How Shopify Chooses Shipment Origins

Is Shopify Locations the solution you are looking for?

In 2018, Shopify rolled out "Shopify Locations".  It is a well-intended way to help merchants get shipping quotes based on where inventory is located. As well-intended as it is, there are valid concerns about how Shopify Locations chooses the shipment origins for an order.

Shopify's example of online order fulfillment

The following example is straight from Shopify.  It describes how Shopify Locations selects the shipment origin for items on an order.  The example is repeated here for the benefit of those interested. The example was once very prominent in Shopify's Help Center, but over time Shopify has made it increasingly hard to find.

In the example, a store has four locations and receives online orders for various items. The orders are assigned to locations based on the fulfillment priority and the following rules:

  • Try to assign the order to a single location.
  • If required, assign a line item to a location that has enough inventory, but do not split line items between locations.
  • If an item is oversold, then assign the order to the priority location where the item is stocked.

Assume the following inventory is available at the locations:

Location Hats Shirts Mugs Shoes
New York 5 1 Not stocked Not Stocked
Los Angeles 0 5 1 Not stocked
Chicago 1 0 5 1
Pittsburgh 10 10 10 10

The location priority is 1 - New York, 2 - Los Angeles, and 3 - Chicago. Pittsburgh does not fulfill online orders.

An order is assigned to locations as follows:

Order Assigned locations
1 shirt New York
1 shirt, 1 mug Los Angeles
1 hat, 1 mug Chicago
2 shirts Los Angeles
2 hats, 2 shirts Hats assigned to New York, shirts assigned to Los Angeles
6 shirts New York
7 shirts New York
1 hat, 1 shirt, 1 mug, 1 pair of shoes Hat and shirt assigned to New York, mug assigned to Los Angeles, shoes assigned to Chicago

How is Shopify Locations flawed?

The proximity of the ship-to address doesn't factor into the location selection. Consider the first example of 1 shirt where New York was selected because it had inventory and was given higher priority than Los Angeles. If the ship-to address were in Irvine, California, it wouldn't make sense to ship the order from New York.

What would the quoted shipping costs be? The rates for shipping the order from across the country instead of across town would be much higher. Price-sensitive customers may balk at paying such high shipping costs in favor of other alternatives. Shipping costs are one of the primary drivers of cart abandonment. 

Alternatives to Shopify Locations

The quoting apps from Eniture Technology make the proximity of the ship-to-address a priority. When merchants define only one location in Shopify (even if they have more) and allow the sophisticated programming of the apps to do the heavy lifting, many of the pitfalls of Shopify Shipping are avoided.

Eniture Technology's apps allow merchants to define multiple warehouses and drop ship locations. Many merchants will find that this approach and the resulting functionality more closely mirror how they run their businesses.  The tradeoff is inventory tracking.

Related material:

Warehouses vs. Drop Ship Locations

Should you use Shopify Locations?

If your primary concern is inventory tracking, then Shopify Locations is probably the correct choice for you. However, make your choice after being informed of and evaluating the shortcomings of Shopify Shipping.