Designing Shipping Fee Transparency to Reduce Checkout Surprise

Lazada Indonesia offers two main shipping options — Standard Delivery and GoJek (Express) — depending on seller and customer locations. Shipping fees for Standard Delivery vary based on multiple factors such as seller location, customer location, order value, and (assumed) package weight.

At the time of this project, customers received very limited guidance on how shipping fees were calculated. Some information appeared on the Product Detail Page (PDP), but the full cost was only revealed again at Cart or Checkout. This often resulted in unexpected shipping fees, especially for low‑value orders.

From a business perspective, Lazada was heavily subsidizing shipping costs, even for very small orders (below Rp 50.000). This created a significant cost burden. The company’s direction was to introduce shipping fees for low‑value orders while minimizing cart abandonment and, where possible, encouraging customers to increase basket size.

This case study describes how the product team approached shipping fee transparency by deeply understanding customer motivation, analyzing behavioral data, and delivering the right information at the right moment along the purchase journey.

Primary Goals

• Reduce cart abandonment caused by unexpected shipping fees
• Increase shipping fee transparency earlier in the journey

Business Objectives

• Enable more granular shipping fee configurations
• Reduce unnecessary shipping fee subsidies
• Encourage customers to increase order value to reach free‑shipping thresholds

Product Metrics (Success Signals)

• Higher address input rate
• Lower checkout drop‑off rate
• Increased AOV and basket size (by persona

By looking at the ordering journey below, we have found some problems:

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Key Pain Points

• Shipping fees were unclear and fragmented across the journey.
• Customers often optimized for item price only, without understanding total landed cost.
• Shipping fee logic was complex and invisible:
  • Based on customer location
  • Dependent on order value thresholds
  • Free shipping applied only to Standard Delivery, not Express
• Shipping fees were calculated differently at PDP vs Cart vs Checkout, creating surprises.

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System & Policy Constraints

• Free shipping threshold varied by customer location.
• Shipping fee at Checkout was calculated on total order value, while earlier screens showed item‑level assumptions.
• Multiple delivery options confused customers, especially first‑time users.

The combination of these issues led to:

• High cart abandonment at Checkout
• Inefficient shipping subsidies
• Missed opportunities to increase AOV and basket size

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User Insights

After conducting user interviews, we had 3 main simplified user personas

Jethro: Repeat customer from Kalimantan (Kalimantan Timur, Kota Samarinda) — far away from Jakarta

• Logged in
• Compare products and looking to score lowest price + shipping fees
• Familiar with Lazada Shipping Fees

Lazada objective: help Customer finding the right SKU with certainty, no drop-off during checkout

Eleazar: First time customer from Surabaya, looking to get diapers urgently

• Guest user
• Not brand-loyal — just needs diapers, mid-range price
• Willing to pay more for Express Delivery (next day), pays by credit card
• Might need additional baby products (wipes, baby bottle) although no urgent purchasing intent

Lazada main objective: direct user to diaper assortment available with Express Delivery (higher add-to-cart)‍

Lazada secondary objective: build bigger basket around initial item (higher AOV)

Suwandi: Casual browser from Jabodetabek (West Java/Java Barat, Kabupaten Bogor)

• Doesn’t log in
• Browse for low price products RP 50.000 — 100.000
• Only accepts COD as payment method

Lazada objective: encourage to increase basket value to >RP30,000 (higher AOV)

Guiding Principle

Customer location is the foundation of shipping fee clarity.

To provide meaningful guidance, Lazada needed to know the customer’s location as early as possible — without blocking the shopping experience.

Instead of forcing a single permission gate, we designed multiple contextual entry points to capture or infer customer location across the journey:

• App entry / first visit
• Search results and filtering
• PDP (delivery information)
• Cart (precise location confirmation)

The approach focused on:

• Progressive disclosure of shipping information
• Aligning information with user intent at each step
• Supporting different customer motivations through personas

Persona‑Driven Design

Case 1: Jethro — Repeat Customer from Kalimantan

Behavior & Motivation

• Highly price‑sensitive
• Optimizes for total landed cost (item price + shipping)
• Familiar with Lazada mechanics

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Design Opportunities

• Help customers quickly identify SKUs with the lowest shipping cost
• Reduce uncertainty before reaching Checkout

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Solution

• Display Free Shipping Threshold and delivery eligibility directly on the Product Detail Page
• Surface seller location and delivery options earlier in Search Results
• Allow filtering by delivery options (Free Delivery, Fast Delivery, COD)

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Case 2: Eleazar — First‑Time Customer, Urgent Need

Behavior & Motivation

• Needs diapers urgently
• Willing to pay more for Express Delivery
• Open to adding complementary items

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Solution Direction

The same approach to get user location and provide the right SKUs, but also have a smart filter methods to let user quickly looking for products with faster delivery

• Prioritize assortments available with Express Delivery
• Clearly communicate delivery speed and fees upfront
• Encourage basket expansion with relevant add‑ons

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Case 3: Suwandi — Casual Browser, COD Only

Behavior & Motivation

• Browses low‑value items
• Very price‑sensitive
• Limited trust (COD only)

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Solution Direction

• Encourage basket value increase to pass shipping thresholds
• Explain shipping fee rules more clearly

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Experiment Setup

• Rolled out to 30% of users in Indonesia
• Measured behavioral shifts before and after changes

Key Outcomes

• Customers entered their addresses more frequently and earlier
• Checkout surprises were reduced
• Clear differentiation in impact by persona:
  • Case 1: Better SKU discovery, but assortment limitation exposed in rural or remote areas.
  • Case 2: Strong uplift in completed orders. We saw a big increment in orders placement.
  • Case 3: We didn't see much improvement on the number of items in the basket, nor any steady data about how customers understand the shipping fees, so for this case we need to run a deeper user research and see more carefully how customer interact with this new features, since this case has been the major case in ID, and Vietnam also (where customers bought very cheap items).

Long‑Term Impact

This project represented the first phase of Lazada’s Shipping Fee Transparency initiative. The learnings were later extended and adapted to other markets, including Vietnam, Thailand, and the Philippines, where low‑value orders and shipping sensitivity were also critical challenges.

The team continued iterating on shipping communication, balancing cost efficiency with customer trust and clarity.