Shipping Strategy Design Guide

This guide shows you how to design free shipping rules that increase sales without reducing your profit margin.

Step 1 — Know Your Real Shipping Cost

Before offering free shipping, calculate what each order actually costs you:

Find your average courier cost per parcel.
Add your packaging cost.
Add any platform fee.
Add your payment processing fee.

Example:

Cost item	Amount
Courier cost	RM8
Packaging	RM2
Payment fee	RM2
Total per order	RM12

If you offer free shipping without adjusting your prices, you absorb RM12 on every order.

Step 2 — Calculate Your Safe Threshold

Use this formula to find the minimum order amount where free shipping does not hurt you:

Required Threshold = Shipping Cost ÷ Gross Margin %

Example:

Shipping cost: RM12
Gross margin: 40%

RM12 ÷ 0.4 = RM30

Customers must spend at least RM30 for you to safely absorb the shipping cost.

Step 3 — Choose a Free Shipping Model

There are three common models.

Model A — Order Threshold

“Free shipping for orders above RM100”

Best for:

Increasing average order value
Encouraging customers to buy more items

Risk: If the threshold is too low, your margin shrinks.

Tip: Set the threshold slightly above your average order value to push customers to spend more.

Model B — Selected Items Only

Use the [FREESHIPPING] tag on specific products.

Best for:

Promoting high-margin items
New product launches
Clearing overstock

Risk: Applying it to low-margin products.

Tip: Only tag items that can absorb the shipping cost.

Model C — Exclude Add-on Items

Use the [PWP] tag on purchase-with-purchase items.

Best for:

Add-on deals
Free gift promotions

This prevents low-priced add-on items from accidentally triggering free shipping for the whole order.

Step 4 — Match Strategy to Product Margin

Different products need different shipping rules.

Product type	Recommended strategy
High-margin	Free shipping allowed
Medium-margin	Threshold-based
Low-margin	No free shipping
Add-on items	Use `[PWP]`

Never apply one shipping rule to all products.

Step 5 — Use the Psychology of Free Shipping

Customers respond strongly to free shipping because they dislike paying for delivery and prefer seeing an all-inclusive price. In many cases, customers prefer:

“Free Shipping”

over

“10% Discount”

even when the monetary value is identical.

Step 6 — Combine with Other Tools

You can stack free shipping with other Boxify features:

Vouchers
VIP Tier
Credit rewards
Flash Sale
Waitlists

Examples:

Spend RM120 → Free shipping
VIP members → Automatic free shipping
Flash sale item → [FREESHIPPING]

Common Mistakes

Advanced Option — Tiered Shipping Rates

Instead of jumping straight to free shipping, use a tiered structure:

RM80–RM119 → RM5 shipping
RM120+ → Free shipping

This protects your margin while still motivating customers to spend more.

Live Selling Tip

Checklist Before Launching Free Shipping

Do I know my real cost per order?
Is my threshold higher than my average order value?
Are high-margin items prioritised?
Have I tested the impact on profit?
Am I using [PWP] correctly for add-on items?