
- After 60 days, review your actual shipping costs and adjust your rates
- Evaluate third-party tools if you're above 100 orders per week
The goal isn't to pick the perfect shipping setup on day one. It's to avoid the expensive defaults and give yourself a foundation you can refine as you see real order data come in.