The Challenge

Like most ecom brands, our client’s shipping prices didn’t answer unit economics and brand positioning questions like:

1. How can we improve AOV & prepaid % through shipping prices?
2. Is AOV increase caused by shipping prices impacting profitability? Is it worth it?
3. Given our messaging, what shipping price is a customer comfortable with?

Without knowing the relationship between shipping price & profitability, we leave a lot of profits on the table.

Theory

Like anything impacting a store’s profitability, shipping prices must be tested monthly to gauge the changes in:

1. AOV
2. Profitability (and hence, CPA)
3. Percentage of prepaid orders
   

Brands shouldn’t get complacent.

An “optimal” shipping price isn’t optimal forever. Customer sentiment changes throughout the year. Even a sale on Amazon changes your CPA.

💡 About Prepaid Orders %: In COD (Cash On Delivery)-heavy markets like India, a cancelled COD order is a net loss (forward + reverse logistics costs).

So shipping prices must nudge users to prepaid & if they still buy COD, the extra charges must be enough to negate losses from cancelled orders.

Execution

Of course, we didn’t test shipping prices the first thing here. Although it’s an “easy win” – We first sorted test products, ad angles, offer, creatives, etc. See more here:

1. Creative, Leaks which scaled the store to 14k orders.
2. SKU-level profitability which reduced order returns by 50% : https://bastiani.agency/case-studies/how-sku-level-analysis-cut-order-returns-by-50-while-increasing-aov/

Now back to shipping prices. We began with a simple but often ignored question:

1. “If the buyer does a quick mental math at checkout, does the total price (product + shipping) feel fair?”
2. “Does the delta between prepaid & COD make the buyer think he’s getting a good deal?”

Let’s peek at the current checkout prices & answer both questions.

“If the buyer does a quick mental math at checkout, does the total price (product + shipping) feel fair?”

In our test:

Prepaid checkout = ₹429

COD checkout = ₹469

₹20 for COD shipping isn’t outrageous. Amazon et al charge ₹30-40.

But here’s what actually happens at checkout:

The buyer doesn’t “see” ₹20. He sees a ₹40 gap between prepaid and COD.

“Does the delta between prepaid & COD make the buyer think he’s getting a good deal?”

This design flips the buyer’s attention:

Instead of thinking “Why am I paying ₹20 extra for COD?” He thinks “Wait, I’m saving ₹40 by paying online.”

This isn’t just price manipulation – It’s behavioral framing. The buyer stays in our frame. And it worked.

Hypothesis was, as long as we contrast shipping prices with a standard prepaid discount, people will buy.

And that’s what happened after we tested our hypothesis.

We systematically tested the following shipping charges:

Test 0: Older shipping charge

Test 1: ₹0 shipping

Test 2: ₹9 shipping

Test 3: ₹10 shipping

Test 4: ₹15 shipping

Test 5: ₹19 shipping

Test 6: ₹20 shipping

Each test proved our original hypothesis: By anchoring COD against a visible prepaid discount, the resulting pricing contrast improves prepaid %, AOV & profitability.

Results

Here’s the “before-after” pics for AOV & Prepaid % for the control price (older shipping) and latest winning test 6. Can’t show profitability for obvious reasons, but the surge was the highest % wise.

AOV: Feb 2025 vs April 2025

3.78% increase from ₹466.28 to ₹483.28

Prepaid %: Feb 2025 vs April 2025

16% increase from 32.11% to 37.25%

* Order volume is less than actual numbers by 4.14% as our one-click payment provider(external to Shopify) misses some buys.

Summary

Shipping price isn’t just a minor part of logistics. It can influence buyer behavior at the most critical point in the funnel: payment selection.

We hit three birds of AOV, prepaid % (& hence lower cancellations) and profitability – All with no major change in the funnel.