Shopify guideGuide8 min read
How to Reduce Shipping Costs for a Small Shopify Store
Small stores usually overpay for shipping in three places: the box, the carrier and the checkout rate. Here is how to find the gap and close it, with the Shopify settings and UK carrier limits that matter.
Key takeaways
- Small stores usually overpay for shipping in three places: packaging that's too big or heavy, one carrier for every parcel, and checkout rates that don't match label costs.
- Shopify Shipping sells discounted labels in the admin, and the discount depends on your plan. In the UK that covers Royal Mail, Evri, DPD and InPost for domestic parcels.
- Royal Mail's Click & Drop is free to use and gets cheaper with volume. Royal Mail suggests an Online Business Account above 20 parcels a week.
- Set free shipping thresholds from your margin, not from a competitor's number. The extra spend you ask for should earn enough to pay for the label.
- Who it is for
- Small stores paying too much for shipping
- Time needed
- An afternoon for the first pass
- What you need
- Your order export and label invoices
Most small stores overpay for shipping in three places: the box, the carrier and the rate they charge at checkout. None of them needs a bigger volume or a special deal to fix. They need an hour with your order data and a few settings in Shopify.
This guide works through each one in order, for UK stores first and with notes for US stores. Carrier limits and Shopify settings come from Shopify's help center and Royal Mail's Click & Drop pages, as checked on 7 November 2026. Postage prices change often, so I've left specific label prices out. Check live rates in your admin or Click & Drop before you decide.
Step 1: Find out where the money goes
You can't cut a cost you haven't measured. Before changing anything, compare what customers paid for shipping with what you paid for labels over the last month or two.
- Export your orders. From
Orders, export the last 60 days. The file includes the shipping each customer paid. - Total your label spend. Labels bought through Shopify Shipping appear on your Shopify bill. Add any Click & Drop or courier invoices.
- Work out the gap. Shipping charged minus label spend, divided by the number of orders, gives your shipping profit or loss per order.
- Find the expensive orders. Sort by destination and weight. A handful of heavy or remote parcels can account for most of the loss.
Put the per-order figure into the profit margin calculator with your product costs. Seeing shipping as a share of margin makes the next decisions much easier.
Step 2: Shrink the parcel
Carriers price on weight and size, and Shopify notes that carriers consider dimensional weight and box dimensions when calculating rates. A light product in an oversized box can cost the same as a heavy one.
- Measure your top ten products packed. Note the smallest box or mailer that protects each one.
- Save those packages in Shopify. Go to
Settings > Shipping and delivery, and in the Packages section click Add package. Choose the type (box, envelope or soft pack), enter the dimensions and weight, and save. - Set the right default. The store default package is used for checkout rates when a product has no package assigned, and with weight-based rates its weight is added to the products'. Make it the box you use most, not the biggest one.
- Swap boxes for mailers where the product allows. Soft goods like clothing often ship well in a padded or poly mailer. Check carrier rules first: DPD labels in Shopify don't support envelope or soft package types.
- Weigh, don't guess. Enter packed weights on products. Every wrong weight is either a lost sale (rate too high) or a lost margin (rate too low).
Step 3: Use the right carrier for each parcel
One carrier for everything is simple, but rarely the cheapest. UK stores can buy domestic labels from several carriers inside Shopify. Their limits are what decide which one fits each parcel:
| Carrier in Shopify | Max weight | Size limit | Worth knowing |
|---|---|---|---|
| Royal Mail | 20 kg | 61 × 46 × 46 cm | Tracked 24 and 48, Local Collect |
| Evri | 15 kg | 245 cm length plus girth | ParcelShop drop-off, up to £25 cover |
| DPD | 20 kg | 60 cm on any side | Drop-off only, no envelopes |
Royal Mail labels in Shopify cover Tracked 24 and Tracked 48, with signature or Local Collect options. Evri offers ParcelShop drop-off and shop-to-shop services, including next-day versions, with no pickups. DPD covers next-day delivery to mainland UK addresses. All three are domestic only when bought in Shopify. For a fuller comparison of service and reliability, see Royal Mail vs Evri vs DPD.
A sensible split for many small stores: a cheap tracked service as the default, a next-day option at a price that covers it, and a different route for heavy or international parcels.
Step 4: Compare where you buy labels
The same Royal Mail parcel can cost different amounts depending on where you buy the label. Compare these three before settling:
- Shopify Shipping. Go to
Settings > Shipping and delivery, click Shipping labels, then Calculate rates. Enter a typical parcel and click Calculate discounted rates to see every carrier side by side. Shopify says label discounts vary by plan, so check what your plan gets. - Royal Mail Click & Drop. It's free, with no monthly costs, and it imports Shopify orders automatically. Royal Mail offers lower prices as volume grows and suggests an Online Business Account for more than 20 parcels a week. It also covers international services, which Shopify's Royal Mail labels don't. My guide to connecting Click & Drop to Shopify covers the setup.
- A direct carrier account. Worth asking for once you ship steadily. Showing your own account's rates at checkout needs third-party carrier-calculated shipping, which is on Advanced and Plus, or on Grow for a monthly fee or with yearly billing.
Step 5: Fix what you charge at checkout
Cutting label costs only helps if checkout rates don't give the savings away. In Settings > Shipping and delivery, open your shipping profile and review each zone.
- Weight-based rates track label costs better than one flat price when your products vary a lot. Set ranges with a minimum, maximum and price, and leave the maximum empty on the top tier.
- Order amount rates let you charge less on bigger orders, which nudges basket size.
- Free shipping is set with Offer free shipping and a minimum order amount on a rate. Set it per zone.
- Calculated rates can carry a handling fee: a percentage, a flat amount or both, with the percentage applied first.
- Local pickup under Pickup in store in Additional delivery methods costs nothing to ship, if you have a shop or studio customers can visit.
- Local delivery by postal code or distance, with a minimum order amount, can beat courier prices for nearby customers.
How to set a free shipping threshold
A threshold works when the extra spend it encourages earns enough margin to pay for the label. Here's the check I use, with example numbers:
Example: does a £40 free shipping threshold pay for itself?
- Average order now£32Taken from your order export.
- Free shipping from£40Set a little above the average order.
- Extra spend needed£8What a typical customer adds to qualify.
- Margin on that £8£4At 50% gross margin, enough for a £4 label.
Free shipping also affects conversion, which is why I test thresholds as part of CRO work. Show the threshold in the cart, with how much more the customer needs to add.
Small habits that add up
- Ship on time. Royal Mail labels bought in Shopify must be used within 7 days of purchase, and can only be voided after 11 days, so don't buy labels in advance.
- Combine orders from the same customer placed on the same day into one parcel where possible.
- Price collection options. Check whether Royal Mail Local Collect or Evri's shop-to-shop services cost less than doorstep delivery for your parcels, and offer them to customers who don't need a doorstep drop.
- Check Northern Ireland orders. Royal Mail and DPD labels in Shopify can't be used from Great Britain to Northern Ireland.
- Review every quarter. Carrier prices and Shopify discounts change, so rerun the rate comparison.
If you ship from the US
| Saving | How it works | Where |
|---|---|---|
| USPS cubic pricing | Small, heavy parcels priced by volume | Priority Mail, Ground Advantage |
| Free pickups | USPS and UPS collect for free | From a US location |
| Free USPS supplies | Boxes and envelopes from USPS | Free USPS account |
| Included insurance | Up to $100 on main USPS services | Labels bought in Shopify |
The full US setup is in USPS and UPS shipping on Shopify.
Common mistakes
- A big default package that inflates every checkout rate.
- Free shipping with no threshold on low-margin products.
- Never comparing label sources. Shopify Shipping and Click & Drop can price the same parcel differently.
- Products with no weight, so rates are guesses.
- Paying for speed nobody chose. If customers pick the economy rate, don't send it by next-day courier.
- Cutting packaging too far. A broken item costs a refund and a second parcel.
Shipping cost checklist
- Shipping charged vs label spend measured per order.
- Packed weights on every product.
- Packages saved in Shopify, with the right default.
- Mailers used where products allow.
- Carrier chosen per parcel type, not one for everything.
- Shopify Shipping and Click & Drop compared on real parcels.
- Checkout rates matched to label costs, by weight or order amount.
- Free shipping threshold checked against margin.
- Pickup or local delivery offered if you can.
- Quarterly review in the calendar.
Next steps
Do step 1 this week. The gap between what you charge and what you pay tells you whether to start with packaging, carriers or checkout rates. Start where the gap is biggest rather than spreading effort across all three.
If you'd like a second pair of eyes, I'll review your shipping setup and checkout for free. Fixes to rates and checkout are part of my CRO work, which starts from $500, and every project gets a fixed quote.
Free tools
Check your own store
Free, no sign-up. Each one runs a part of this guide for you.
Frequently asked questions
What is the cheapest way to ship for a small business on Shopify?
There isn't one cheapest carrier for every parcel. Compare Shopify Shipping's discounted labels with Royal Mail Click & Drop on your real parcel sizes, use the smallest safe packaging, and pick the carrier per parcel type. Shopify's Calculate rates tool shows carriers side by side.
Is Shopify Shipping cheaper than buying labels directly?
It can be, because Shopify sells labels at pre-negotiated discounted rates, and the discount depends on your plan. It isn't always the cheapest, so compare it with Click & Drop and any direct carrier account on a few typical parcels.
Is Royal Mail Click & Drop free?
Yes. Royal Mail says Click & Drop is free to use with no monthly costs, and you pay only for postage. It offers lower prices as volume grows, and suggests an Online Business Account for more than 20 parcels a week.
How do I set a free shipping threshold in Shopify?
In Settings > Shipping and delivery, open your shipping profile, edit a rate, select Offer free shipping and enter a minimum order amount. Set it per zone, and check that the margin on the extra spend covers the label.
Does packaging size affect Shopify shipping rates?
Yes. Carriers consider box dimensions and dimensional weight, and Shopify uses your store default package for checkout rates when a product has no package assigned. Save your real box sizes under Packages and make the most-used box the default.
Which UK carriers can I use in Shopify Shipping?
For UK fulfillment locations, Shopify lists Royal Mail, Evri, DPD, InPost UK and DHL Express Europe. The Royal Mail, Evri and DPD labels sold in Shopify are for UK addresses only.
Sources
- Understanding shipping carriers, Shopify Help Center
- Setting up packages, Shopify Help Center
- Shipping with Royal Mail, Shopify Help Center
- Shipping with Evri, Shopify Help Center
- Shipping with DPD, Shopify Help Center
- Click & Drop, Royal Mail
Related services and work
I'm a Shopify developer and CRO specialist. I have built and improved Shopify stores since 2018, completed more than 1,000 projects, and hold a 4.96 average rating across 719 client reviews.
More guides
-
Why Shopify Stores Lose Sales on Mobile: A Practical CRO Checklist
Mobile visitors decide fast, with one thumb and plenty of distractions. Here is how to find the leaks on a Shopify store and fix them in the right order.
-
Shopify CRO Audit Checklist for DTC Brands
The checklist I use to audit DTC Shopify stores, from checking that the data can be trusted to deciding which fixes to ship first.
-
When to Build a Custom Shopify App Instead of Adding Another Subscription
Another subscription is the quickest fix, until you are paying for five apps that still don't match how your business works. Here is how to decide.
-
How to Find Out What Theme a Shopify Store Uses
Every Shopify store names its theme in the page code. Here is where to look, how to read what you find, and what it means for your own theme choice.
-
How to See What Apps a Shopify Store Uses
Apps leave traces in a store's page code: scripts from their own servers, app embed folders and pixel settings. Here is how to read them, and what to do with the list.
-
How to Name a Shopify Store (and Check the Name Is Free)
A store name has to be easy to say, free as a domain and a handle, and clear of other brands. Here is the process I use with clients, and what Shopify lets you change later.
