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Shopify Shipping Rates & Changes In 2022

Shopify Shipping Rates & Changes In 2022↘

As a business owner, it's important to be able to keep an eye on the costs that keep a company ticking over, as they inevitably change from one year to the next.

Without fail, shipping carriers review their services and prices each year, making adjustments to their rates accordingly. A price increase is usually a ripple effect of rising fuel and labour costs.

Such changes are usually implemented at the start of each year, so, now that we’re in January, many of these updates have already taken place, which just might affect your shipping and pricing strategy for 2022.

So, if you’re curious to see what’s new with Shopify Shipping Rates, stick with us as we walk through the rate increases that have come into full swing:

N0.1: USPS

Effective From 9th January 2022

Shopify offers some of the lowest USPS rates available via Shopify Shipping, which includes up to 67% off of retail rates for the First-Class Package Service.

However, there are several changes which merchants should be made aware of:

  • It has been announced that Shopify merchant shipping rates have increased by $0.50 for packages weighing between 1-4 ounces using the First-Class Package Service. This service has also risen by $0.30 for packages weighing between 5-12 ounces. Furthermore, packages that weigh over 12 oz will cost between $0.80 and $1.70 to send. Nonetheless, merchants will continue to save up to 67% off of retail rates when using Shopify Shipping.
  • Retail rates for Priority Mail Express have also undergone an increase of 3.1%, though merchants can continue to save up to 16% when Shopify Shipping is used.
  • Last but not least, merchants who are on Shopify’s ‘Advanced’ or ‘Plus’ plan will continue to benefit from Priority Mail Cubic pricing which provides up to 88% off of retail rates.

Note:

Merchants can turn to the Shopify Shipping calculator to estimate the current rates that would be paid using the existing USPS mail classes offered. Now that these foretold rates have come into effect, the Shopify Shipping calculator can be used to discover how much each company could save.

N0.2: UPS

Effective From 26th December 2021

Just ahead of the new year, UPS increased its rates by an average of 5.9%. However, UPS Shopify shipping rates remain unchanged.

As a result, merchants will receive up to 86% off when orders are shipped using UPS negotiated rates with Shopify.

  • Additionally, UPS merchants will receive ecommerce discounts on domestic and international shipping, which includes up to 55% off of UPS Ground shipments, up to 69% off of the UPS 2nd Day Air service and UPS Next Day Air service, as well as up to 86% off of the UPS Worldwide Expedited service on eligible packages.
  • While UPS base rates have not swayed where Shopify Shipping is concerned, there are select service and surcharge updates that will come to affect UPS rates.
  • UPS has made changes to the costs for value-added services and other charges. However, several of these services will be un-applicable for merchants using Shopify Shipping.

Effective From 9th January 2022

  • Further updates surrounding ZIP codes and area surcharges will change. These updates include; Delivery Area Surcharge, Extended Area Surcharge and Remote Area Surcharge.

Note:

When things get busy you may require a variety of options to get packages out of the door. It may help you to know that UPS has continued to expand on its wide range of pickup options and convenient drop-off locations. UPS also had the highest on-time performance in the shipping industry last year - now that deserves some credit.

  • Pick Up: Merchants on Shopify can schedule a discounted pickup directly through the Shopify admin or users can contact customer support and allow the team to arrange a UPS driver to pick up shipments either; daily, weekly, or upon request.
  • Drop Off: With this service, organising merchant shipping just became a whole lot easier. To use this service, all you'll need to do is drop off pre-labelled packages at any UPS Access Point location, including; The UPS Store, UPS Drop Boxes, select CVS, Michael’s stores or a designated local business.

N0.3: DHL Express

Effective From 1st January 2022

At the start of 2022, DHL Express retail rates increased by an average of 5.9% for the DHL Express Worldwide shipping service.

With Shopify Shipping, online retailers can save up to 76% off of retail rates for the DHL Express Worldwide shipping service and will receive package pickups for free too.

N0.4: Canada Post

Effective 10th January, 2022

In 2022, Canada Post costs have risen by an average of 3.5% domestically and 2.8% for the US and international business.

However, with Shopify Shipping, online stores can save up to 58% off of Canada Post shipping rates.

Optimising your Shipping Strategy

The options available to adjust to the rate changes will depend largely on what your current shipping strategy relies upon for pricing.

So, depending on which one you’re currently using (e.g. free shipping, flat-rate shipping, or calculated shipping, there will be multiple courses of action that can be taken to accommodate them.

Free Shipping

If free shipping is offered through your store, here are some of the options available:

  • Absorb Increased Costs: If a merchant were to continue to offer free shipping, the increased cost of ecommerce shipping will need to be absorbed now that the rate changes have taken effect. Before moving forward, make sure that you are aware of your margins and that you will remain profitable in the face of increasing costs.
  • Increase Product Prices: If product prices are increased to cover the rising costs of shipping, margins will remain the same. However, repeat customers may notice a price increase, which could in turn impact their purchase frequency.
  • Free Shipping Minimums: A good compromise between doing nothing and increasing product prices is to add a free shipping minimum to your strategy. This is an effective tactic to increase the average order value, which can help offset the increased cost of shipping, whilst passing on the cost of shipping to your customers if their order falls below the threshold.

Flat Rate Shipping

If flat rate shipping is offered through your store, here are some of the options available:

  • Absorb Increased Costs: Continuing to offer flat rate shipping, requires preparation to absorb the increased costs when the rate modifications take effect. Be sure to check what impact this will have on your profit margins to ensure that they are sustainable.
  • Adjust Order Value Ranges: It’s important to remember that a store’s flat rates do not need to be the same for every order. Instead, online businesses could begin to offer a higher flat rate on small orders and lower flat rates as cart sizes increase to help offset increased shipping costs. If you are already offering variable flat rates for your store's shipping, the ranges to account for the increased costs could be adjusted.
  • Increase Product Prices: If merchants were to keep their flat rate shipping price the same whilst increasing their product prices, current margins could be maintained. However, repeat customers may notice the price increase, which could lead to more time in between repeat purchases, or potentially a lower conversion rate.
  • Increase Flat Rate Shipping: Increasing the cost of shipping may lead to similar results as increasing your product prices. However, online stores will likely see the impact on their abandoned cart rates. Shipping costs are one of the most common reasons for customers to abandon their carts, so to mitigate the impact, we’d recommend implementing cart recovery emails into your strategy.

Calculated Shipping

If calculated shipping is offered through your store, several options could be implemented:

  • Calculated Rates Provider: If merchants were to turn to a calculated rates provider or app for help, the shipping rates displayed at checkout will automatically update to the 2022 rates. It’s important to keep in mind that shipping costs are one of the biggest factors that lead to abandoned carts, so businesses may see a higher cart abandonment rate as shipping costs increase. However, if Shopify Shipping is used, discounted shipping rates will still be passed onto the customer.
  • Decrease Product Prices: Since shipping rates update automatically, product prices should be decreased to keep costs the same for your customers. If you are considering this approach, it’s important to ensure that your margins are still sustainable given your new pricing strategy. For instance, if a premium product is offered, merchants should ensure that their prices still communicate the right message concerning the product’s quality.

Reviewing your Shipping Strategy

While your existing strategy can be adjusted to account for the new Shopify shipping rates in 2022, this is also an opportunity to rethink your approach to shipping from the ground up.

So, if the modifications above no longer fit with your; pricing strategy, margins or ideal conversion rates, it may be time to consider a path unexplored.

We hope that you have found our guide to the latest Shopify shipping rate changes useful.

If you’re actively looking to work with a Shopify agency designer or developer to assist you with your business, we’d love to hear from you. Get in touch to get started!

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