Misclassifying free shipping as a logistics cost can erode operational efficiency over time by misaligning team incentives and distorting cost structures. In practice, consider the situation where a Shopify store provides free shipping for orders; this decision should be reflected within the Customer Acquisition Cost (CAC) rather than the Cost of Goods Sold (COGS). Assigning it correctly motivates the marketing team and maintains transparency in financial reporting. As sales volumes grow, logistics often become strained to meet unrealistic benchmarks if free shipping is not allocated as a marketing expense, causing stretching in cost-saving measures elsewhere. A preventative operating model would see cross-functional accountability for such costs, with a clear owner to monitor and adjust strategies in response to market dynamics.