Who Pays for DDP Shipments?

Key points:

• DDP is one of the most common eCommerce international shipping options
• When offering DDP shipping for online orders, the seller is responsible for covering both import and transportation costs
• The end customer is responsible for sharing reliable information for a successful delivery
• Easyship can help you scale your store internationally by keeping the costs of DDP shipping low

Looking to start offering DDP shipping for your store but worried about the costs? This article defines DDP shipping, Incoterms, the type of transport and import costs involved and crucially, who is responsible for paying. Plus, explore how Easyship can help you make more sales and create a delivery experience customers love with DDP, without increasing shipping costs.

What is DDP Shipping

Delivered Duty Paid (DDP) is a type of shipping where the seller is responsible for covering all the costs associated with delivering the order to the end customer. This includes customs clearance, plus any taxes that might need to be paid. This also means the store owner takes all the responsibility, risks and costs associated with shipping until the product is delivered.

Incoterms: DDP, DDU, DAP & DPU

Incoterms are a set of international commercial terms published by the International Chamber of Commerce. Recognized around the world, Incoterms stop confusion in international trade and supply chains by clearly stating the responsibilities of both the buyer and seller. While we have broken down DDP above, there are alternative shipping methods available:

DDU

In contrast to DDP, delivered duty unpaid (DDU) is when the end customer becomes responsible for paying import duties, plus shipping costs once the products are delivered. Offering DDU as a shipping option can impact customer satisfaction, as most eCommerce customers will not be happy paying extra fees upon delivery. This shipping method is more commonly known as Delivered At Place (DAP) in eCommerce.

While the seller pays for the packaging, insurance and transportation cost for shipping the package to the order's destination country, the end customer is responsible for the import costs. These can include:

• Import license for purchasing goods from overseas
• Inspection costs
• Duties and taxes
• Delivery from customs to the end customer
• Loading and unloading fees
• Documentation costs

DPU

Finally, there is also Delivered at Place Unloaded (DPU). This third term is used to differentiate from the previous two shipping methods, as under DPU the seller is also responsible for unloading the goods at the place of destination. Usually referring to freight shipping, this term is also known as Delivered at Terminal. While risk transfers from seller to buyer when the goods are unloaded, the buyer is responsible for customs clearance and local taxes or duties.

Costs Involved in DDP Shipments

There are several costs that need to be considered for duty paid DDP shipping. These can be broken down into two main categories to cover how they impact buyers and sellers.

Transportation Costs

Shipping costs can quickly add up and are determined by a range of key factors that are specific to each shipment. Shipping rates for most couriers are calculated based on the following:

• Dimensions
• Weight
• Speed
• Distance to destination
• Surcharges
• Features

Choosing the right carrier and shipping solution to create a delivery experience customers love can be crucial for nearly all online stores. Keep costs low and find the best rates with the Easyship Free Shipping Rates Calculator.

Import Costs

Import costs are anything associated with clearing customs, plus the taxes and duties that need to be paid to the relevant local authorities. Just like how transportation costs vary for every package, import costs vary for every country and also depend on the contents.

As every destination country has its own particular import tax and custom fees, there can be a wide range of different total import costs. The import taxation for a particular country is determined by the local Goods and Services Tax (GST), Value Added Tax (VAT), item category, plus the shipment's declared value. However, some countries have a tax and duty threshold, where items under that declared value aren't required to pay taxes.

When shipping DDP, import costs can quickly add up, especially if a country has a particularly high import clearance fee, customs duties or complicated customs paperwork. Stay one step ahead and never overpay for international shipping again with Easyship's free duties and taxes calculator. This can automatically estimate import costs for your customer's destination countries.

Related post: DDU vs. DDP: Understanding the Differences

Responsibilities of the Seller

Under delivery duty paid DDP, the seller must pay for all the costs associated with delivery of the order. DDP can refer to a range of different modes of transport, including ocean, air, road and multimodal. DDP is common in eCommerce sales contracts as it can create a seamless delivery experience for the customer, without unexpected costs on delivery after purchase.

The seller must also take responsibility that the order is delivered in a reasonable time frame and in good condition. The online store is also responsible for updating the customer about any delivery issues, which can make it crucial to use a reliable courier with frequent end-to-end tracking updates.

Responsibilities of the Buyer

The customer takes minimal responsibility with this shipping method. Their main duty is to supply the online store with the correct information, so the order can be delivered without any issues. Key information needed by couriers to successfully deliver a package can include:

• Name. Usually within 36 characters and using Latin alphabet.
• House name, street number or PO box number
• Street name, City, State & ZIP
• Email address
• Phone number

If a customer is having issues with an address, using Easyship's address validation service can instantly check, verify and correct US addresses using USPS standards. The customer is also responsible for supplying the correct information for the required relevant import documents. Make sure your documents are correct every time by using Easyship's shipping tool to automatically generate customs paper work.

DDP Benefits

While DDU can be a cost-effective shipping option, while also giving the customer more control over the shipping process, DDP offers a range of benefits that can help an online store grow. These include:

Increase Sales

Offering DDP can create a competitive advantage over other stores selling to the same target audience. Products with a transparent shipping process that doesn't require extra time or work compared to competition, can help increase conversions.

Optimize Checkout Process

A streamlined checkout process can also help increase sales. Clearly stating international duties and taxes on your checkout page simplifies the customer's checkout experience. Go one step further and show customers the cheapest, fastest and best value shipping options at checkout with Easyship's Real-Time Shipping Rates Plugin.

Quick Delivery

When you take on all the shipping risks, you can avoid any cases of lost or damaged goods by choosing a reliable courier that will deliver goods safely. At the same time, a top courier will also be able to ensure that your goods don't spend longer than necessary in customs.

Increase Customer Satisfaction

This is an obvious huge benefit of shipping DDP. Customers receiving unexpected extra costs can instantly get rid of the trust you have worked hard to build for your online store and reduce customer retention. This can lead to returns, complaints, negative reviews and refunds. This can be avoided by taking responsibility of the shipping process.

Keep DDP Costs Down with Easyship

DDP shipments are a popular choice for online stores, however it can sometimes not be clear who pays. The costs involved in DDP shipments include both transportation and importation, while in most cases the responsibility for these costs will be placed on the seller. Easyship's shipping tools can help eCommerce entrepreneurs scale their store internationally, without increasing costs.

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Who Pays for DDP Shipments FAQ

What does DDP mean?

DDP is a shipping method where the seller is responsible for both the transportation and importation costs of delivering an order. The end customer is responsible for supplying the online store with correct, relevant information so that an order can be delivered successfully.

Who pays for DDP shipments?

The online store shipping the order to the customer pays for all the transportation and import costs. These can include shipping costs, Goods and Services Tax (GST), plus Value Added Tax (VAT).