If you’re an eCommerce business that’s starting to explore the option of offering international shipping, then you may have come across the concept of delivery duty paid (DDP). But perhaps you’re wondering what exactly it is? And, why is it used? If you want the answers to those questions and more, then keep reading…
Delivered duty paid definition
Let’s begin by defining what DDP actually is. Delivered duty paid (also referred to as delivery duty paid), is a type of shipping whereby the seller (i.e. you or the freight company that you choose) takes responsibility for all of the fees and risks associated with shipping an item.
DDP is what’s known as an ‘Incoterm’, which is a pre-defined commercial term which was developed by the International Chamber of Commerce in order to help standardise shipping options when you’re shipping something from one country to another.
Under the terms of DDP, a seller must:
- Take all responsibility for the shipping of a good until it reaches the agreed-upon destination.
- Take responsibility for arranging all shipping as well as the costs associated with export clearance and customs documentation.
- Take responsibility for VAT charges and any costs associated with delays etc.
Because of the additional work that is associated with DDP shipments compared to other types of shipment, it’s mainly used for higher-value items and goods (typically £25 or higher).
Why is DDP used?
As you’ve just read, there’s quite a lot for a seller to do under the terms of DDP. But, there are many good reasons why it does get used.
It protects your customers
DDP shipments ensure that the people buying your goods in other countries won’t suddenly find themselves with some nasty surprises (like having to pay a customs charge on top of what they’ve already paid for the item).
Using DDP also provides your overseas customers with reassurance. Because DDP is an internationally-recognised form of shipping agreement, your customers will be confident that they’ll actually receive the item(s) they’ve ordered.
It ensures safe delivery
If you’re a consumer and you’re thinking about ordering something from another country, you may be a little worried if it will actually reach you in one piece or not.
With DDP that worry is erased. It’s up to the seller to ensure that the item they are shipping – be it by air or sea – arrives in perfect condition. If the item does turn up damaged, then it’s the sellers responsibility to rectify the situation.
It provides a smooth buying experience
From a consumer’s perspective, the less they have to do, the better.
Say someone wants a coat that they’ve spotted online. They want to be able to click ‘add to basket’ and have it arrive at their doorstep sometime later.
What they don’t want is to have to go to the post office and pay an exorbitantly expensive customs fee or import duty. Not only are extra charges a sting, but the fact that a customer has to make a trip to a post office or depot, and also experience a delay in receiving their item makes the whole experience a sour one.
DDP ensures the types of things we’ve just described don’t happen. In other words, DDP makes buying something from an international eCommerce store a much smoother and pleasant experience.
The advantages of delivery duty paid
As we’ve just seen, there are plenty of good reasons why DDP is used. It will certainly help you to reassure international customers and provide them with a smooth, stress-free buying experience.
But, what are the other advantages of DDP? Let’s take a look…
When you decide to send your goods using DDP, then the company that is in charge of your freight is responsible for ensuring that your item is sent safely, securely and that all associated customs, VAT and other charges are paid for.
Because DDP is an Incoterm, it sets out very clear rules and responsibilities. Whilst there are quite a few things that need to be done under a DDP shipping arrangement, the fact that there are actually set rules and responsibilities will make your life as a seller easier.
Think of it this way; if everyone (that is, freight companies, port authorities, customs officers etc) has set rules that they have to follow, then there’s less chance that something will go wrong with the shipping of your orders.
In short, whilst DDP may be a bit more onerous than other types of shipping arrangement, it conversely will make your international shipping easier.
By choosing a DDP shipping solution with a reputable freight provider, you’ll have a single, clear price to pay for the shipping of your orders.
Quality DDP shipping providers will typically offer complete packages that take into account not only the cost of shipping, but also the associated customs and tax charges that will be levied on your orders.
This will make your life much easier than if you were to try other types of international shipping where you can be hit with unexpected (and large!) fees.
The disadvantages of delivery duty paid
Whilst DDP does certainly make international shipping easier for eCommerce brands, it isn’t without its downsides.
Without a doubt, DDP can be more expensive than other forms of international shipping.
The reason is largely down to the fact that you, as the seller, are assuming responsibility for not only the cost of shipping, but also any associated taxes and duties that need to be paid.
Whilst you can factor these costs into the pricing of your products, this may well make your pricing uncompetitive.
The alternative is to use other forms of international shipping where more responsibility is placed on the buyer. As you’d expect however, this can be less appealing to consumers who may not want the hassle of having to pay customs duties etc.
The fact is, DDP involves more work for sellers (or the freight companies they choose).
As you are responsible for shipping and paying applicable fees, taxes and duties, there’s multiple bits of paperwork that needs to be completed. There’s also the job of communication; it’s your responsibility to keep the buyer informed of things like delays.
So, DDP can be more burdensome than other types of international shipping.
Want someone to handle international shipping for you?
Having just read all of that, you may be wondering if offering international shipping on your eCommerce store is actually worth it.
Well, the answer is that you can take away much of the worry and work by selecting someone to handle your international shipping for you.
That someone is 3PL!
We work with eCommerce brands big and small and have extensive experience providing international fulfilment and shipping.
Speak to 3PL about your international shipping requirements today
For more eCommerce logistics, fulfilment and shipping advice, read the 3PL blog…
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