Free shipping versus paid shipping

You hear the term free shipping a lot in ecommerce, and for many of today’s online shoppers the notion of free shipping has become an expectation rather than a pleasant surprise. In 2020, a survey by RetailMeNot showed that 82 per cent of Americans prefer free shipping over fast shipping!

In my opinion, it can’t only be the customer that dictates whether or not you offer free shipping. You also need to consider whether your pricing — and your gross profit margin — can withstand the costs of covering the shipping.

In the following sections, I run some calculations to help you work through the financial implications of free shipping versus paid shipping. I also suggest some alternative shipping approaches that may work for your business.

Express shipping versus standard shipping

Another useful comparison to keep in mind is standard versus express shipping, which vary in cost as well as shipping time. Standard shipping, also known as economy shipping, is cheaper and generally slower when it comes to getting your parcel from A to B, while express shipping is faster and more expensive.

Do you absolutely need to offer both? Not really, but speed in delivery is important to some customers, who will pay extra to have their order with them sooner — so it doesn’t hurt to offer it. A common shipping strategy is to offer a free standard shipping service and cover your costs (or close to your costs) by charging for express shipping if the customer elects to upgrade to the faster service.

If you’re electing to charge for shipping, try to cap your domestic express shipping rate at a cost of no more than $10 to the customer (if you’re selling products that weigh less than 2 kilograms). This prices your shipping competitively — anything more may stop customers from ordering.

Customer enquiries asking about the whereabouts of an order are one of the most common enquiries you can expect to see, which suggests there’s always a sense of urgency when customers place their orders. Speed of delivery is often of the utmost importance in a customer’s decision-making process, and a positive shipping experience can be a key determining factor as to whether or not they will shop with you again.

Amazon is famous for continuing to raise the bar when it comes to the delivery of online orders. Amazon launched Prime in 2005, which promised two-day delivery on over one million items across the United States — and Prime has since upped the ante by offering same-day delivery in some places! The reality is, customer expectations around speed of delivery are increasing, so it’s a good idea to review your delivery options and make sure that you’re offering something at least as good as your competitors.

One of the reasons that express shipping is faster than standard shipping is that parcels are often delivered by air across the country, except when delivery destinations are close to the sender, in which case a driver can deliver within an express time frame. Deliveries are carried out by in-country mail systems, such as USPS, Australia Post, Royal Mail, and so on, or by carriers, also known as couriers. A carrier is any person or vehicle involved in carrying or delivering a parcel from a retailer to a customer.

In order to achieve fast delivery across the country (and not just in the city or area that your business is located), it’s important to select a carrier company that is both reputable and has a good delivery network.

Try and cover your costs, but don’t get greedy and try to profit from shipping. If you are having trouble working out what to charge your customers, check out some of the major carriers (such as Australia Post, Canada Post, FedEx, UK Royal Mail, UPS and USPS) to get an idea of what they charge for different shipping services.

As well as requesting prices (or rates) from your potential shipping partner, I suggest you also request a copy of their delivery times to each area (or zone) across the country you’re located in. The same applies for international shipping.

When shipping internationally, you need to consider the profitability of offering free shipping, even more so than usual, due to the higher costs of international shipping. Use the same principles as outlined in the earlier section ‘Testing whether free shipping is cost-effective’ to see if it’s cost-efficient for your store to ship internationally for free. Perhaps you could offer free shipping on an international economy service, while asking the customer to pay a fee for international express shipping. You may even have different prices for your shipping fees depending on the country — for example, shipping from the United States to Canada may be cheaper than shipping from the United States to Australia.

Logistics and fulfilment are a huge part of ecommerce, so they deserve their own chapters. In chapters 12 and 13 I talk more about the finer details of order fulfilment and logistics.

Shopify and shipping

When I first started out selling products online, at the end of each day I would review all my orders, pick the items from my inventory and then take the products to the local post office, filling out each postal slip, including the address details, by hand. Eventually, I opened a commercial account with the postal company, and they sent a driver to my address each day — but I still had to write out each address.

I then got slightly (very slightly) smarter and invested in a label printer, so instead of writing the labels I was typing them — not much of a time-saver, really! While this worked for a while, it wasn’t scalable, and the best use of my time was certainly not writing out labels — I needed to free up my time to grow my business.

Fast forward a decade (okay, maybe two), and Shopify not only integrates with most major carriers but it can print your shipping labels and update your orders with the click of a mouse — no pen and paper required. This doesn’t mean you are tied to any specific carrier or price structure, either — Shopify gives you the flexibility to find the best shipping strategy to suit your business.

You can handle shipping three ways in Shopify:

• Carrier accounts: Bring your own shipping rates over to Shopify if you already have a great deal with your preferred carrier, including your own account number. If you use a shipping aggregator, such as ShipStation, Starshipit or Easyship, you can plug them right into your Shopify store, giving you the option to use their negotiated rates with a wide range of carriers or load your own rates into their system. I talk more about making the right choice for your business in Chapter 13.

• Shopify Shipping: Shopify Shipping is already built into Shopify and has a set of negotiated rates for Shopify merchants. Shopify Shipping shows merchants real-time shipping rates in the United States, Canada and Australia, allowing merchants to print labels and track shipments.

  Shopify Shipping partners with USPS, UPS, DHL Express, Sendle (in Australia) and Canada Post to offer discounted rates on many shipping services. These discounts are often around 20–50 per cent, but they range all the way up to 90 per cent. Accessing these shipping carriers’ rates allows you to list real-time shipping calculations both on your order processing page and in your checkout! This allows you to charge precise amounts for shipping, reducing the risk of underestimating your shipping expenses.

• Manual shipping: You won’t see this terminology used in your Shopify store — it’s just my way of explaining the process of using Shopify to facilitate online orders, and then arranging your own delivery. You can still print invoices or packing slips out of Shopify, but this way you have your own courier come and collect from you when you book in a delivery — or you take your items to the post office.

  The downside of this process is that it’s a manual process, so unlike the previous two automated options, you need to enter your tracking numbers manually into each order, as opposed to integrating with automated solutions that do cool things like entering your tracking numbers into your orders (which is super helpful for when a customer emails in, asking you to track their order). You can still send an email to a customer, with their order tracking number, it just doesn’t happen automatically, like it does when you use Shopify Shipping.

Most of the online businesses I work with are exporters, meaning they ship internationally as well as domestically (in other words, they send orders overseas as well as within their domestic market). In Chapter 13 I look at the logistics of shipping internationally, and if you’re using Shopify it’s easy to access a wide range of carriers that can transport your products into new markets.

Adjusting your default package type

When you create new products in your online store, you have the option to add accurate weights to assist with calculating your shipping rate. The weight of the product, combined with the weight of the box or package you use to ship your product, is then used to calculate the cost to ship your order.

Shopify has a default package type already in place in your Shopify admin. You can set up the weight and dimensions of the default package type you intend to ship your orders in. If you intend to use multiple package types when shipping your products (for example, because you sell products of different sizes, such as shoes and earrings), then you can adjust the dimensions of the package when you purchase the shipping label, which occurs when you ship your order (I explain this in more detail in Chapter 13); however, the easiest approach is to adjust your default package types within Shopify, which saves you having to adjust them with each shipping label you purchase.

If you want a shipping carrier to calculate the cost of packages other than your default package, you can use a suitable shipping app, many of which are available to browse in the Shopify App Store (apps.shopify.com).

To change the weight and dimensions of your default package:

1. In your Shopify admin, go to Settings → Shipping and Delivery.

   The Shipping and Delivery page appears.

2. Scroll down the page until you see the section Saved Packages.

   You see a sample box listed in the Saved Packages section, with the word Default next to it. This is your store’s default package option.

3. Click on the Edit button next to the Saved Packages section heading, and enter the dimensions in the dialogue box if you want to change them (you see some default dimensions in place already — simply type over them).

   For example, if you sell shoes, enter the dimensions of your shoe boxes (or the box that you send your shoe boxes in). If you sell shoes, plus earrings, then you may want to add a new, smaller package, so that your courier isn’t charging you for a shoe-box sized package when you’re sending your earrings in a small envelope. The weight and dimensions you add here need to reflect your package size as accurately as possible to ensure that you are not overpaying for shipping — or providing inaccurate information to your shipping provider.

4. Click on the green Save button inside the dialogue box to save your new dimensions.

   You get to select the packaging type when you buy a shipping label through Shopify Shipping — more on that in Chapter 13.

Setting up packages and shipment weights in Shopify is important if you have different-sized packages, and you wish to be charged correctly by your courier and pass the charges on to your customer, because most couriers charge by weight and dimensions. If you’re integrating a courier into your Shopify store, you’ll be able to get accurate pricing for each of the parcels you intend to send. Online retailers often use this pricing to display the shipping price at checkout to customers. If you’re intending to offer free shipping, or a set price, then package types aren’t so important.

You can leave all your package types as they are, without ever touching this section in your Shopify admin; however, you run the risk of being incorrectly charged by your courier, whether you use Shopify Shipping or a third-party integrated carrier, as the weight and dimensions you provide the courier will revert to Shopify’s default weight and dimensions.

To add another package type to your Shopify store (so you can send packages containing products of different weights/dimensions):

1. In your Shopify admin, go to Settings → Shipping and Delivery.

   The Shipping and Delivery page appears.

2. Scroll down to Saved Packages.
3. Click on the Add Package button and enter the packaging dimensions and weights for your new package type.

4. Click on Add Package in the bottom-right corner, which saves your new package and takes you back to the Shipping and Delivery page within Settings.

   Your new package appears next to your Default package on the Shipping and Delivery page.

If you ship products of all sizes, it’s important to either set up a range of package types (in addition to your Default package, which ideally ships a large portion of your typical orders) or remember to manually change the dimensions of the product when you buy the shipping label. If you are sending earrings but you forget to change your package type from a box to an envelope, you’ll likely be overcharged for your shipping.

Some Shopify Shipping options offer their own packaging types, so you may not need to add extra package types. For example, if you’re in Australia, you can choose between carrier packaging or customer packaging when you add a new package type.

If you choose carrier packaging, you’re presented with the option to use Sendle packaging (which is Shopify Shipping’s Australian carrier). The main benefit of using carrier packaging via Sendle in Australia is that Sendle has what it calls an Unlimited Satchel, which measures 33.5cm x 24.5cm x 1cm — a typical size that’s big enough for many popular ecommerce items, such as clothing. If you select this option for your package size, Sendle charges you a flat rate for whatever you can squeeze into that satchel, so it’s simple to calculate your shipping costs. As a bonus, you can order the satchels from the carrier inside the Shipping and Delivery section of your Shopify admin — see Figure 6-1.

If the Shopify Shipping options in your country provide you with carrier packaging as an option, it’s a good idea to select the packages that suit your products by selecting the packaging type in the Shipping and Delivery section of your Shopify admin. Figure 6-1 shows Australia’s Shopify Shipping option through Sendle, which offers one package size; depending on which country you’re in, you may see more than one option available. After selecting from the range of package types available, click on Add Package — the package types you have added appear next to your Default package type on the Shipping and Delivery page. You’ll also see the packages available to choose from when you’re ready to send out your orders.

Shipping rates and profiles

Shipping profiles allow you to charge accurate shipping rates through product-based or location-based shipping rules, rather than using a one-size-fits-all approach to set shipping rates. Shipping profiles are not specific to any one of the three shipping methods you can adopt to ship your orders out (refer to the earlier section ‘Shopify and shipping’ for more on these), but rather are to do with how you charge your customers for shipping different products.

For businesses with simple products requiring a simple shipping set-up, your general shipping profile will be sufficient. For businesses with a complex shipping set-up (for example, an online florist that sells difficult-to-ship products like fresh flowers, which need to be shipped upright), an additional custom profile is helpful, which allows a florist to charge more for shipping delicate or fragile parcels.

You can use shipping profiles to set shipping rates for specific products, from fresh flowers to fragile items, which is known as product-based shipping.

Your Shopify store comes with a default shipping profile, which it calls a general shipping profile. (Shopify also gives you the option to create one or more custom shipping profiles.)

Your general shipping profile contains your general shipping rates — in other words, you edit this shipping profile to set up your typical shipping price, which is the price you charge your customer to ship their order. Most Shopify users only use this profile.

For businesses with a simple shipping set-up, general shipping rates are often sufficient. For businesses that manage products and locations that have different shipping costs and regional availability, additional shipping profiles help keep your shipping costs accurate and easy to manage. The chances are you fall into the first category and only require a simple shipping set-up.

Keep your shipping options simple. One of the main reasons for an online shopper abandoning their shopping cart is due to complex or prohibitive shipping arrangements.

Setting your shipping rates

Shopify enables you to charge whatever you want for shipping. In this section I show you how to do exactly that, although I recommend that online retailers charge a flat shipping rate (I discuss the flat rate shipping strategy in the earlier section ‘Opting for flat rate shipping’). Price-based shipping rates allow you to offer different shipping prices depending on how much the customer is spending; for example, if they spend over $100 you may offer free shipping, and for orders under $100 you may instead charge a flat rate (such as $9.95) for shipping.

To set up price-based shipping rates for your location country, first you need to add a shipping zone. Shipping zones cover the countries that you ship to.

If countries aren’t included in one of your shipping zones, then customers in those countries won’t be able to enter their delivery address in your checkout.

Follow these steps to add a shipping zone to your Shopify store:

1. From your Shopify admin, select Settings → Shipping and Delivery.

   The Shipping and Delivery page appears.

2. Click on Manage Rates, which appears next to General Shipping Rates in the top section of the page.

   The Manage Rates page appears.

3. Click on Create Shipping Zone.

4. You are prompted to create a Zone Name. Start by creating a zone for your own country (which you’re servicing domestically) — for example, Australia. When you have entered the Zone Name as prompted, turn to the list of countries below the Zone Name field and select the corresponding country (in this case, Australia).

   If you are creating a domestic shipping zone, you only click on one country here, but if you are creating an international shipping zone, you may select a range of different countries that you group together for shipping — or perhaps even simply select Rest of World if you only plan to have one international shipping zone.

5. Click on Done in the bottom-right corner.

   You return to the General Shipping Profile page within your Shipping and Delivery page, which now shows the flag of the country or zone you just created underneath the Shipping To heading. All the countries and flags you see listed here will be the countries you are set up to ship to.

   Repeat these steps if you want to add new countries to ship to.

Now that you have set up a shipping zone, you need to set up a price-based shipping rate for that zone. Continuing from the Shipping and Delivery page, follow these steps:

1. Click on the Add Rate button, located below the shipping zone location you created in the preceding set of steps.

   A dialogue box pops up that offers you two options: Set Up Your Own Rates or Use Carrier or App to Calculate Rates. If you qualify for Shopify Shipping or want to use third-party integrated shipping rates, you can click on Use Carrier or App to Calculate Rates. In this instance, however, you want to set up your own shipping rates.

2. Select Set up Your Own Rates.

   If you qualify for Shopify Shipping, you see a range of shipping carrier packages with prices here that you can simply select from, which passes the charges to your customer when they reach your site’s checkout. In other words, if you want to pass on your Shopify Shipping costs to the customer rather than set up your own shipping prices, you can select this option. The advantage of choosing this method is that you’re not going to lose any money on shipping — you simply pass the charges directly to the customer; however, the disadvantage is that you can’t advertise one clear flat rate shipping price on your website, so customers may find it confusing to work out how much they are going to be charged for their order before they reach the checkout.

3. The dialogue box extends to show a new section, Shipping Speed. You can select from Standard, Express or Custom Flat Rate — for this example, select Standard.

   Typically, online retailers charge a flat rate for express and standard shipping, and it’s rare to see more than these two shipping options. However, an example of a Custom Flat Rate may be a store choosing to offer same day delivery.

4. Select Add Conditions, which is located at the bottom of the dialogue box.

   A new section appears that extends the dialogue box. This is where you set up your price-based shipping rule (see Figure 6-2).

5. Select Based on Order Price.

   The other option is Based on Item Weight — use this to charge prices based on how heavy your products are, a delivery option that is pretty uncommon.

6. You have the option to select a minimum and a maximum price. Enter the prices you require for your standard shipping rate.

   If, for example, you want to charge $9.95 shipping for orders under $100, leave your minimum price at $0.00 and adjust your maximum price to $99.99. Then, enter $9.95 in the Price field, and click Done. Repeat the process of selecting Add Rate, Add Conditions, and then Based on Order Price, and this time put the minimum price at $100 and leave the maximum price empty, which means there’s no limit.

7. Click on Done, which takes you back to your General Shipping Profile page.

Congratulations, you’ve just created shipping rates in your domestic market, for standard shipping on orders below and over $100! Follow the same steps if you want to create express or customized flat rate shipping rates — simply select Express or Custom Flat Rate in the Shipping Speed section, rather than Standard. For more on express shipping, refer to the earlier section ‘Express shipping versus standard shipping’.

After you’ve set up your domestic shipping prices, your new rates appear in your general shipping profile, and a message appears at the bottom of the page telling you how many countries you’re not shipping to.

If you wish to ship to additional countries, follow the steps earlier in this section to create a new shipping zone.

For international shipping zones, you may prefer to set up a zone for the rest of the world if they share the same shipping rate, or you may want to set shipping rates for specific countries or regions, such as the UK or Europe.

Some countries may be easier and cheaper to ship to than others, which may mean you require a couple of different international shipping zones. For example, if you operate from the United States, shipping to Canada is a logical and straightforward option; equally, if you are based in Australia, shipping to New Zealand is feasible.

After naming your international shipping zone, select all the countries that fall into that zone from the list of countries provided. For example, if you want to set up one international shipping zone that covers the rest of the world, you can name the shipping zone Rest of World and tick the box that says Rest of World in the list of countries provided. Any customers who place orders outside of your home country will be charged the same shipping price that you set up for this shipping zone.

You’ll see the options to select Standard International or Custom Flat Fee. Select Standard International, or create express international shipping by clicking on Custom Flat Rate. Name the rate Express Shipping when prompted to do so if you select Custom Flat Rate.

Shopify doesn’t specify an express shipping option for international zones by default, which is why you use Custom Flat Fee to set up express shipping for international express delivery.

Follow the same steps as earlier in this section to finish creating your basic but popular and effective shipping prices for all over the world!

Setting up tax collecting in your store

If you’re in the United States, Canada, the European Union, the UK, Norway, Switzerland, Australia or New Zealand, all of which use registration-based taxes, you can add your tax registration information to Shopify so you can collect tax.

As a merchant, you may need to charge taxes on your sales and then report and remit those taxes to your government. Although tax laws and regulations are complex and can change often, you can set up Shopify to automatically handle most common sales tax calculations. You can also set up tax overrides to address unique tax laws and situations.

Shopify uses many default sales tax rates, which are updated regularly. If you use the default rates, then you need to confirm that they are current and correct for your particular circumstances. You can override them whenever necessary.

The first step is to set up tax rates in the countries you’ll be shipping to (in other words, your shipping zones), which you established in the earlier section ‘Setting your shipping rates’. At the very least, you’re likely to need to be collecting taxes in the country that you operate, so ensure you’re collecting tax in your own country (if you’re obliged to).

If you’re in a country that collects registration-based tax and you’re registered to collect tax, follow these steps to set up tax collection in Shopify:

1. After you’ve set up your shipping zones (that is, the countries you want to sell to) in Shopify (refer to the earlier section ‘Setting your shipping rates’ if you still need to do this), head back to your Settings page in the Shopify admin and select Taxes.

   The Taxes page appears. If you have already set up your shipping zones, you’ll notice they appear here as Tax Regions (see Figure 6-3). You can expect to see your local country as one shipping zone, and one or more other zones, depending on where you’re planning to ship to — for example, Rest of World (for the rest of the world).

   

   At this stage, your shipping zones have a grey box next to them saying Not Collecting, which means you haven’t yet set the countries/shipping zones up to collect tax.

2. To the right of the grey Not Collecting box, click on the Set Up button for the first location you want to collect taxes for — for example, your domestic location, such as Australia.

   You are prompted to enter your business or tax registration details, for example your Australian Business Number (ABN) if you’re in Australia.

3. Add your business or tax registration details as prompted and click the green Collect GST button to start collecting tax.

   After hitting Collect GST or your country’s equivalent (such as Collect VAT in the UK), you’re taken to the Tax Calculations page of your Shopify admin.

4. Select your tax calculation method from the options provided (see Figure 6-4).

   Here you have four options that you can check or leave unchecked:

   • All Prices Include Tax: This means that the prices you create for your products include tax. If you leave this box unchecked, tax will be added at the checkout, on top of the price you have given each product.

     Prices usually include tax, so I suggest you check this box unless you know tax has not been included.

     

   • Include or Exclude Tax Based on Your Customer’s Country: You can select some countries where your product prices include tax, and others where it does not include tax — however, I have rarely seen this used, so I don’t suggest ticking this. You may need to tick this in the future if you want to change the first option (All Prices Include Tax) to be country-specific.

   • Charge Tax on Shipping Rates: This option includes shipping rates in the tax calculation (which is automatically calculated for Canada, the European Union and the United States). Generally, you check this box, given that you are likely legally obliged to pay tax on any freight revenue received.

     I recommend you seek tax advice on whether or not you need to pay sales tax on freight revenue collected in your region.

   • Charge VAT on Digital Goods: VAT (value-added tax) is the European Union’s name for tax, and this option allows you to charge VAT on digital products such as courses or music.

     If you are in the EU, I recommend seeking advice on whether or not you need to collect tax on digital goods.

5. Click the green Save button in the top-right corner to save your tax collection settings.
6. Repeat the preceding steps for each country/location where you are obliged to collect tax.

If you aren’t registered for tax, you shouldn’t collect tax. If you’re not registered to collect tax for any of the countries you are shipping to, then leave them listed as Not Collecting on the Taxes page (Figure 6-3). In a country like New Zealand, where taxes are charged on online sales into that country, you can either register with the New Zealand government to collect tax, or you can send your orders as normal, with the awareness that your customer will be asked to pay tax in New Zealand when the order arrives.

Always get the right legal advice around sales tax before proceeding. This book isn’t designed to tell you whether or not you need to collect and pay tax — every business and location is different. This book is focused instead on showing you how to use Shopify to collect taxes from your sales where required.

Including tax in your product price

When you’ve set up tax collection correctly in your Shopify store, you need to make an additional decision — whether you want your product prices to include or exclude tax.

Most online stores display their pricing including tax because it avoids confusion at the checkout.

To include or exclude tax from product prices after you have completed the initial tax collection set-up (refer to the preceding section):

1. In your Shopify admin, go to Settings → Taxes.

   The Taxes page appears.

2. Scroll down to the Tax Calculations section.

3. To exclude tax from your product prices, uncheck the All Prices Include Tax checkbox. To include tax in your product prices, check the All Prices Include Tax checkbox.

   You may already have this box checked or unchecked as a result of any initial decisions you made when setting up tax collection (refer to the preceding section).

Setting up Shopify Payments

Shopify Payments is available in the following countries:

• Australia
• Austria
• Belgium
• Canada
• Denmark
• Germany
• Hong Kong SAR
• Ireland
• Italy
• Japan
• Netherlands
• New Zealand
• Singapore
• Spain
• Sweden
• UK
• United States

If you’re operating outside of the countries on this list, you need to integrate a third-party payment provider. Shopify supports over 100 payment gateways, so you have plenty of options.

To get started with setting up Shopify Payments, you need to have your bank account details ready, along with your business registration number (depending on the business registration requirements in your location).

If you don’t have a business registration number yet, it’s optional at this point — but make sure you get the right legal advice and that you find out at what point you need to register your business. Typically, customers want to see your business registration information on their tax receipts.

To set up Shopify Payments, go into your Shopify admin and click through Settings → Payments → Complete Shopify Payments Setup (see Figure 6-5). Go ahead and complete your company and personal information as prompted. You’ll be asked for your legal business name, business registration number and your business type, along with personal information (such as your name, address and date of birth, and the industry you operate within). You’ll also be asked for your bank account details, which is important if you want to get paid!

Click on Complete Account Setup when you’re done, and voilà — you’re all set up to receive payments from Shopify.

Accepting other payment methods

Offering alternative payment providers has never been more important, as consumers move away from typical payment methods like credit cards and towards other tech or convenience-based payment methods, many of which you’re already able to accept through Shopify Payments. Simply click on Choose Alternative Payment Providers on the Payments page in your Shopify admin Settings, and a page appears with a long list of payment methods (see Figure 6-6, which shows the first few of many options), including most of the well-known BNPL options, such as Afterpay and Klarna.

Imagine you want your customers to be able to pay using Afterpay on your site. To add Afterpay as a payment option, simply type Afterpay into the search bar at the top of the Alternative Payment Providers page, and then click on the word Afterpay when it appears in the search results. You’ll be prompted to enter a Merchant ID and Secret Key to add Afterpay, both of which will be provided to you by Afterpay when you create an account with them (which will be the case for all the alternate payment methods you want to add to your store).

I recommend starting with accepting Visa, Mastercard, PayPal and one BNPL option, as a minimum. Choose the BNPL option that dominates your local market or demographic.

Viewing your Shopify Payouts

From time to time, you or your bookkeeper may want to view the Shopify Payouts that are due to be processed (or have already been processed). To do this, follow these steps:

1. From your Shopify admin, go to Settings → Payments.

   The Shopify Payments page appears.

2. In the Shopify Payments section of the Payments page, click the View Payouts button.

   The Payouts page appears. It displays your previous and next Shopify Payout. If you have scheduled your payouts, you will see the estimated date that you get paid. You can see the available balance for your next payout and any funds held in reserve.

   The All-payouts section of the Payouts page lists all your payouts and their current status:

   • In Transit: The payout is in the process of being sent to your bank account.
   • Paid: The payout has been sent to your bank. This does not mean that you have the funds in your bank account. Your bank may still need to process and deposit the funds into your account.
   • Failed: Your bank failed to successfully process the payout so the funds have not been deposited.

Setting up multiple currencies in Shopify Payments

If you’re using Shopify Payments, you can sell in multiple currencies. If you’re using a third-party payment provider, you need to check with them if you can set up multiple currencies.

Look at adding extra currencies to your online store if you’re getting regular orders from a certain country, or countries, or if you’re planning to sell into other countries, as customers feel safer paying in their own currency rather than having to try and work out conversion rates or pay credit card fees associated with cross-border transactions.

If you’re planning to add other currencies to your online store, you need to have a theme with a currency selector — or you can add an app to your store that allows customers to switch between currencies. It’s also a good idea to add Shopify’s Geolocation app to your site — it detects where a customer is shipping from and suggests they switch to their local currency (unless you’re on Shopify Plus, in which case your store automatically detects where the customer is located from their IP address). You can set the exchange rate yourself or choose to display a market rate.

Some themes, such as Debut or Brooklyn, include a currency selector in the most recent versions. If you’re using an older version, you can update your theme to automatically add a currency selector to your storefront.

To set up Shopify Payments to accept multiple currencies, follow these steps:

1. From your Shopify admin, go to Settings → Payments.

   The Shopify Payments page appears.

2. In the Shopify Payments section, in the top-right corner in blue font, click on Manage.

   The Manage Payments page appears, which displays Shopify Payments’ processing fees and rates.

3. In the Countries/Regions section of the Manage Payments page (about halfway down the page), click on Add Country/Region.

   A new dialogue box appears with a list of countries and their currencies — for example, United Kingdon (GBP).

4. Select the country or region’s currency that you want to enable from the list of supported countries and regions by selecting the checkbox next to that country and currency.

5. Click on Add Country/Region, which saves your changes for you.

   While you can now sell in GBP (or whatever currency you have enabled), you still need your customers to be able to see their local currency when they shop on your site, which the steps above do not facilitate. You can use the Shopify Geolocation app (available in the Shopify App Store) to enable your pricing to be shown in other currencies — visit apps.shopify.com.

Setting up a third-party payment provider

You can bring your own relationship with a payment gateway to your Shopify store if you so choose. If you go to Settings → Payments, simply scroll down to the Choose Third-party Providers section, search for your payment provider in the list that appears and click on it. You need to have your merchant details on hand to set your payment provider up in Shopify — your merchant details are the banking details provided to you when you registered with your chosen third-party payment gateway.

Shopify Payments activity is temporarily disabled on your site while you are in the process of adding a third-party provider.

Investigating suspicious orders

Shopify has its own inbuilt fraud detection capability that analyses transactions and alerts you when it identifies that a suspicious transaction may have occurred, so that you can then take appropriate action.

To view the fraud analysis of an order, follow these steps:

1. From your Shopify admin, go to Orders.

   A list of all the orders that your store has received appears, from newest to oldest.

2. Click on the order number of the order that you want to review.

   You may have numerous orders appear, which can be difficult to wade through, so consider searching for particular orders using the search bar at the top of the orders page. You can search for orders using a variety of parameters, including customer name or email address, but you need to click on the order number to access the order details page.

   The order details appear. You see the customer’s details, including delivery address, phone number and email address.

   Suspicious orders are flagged with an exclamation mark beside the order number.

Fraud analysis typically happens straight away, but if you see an order stating that fraud analysis is not yet available, hit refresh after a few minutes. It’s best not to send the order until it’s been passed as safe.

When an order has been flagged as suspicious, Shopify suggests several ways you can check the legitimacy of the order:

• Verify the IP address. Is the customer’s IP address located in a different general area from where they claim to be?

  You can use free online tools like What Is My IP Address (https://whatismyipaddress.com) to check the location of an IP address.

  If the answer is yes, try and email or call the customer — consider asking for a form of ID to be emailed to you, and explain to the customer that the security of your store is paramount in order to protect your customers. If you get no reply, you can be 99 per cent sure the order is a fraud attack on your store.

• Call the phone number on the order. The majority of the time an order is fraudulent, the phone number on the order never connects or there’s no answer. If you’ve called the number a few times over a day or two, the chances are you’re dealing with a fraudulent order, so you can cancel it.
• Search for the email address. Using the same principle as calling the phone number, try emailing the customer, or even searching for the email address in a search engine, to see if it’s linked to any businesses or social media accounts.

• Verify that the billing and shipping addresses match. Often in fraudulent orders, the billing address and delivery address are significantly far apart, which is a key indicator of potential fraud (generally, a customer is reasonably close to the location of their billing address).

  Another red flag is when you have multiple orders for the same shipping address but each with different billing addresses, meaning numerous cards have been used to send orders to the same address — which is where the fraudsters collect their orders from before selling on the goods.

• Review high-value orders. Fraudsters often get greedy and place orders with unusually high values — and if the fraudulent order slips through undetected, their windfall is significant. If you see an unusually high-value order come through, it’s a good idea to verify the customer before you send out the items, using one or more of the strategies outlined in this list.

Following these steps can make a meaningful difference, reducing fraud and saving you money. You may wonder why I’m saying it saves you money (and not the poor person who’s had their credit card details stolen), and the reason for that is one of the banes of an online seller’s existence — chargebacks, which I explain in the next section.

Processing chargebacks

Chargebacks occur when a person believes their card has been used without their permission, so they dispute the charge with their bank — which then requests more information from you, the merchant. If the bank deems that the order has been placed without the cardholder’s permission, it reverses the charge, taking the money off the merchant, who then has the indignity of losing the sale and the product that’s already been sent!

Here’s the typical chargeback process in Shopify:

1. The cardholder disputes a credit card charge with their bank.
2. The cardholder’s bank sends a chargeback request to the credit card company.
3. The credit card company asks you for evidence that the charge was valid, such as a signature on the order.
4. You and Shopify gather evidence to figure out whether the charge was valid.

5. Shopify sends a response to the credit card company.

   If you use Shopify Payments, Shopify collects evidence and sends a response to the credit card company for you on the due date. You can add additional evidence to the response before the due date. The due date is 7 to 21 days after the chargeback or inquiry is filed. If you’re using a third-party payment provider, you’ll need to refer to its chargeback process.

6. The credit card company reviews the evidence. The review can take up to 75 days after the response has been submitted.
7. The credit card company resolves the chargeback by either allowing the charge to be processed, or reversing the charge and giving the funds back to the cardholder.

You won’t be sent a bill for the chargeback — it will be taken directly from your next Shopify Payments payout (or other payment gateway if you don’t use Shopify Payments) or settlement.

In my experience, 99 per cent of the time the merchant loses rather than the customer, which places further emphasis on the importance of reviewing your potentially fraudulent orders before you send them. Chargebacks typically sit at 0.3–0.5 per cent of total orders, which is a potentially huge loss as your business starts to scale.