Easy DDP Shipping for Cross-border Ecommerce
January 13, 2020
Does your online store have an FAQ that says something like this –
|“International orders are subject to duties, customs, and value added taxes that aren’t reflected in our prices. The recipient will be responsible for paying these charges upon receipt of your order.”|
Or what about this –
|“Depending on your country, you may be charged customs/import fees.”|
Or maybe this –
|“Check with your local customs office for relevant charges. Some countries may be assessed additional fees for brokering these payments prior to delivery.”|
These ambiguous statements put the responsibility for duty, tax, and customs clearance on the end-consumer which creates a complicated purchase experience for the savvy shopper.
Imagine, instead, your website clearly communicated the customs duty & tax costs along with discounted international shipping rates ? This is referred to as “DDP shipping” and it’s finally easy to offer thanks to FlavorCloud’s Shopify and BigCommerce plugins.
DDP or DDU?
When ecommerce merchants start selling internationally, they must decide whether to offer DDU or DDP shipping.
DDP stands for “delivered duty paid” and means the consumer pays all cross-border customs duty & tax charges at checkout. DDU stands for “delivered duty unpaid” and means the consumer handles all duty & tax formalities upon shipment’s arrival in country.
“Customs duty” refers to the tariff applicable in a consumer’s country on imported goods. Whether DDP or DDU, the consumer will pay duty & tax when shopping cross-border – it’s just a question of when and at what cost.
DDP shipping is the goal
The best online shopping experience is to offer DDP shipping. Historically, offering DDP shipping was difficult because it meant merchants had to do all the work to figure out the complicated duty & tax calculations and then figure out how to collect and remit payment to the customs authorities. This required costly resources and specialized expertise, so many merchants (understandably) chose to go the DDU route. But DDU leaves the duty, tax, and customs burden to the end-consumer – not a great consumer experience at this time where the online shopping market is so competitive.
FlavorCloud has cracked the code
Fortunately, technology advances enable merchants to calculate duty & tax at checkout making DDP shipping easier than ever.
In Q4’2018, 28% of the international shipments processed by FlavorCloud were shipped DDP. In Q4’2019, that figure jumped to 67% as more merchants discovered the ease and benefit of using FlavorCloud to offer DDP shipping.
FlavorCloud makes DDP shipping easy for ecommerce merchants by:
- Calculating the duty & tax amount at checkout to determine a guaranteed landed cost for each cross-border transaction. This includes the cost of shipping, duty, local tax, and customs clearance.
- Presenting international shipping rates that are deeply discounted and pre-negotiated to include reduced customs handling fees saving ~$30 per order.
- Applying proprietary and scalable auto-classification logic to assign the country-specific tariff code to every product in the catalog size saving hours of expensive classification work.
- Facilitating communication of customs clearance information and remittance of duty & tax to authorities.
- Providing merchants with the ability to present both DDP and DDU shipping options so the customer can choose.
Ultimately, it’s up to the merchant to decide which model best suits their business. However, DDP is the best option for a successful and sustainable global selling program. DDP shipping gives upfront cost certainty so savvy consumers aren’t surprised with additional charges. DDP shipping also maximizes merchants’ global selling investments by instilling trust, convenience, and predictability resulting in a positive experience and fewer rejected shipments.