What's the right way to optimize images for Shopify?

Three things in order: serve modern formats, size correctly, and load smartly. Shopify can serve WebP automatically and resize via image URL parameters, so the key is uploading reasonably-sized source images (you don't need 5000px hero files) and letting the theme request the right dimensions per device. Lazy-load everything below the fold, but load the hero/LCP image eagerly.

The biggest real-world win is just not shipping a giant uncompressed hero. Compress before upload, let Shopify handle format/resize, reserve space so images don't cause layout shift, and you've solved most image-related speed issues without per-photo fiddling.