What Is DDP Shipping?January 27, 2021
Optimizing shipping methods is a vital part of any ecommerce store’s business strategy. Choosing the right shipping option can ensure success by setting up the right mix of expectations and responsibilities for the seller and buyer. For international sellers, an important shipping concept to understand is Delivery Duty Paid (DDP) shipping and how it differs from Delivery Duty Unpaid (DDU) shipping. DDP shipping can enhance the customer experience, but it’s important to know its advantages and disadvantages before deciding on it as a policy.
First, we’ll give a quick definition of DDP shipping and how it differs from DDU shipping.
DDP Shipping Vs. DDU Shipping
Delivery duty paid shipping is a shipping option where the seller needs to deliver their goods at their own expense and risk until they reach their destination. This means the seller also takes care of all formalities like clearing customs as well as pays all import duties and taxes.
Delivery duty unpaid shipping on the other hand requires the end consumer receiving the goods to pay all duties once the package reaches their destination country. With DDU shipping, a customer will also be contacted by customs once their parcel arrives and they may have to go to their local post office to get it.
Advantages of DDP Shipping
The biggest advantage of DDP shipping is that it enhances the customer experience. DDP is a cross-border option that includes all fees upfront and allows the merchant to choose whether they want to pay all the costs or pass them on to the customer. DDP shipping often removes the buyer’s fear of paying high taxes as they are not responsible for them. This makes them more likely to go through with their purchases.
Disadvantages of DDP Shipping
Although DDP is frequently used by sellers, it also comes with a higher amount of fees. Sellers assume responsibility for the following:
- Import and Export Custom Duties
- Shipping Fees
- Damage fees
- Shipping Insurance
- Storage and Demurrage
Due to the higher cost, sellers must calculate the fees they’ll have to pay and find out whether they’ll make a profit from their sales before choosing DDP shipping.
Choosing a shipping method is difficult for many businesses as they must weigh the pros and cons of each option for themselves and their customers. Although DDP shipping is great for the buyer, businesses must take their budget into account and weigh the impact choosing DDP shipping will have on them as the seller.