For a long time, free shipping felt like a cheat code. You added a banner. You set a threshold. Conversion went up. That math is changing.
In August 2025, the US removed de minimis for parcels from China. By July 2026, the EU will remove the €150 customs duty exemption and add a €3 duty on all low-value parcels. Your costs are going up. But customer tolerance for surprise costs is not.
Customers still want free shipping. But when they can't get it, surprise costs at checkout are what kills conversion. 47% of shoppers abandon their carts when extra costs like shipping, taxes, and fees appear at checkout. That is the number one reason for cart abandonment, ahead of delivery speed and payment options.
Free shipping still works. You just need to be more strategic about where you can afford to offer it and where you need transparent pricing instead. If you manufacture in Asia and sell to North America or Europe, here is how to rethink your shipping promise so it survives both rising costs and customer expectations.
Not every order can support free shipping anymore. The brands that navigate this well think about it in three decision layers, not a single blanket policy.
Surprise kills conversion. Extra fees that appear only at checkout are the top reason shoppers abandon carts. Not slow shipping. Not complicated forms. Unexpected costs.
If you charge for shipping, show it early. Header banners, product pages, and cart previews consistently outperform pricing that only appears at the final checkout step.
Shoppers accept paying more when the cost feels proportional. They leave when it feels arbitrary.
A shipping fee that makes up most of the order value feels unreasonable. The same fee becomes acceptable when it represents a smaller share of the total, such as $10 on a $68 order.
That reaction is common. Checkout research shows shoppers abandon carts when shipping and fees feel too high or out of proportion to what they are buying, not because they refuse to pay for shipping at all.
A predictable shipping promise builds trust. A confusing mix of thresholds, exceptions, and regional surcharges erodes it.
Most brands perform better when shipping rules are simple and clearly communicated, rather than buried inside checkout flows or revealed late in the purchase process.
Practical recommendation: Build a dedicated shipping FAQ page that answers the most common customer questions before they reach checkout.
The goal is not to offer free shipping on every order. The goal is to offer it where your margin supports it and charge transparently where it does not.
Many brands skip this step and regret it later. Before you change anything on your site, it helps to understand what you actually pay.
Your shipping costs break into four buckets: fulfillment (pick, pack, storage), transportation (parcel rates, fuel surcharges), duties and taxes (import duties, VAT, customs fees), and customer incentives (the portion you subsidize).
The brands that navigate this well pull their last 6 months of orders and calculate for each region:
This shows you where you have room to subsidize and where you are already underwater. The average free shipping threshold across retailers is $64 in 2025, though many brands set theirs 10-20% higher to protect margin after accounting for duties and cross-border costs.
For EU orders under the new rules, you will want to add €3 per parcel plus VAT processing to your calculation. For US orders from China, assume tariffs apply unless you have confirmed exemption.
Most brands find success with one primary model and a secondary option for edge cases.
Threshold-based free shipping remains the most practical option for many brands. The approach is to set free shipping at a point where gross margin stays positive after product cost, shipping, and duties.
Industry benchmarks show that many DTC brands set thresholds between $75-100 for US orders, with higher thresholds often required for EU markets due to duties and VAT. The exact number matters less than whether it reflects your actual unit economics.
Brands that struggle often set thresholds based on round numbers or competitor behavior instead of their own data. Your historical orders will show where your real break-even point sits.
Regional pricing gives you flexibility to offer free shipping above $75 in the US while charging $8-12 for EU or UK orders, or setting a higher threshold like $150 for those markets. This keeps your promise generous where you compete hardest and realistic where new duty costs hit.
Transparent paid shipping works well if you compete on speed and reliability instead. Show delivery windows that are accurate, not aspirational. Charge $6-10 for standard shipping and make express a paid upgrade. The key is removing surprise by showing full landed cost including duties before checkout.
Cross-border regulatory shifts directly affect your shipping strategy, regardless of where in Asia you manufacture. The EU eliminated the €150 duty exemption and added a €3 handling fee per parcel from July 2026. This applies to all parcels from non-EU countries, whether you ship from China, Vietnam, Thailand, or anywhere else outside the EU. That is €3 plus import duty plus VAT on every order, regardless of size. For a $50 order, this adds roughly $6-8 in new costs.
The US separately removed de minimis for parcels from China in August 2025.
These changes hit your ability to subsidize shipping in three ways:
When you rebuild your shipping promise, factor these costs into your threshold calculation. If €3 plus duty makes EU orders under $100 unprofitable, either raise your EU threshold or add transparent shipping fees for that market.
The brands that have navigated this successfully tend to follow a similar pattern. Here is what they do.
They start with margin analysis by region. Most pull 6 months of order data and calculate contribution margin after product cost, shipping, and duties for orders at $50, $75, $100, $150, and $200. This shows them the inflection point where margin turns positive in each market.
They set thresholds with buffer. If they break even at $75, they might set free shipping at $85 or $90. This gives them room for carrier rate increases and unexpected costs. They do this separately for US, EU, UK, and any other major markets.
They evaluate their fulfillment model. If they are pre-stocking months of inventory in destination warehouses to hit domestic shipping speeds, they calculate how much capital that ties up and what happens if demand shifts. Some explore keeping inventory upstream and shipping cross border on demand instead. The guide to assessing 3PL providers walks through how to evaluate this tradeoff.
They communicate costs clearly. Most put free shipping thresholds in their header, cart page, and product pages. For orders that do not qualify, they show exact shipping cost before checkout. For international orders, they show estimated duties and taxes. They find that clarity converts better than hiding costs until the last second.
You can negotiate carrier rates forever. You will still feel squeezed if your fulfillment model forces you to pay duties and freight months before products sell.
The traditional model locks you in. You book sea freight from China to US or EU warehouses. You pay freight and duties on full containers before units sell. You offer free or discounted domestic shipping to compete. If tariffs rise or demand shifts after you ship, that container becomes a sunk cost eating your margin.
Direct fulfillment changes the timing. Inventory stays at a fulfillment center near production. Orders ship by air directly to customers in 6 to 9 days. You pay duties and freight as orders leave, not three months early on a forecast.
This matters for free shipping because you tie costs to real demand instead of predictions. When inventory is not trapped in the wrong warehouse eating cash, you have more room to be generous with thresholds or absorb new duty costs.
How do EU customs changes affect my costs?
The EU removed the €150 duty exemption and added a €3 handling fee per parcel from July 2026. Every order now pays this fee plus import duty plus VAT, regardless of value. For a $50 order, this typically adds $6-8 in costs. Many brands are factoring this into their EU pricing and shipping thresholds, or moving to transparent paid shipping for EU markets.
Should I charge for shipping on international orders?
It depends on your margin and how you compete. Many brands now use transparent paid shipping for international orders and focus free shipping on their core domestic market. Showing full landed cost including duties early in checkout prevents surprise abandonment. Some brands find they convert better with honest $10-15 shipping costs than with "free shipping" that hides those costs in product price.
Does shipping speed matter more than cost?
Clarity and reliability often matter more than absolute speed. Many customers prefer transparent delivery windows (7-10 days, shown upfront) and no surprise fees over express shipping that costs extra or arrives with unexpected duties. The brands that do well focus on setting accurate expectations rather than promising the fastest delivery.
How does factory-adjacent fulfillment change my options?
Direct fulfillment keeps inventory near production and ships orders as they arrive. You pay duties and freight on units that already sold, not months in advance. This gives you more flexibility to absorb costs or adjust thresholds because cash is not tied up in warehouses.
