I uploaded a shape as a transparent PNG thinking that it would clip the uploaded image into the shape, however it's coming in as a square with no shape clipping. I can only conclude that I've configured the upload zone incorrectly or this functionality is not possible.
Can anyone provide any insight?
This function is not possible. The only other option you have is creating a shape using an overlay mask. But with this technique you won't be able to see anything else around the mask in the product designer. You can find a demo here: http://support.fancyproductdesigner.com/support/solutions/articles/5000548181-using-an-overlay-image-as-mask
That is disappointing. Thank you for the response though, Wendel!