Welcome to the World of DDP: Build trust at checkout with transparent duties, taxes, and fees

When buyers shop internationally, the first things that often enter their brains are, “What am I going to pay for shipping?” and “Am I going to have to pay duties and fees?” 

Nothing makes an abandoned cart rate skyrocket like unclear or misleading shipping costs. And that’s because no shopper wants to pay expensive shipping and duty fees.  

According to Nosto’s cross-border shipping report, 41.25% of shoppers hesitate from making an international purchase because it’s not clear if they’re going to get hit with surprise shipping costs and duties.  

Nosto’s report also shared that 68.95% of shoppers said the website having clear information about returns, refunds, taxes, and duties would build their trust in an ecommerce brand when browsing. 

So, when it comes to selling internationally, it’s important to understand who is responsible for different parts of the process — the merchant or the buyer. 

The answer to these questions lies in understanding two key terms: DDU (Delivered Duty Unpaid) and DDP (Delivered Duty Paid). As a seller, your choice of DDU or DDP determines responsibility and directly impacts the buyer experience and repeat purchase rate.  

Hint, hint: DDP is the better option. 

Let’s explore the differences between DDP and DDU shipping and why DDP offers a more seamless, buyer friendly, and predictable option. Plus, we’ll dive into why DDP is a great way to future-proof your business, too. 

What’s the Difference Between DDP and DDU Shipping? 

Hearing all these acronyms and remembering definitions all feels a little… textbook-esque. So we’re going to make this part super easy! 

DDP (Delivered Duty Paid)  

• The seller handles all costs and customs clearance-related responsibilities including duties, taxes, and customs fees. 

• The buyer receives the product without any unexpected charges or complications at delivery, ensuring a smoother and more positive buyer experience. 

DDU (Delivered Duty Unpaid)  

• The buyer is responsible for all customs clearance-related responsibilities and for paying customs duties and taxes upon delivery. To add more acronyms to your lexicon, it’s also known as DAP (delivered at place). 

• The buyer can refuse delivery, leaving the burden of expensive returns or destruction of the product on the merchant, which can result in a significant hit on profit. 

When buyers know all duties and taxes will be handled and paid at checkout, trust increases. When there’s more trust, checkouts increase too. 

Modern Commerce is Powered by DDP 

DDP is simply a much smoother and more reliable experience for merchants and buyers. But let’s look at more highlights of DDP: 

Enhanced Buying Experience 

It’s 2024. Buyers shouldn’t be paying surprise duties and taxes post-purchase anymore. That’s so 2013.   

Sure, it might get them to purchase from you once, but even if they don’t refuse the delivery when hit with a surprise cost, they’re not likely to come back to shop from your brand again. 

DDP offers transparent pricing at checkout with no hidden fees, leading to better conversion rates. Since merchants often bake the duty costs into the shipping price, it’s a win-win.  

Buyers aren’t surprised and your margins aren’t impacted.  

This is especially important for retention as you find new buyers during peak season. The numbers speak for themselves: merchants who switch from DDU to DDP with FlavorCloud see average annual growth in GMV of over 120%.  

With FlavorCloud’s DDP solution, you can provide an unmatched shopping experience. It guarantees pricing, eliminates surprises, and ensures buyers won’t encounter additional costs.  

Our 300+ carrier network ensures we consistently deliver a reliable DDP solution through redundancy and the ability to rate shop for both time and cost. This helps buyers get their packages on time and in the most cost-efficient manner. 

Increased Trust and Brand Loyalty 

DDP shipping increases trust in your brand, encouraging repeat purchases for years to come. How? With DDP shipping, buyers know exactly what they’re paying upfront and that no sneaky costs will hit them later.  

With FlavorCloud, what’s shown at checkout is accurate and a guarantee, not an estimate, meaning we take on all the risk if fees change during shipping. This gives your customers a hassle-free purchasing experience that drives more conversions and encourages them to shop again in the future. 

Not to mention, FlavorCloud’s DDP solution allows us to take on “Importer of Record”, meaning that customs reach out to us if there are any issues and we work on behalf of the merchant to resolve problems. Again—there’s less hassle for your buyers to shop with you, which makes them more likely to come back again and again. 

Faster Shipping and Fewer Delays 

Heading into peak season, delivery speed is more important than ever. Nothing can turn a happy buyer into a Grinch faster than their package being tied up in the logistics of customs as the holidays loom closer. 

Unlike DDU, which can introduce delays due to unpaid fees, increasing the shipping time and chances of rejected deliveries, FlavorCloud’s DDP solution promises international shipping times will be: 

• Standard: 2-14 business days 

• Express: 1-7 business days 

Quicker customs clearance and faster deliveries result in improved buyer satisfaction. The proof is in the holiday pudding: Only 1.2% of all international shipments powered by FlavorCloud result in a support ticket to our team. 

Global Market Access 

If you’re interested in FlavorCloud, you’re interested in selling more online. DDP shipping provides much less friction for your buyers; with our DDP experience, we do much of the heavy lifting. This means you can tap into new markets with confidence. 

FlavorCloud enables merchants to reach 220+ global markets via a fully automated, compliant cross-border solution. This unlocks international growth, which for many merchants accounts for ~15% of their total annual GMV. 

Unit Economics of DDP 

By providing clear, transparent, and guaranteed DDP pricing up front, your buyers enjoy a seamless shopping experience that not only reduces support tickets, but also boosts trust and increases your revenue. But how?  

First, DDP requires the consumer to pay landed costs upfront. FlavorCloud’s DDP solution can drive down landed costs and offer significant savings while giving the merchant flexibility on how to pay these costs. Some merchants cover these costs on behalf of their buyers, while others bake it into the shipping costs at checkout.  

Second, DDP improves your profit margins. When costs are clear and guaranteed at checkout, there is no surprise expense for consumer order rejections where the seller has to pay for an order to be returned. There’s also no loss of the entire order value if a buyer abandons the purchase due to surprise costs upon delivery.  

The result? After switching to DDP, merchants see GMV improve by 120%+ due to better conversion rates and increased loyalty. Our team of experts can help you determine the best way to optimize costs without impacting your checkout conversions. 

No Risk, All Guarantee with FlavorCloud 

As peak season approaches, if you haven’t already, we encourage you to consider offering a DDP solution to improve the experience for your existing buyers and earn the trust and loyalty of new ones for years to come. 

Here’s one last look at the facts: 

• DDP improves the shopping experience, speeds up delivery, and builds trust, resulting in higher conversion rates and GMV growth of 120%+. 

• FlavorCloud’s Guaranteed DDP solution allows merchants to benefit from seamless international shipping, reduced support tickets, and greater profitability. 

• While it may feel like the seller bears more responsibility for shipping and customs, FlavorCloud ensures that’s not the case. We automate the entire process, including customs clearance and HS code classification with 99% accuracy at no additional cost. 

• While DDP may sound more expensive at checkout, the increase in conversion and LTV and decrease in support costs overwhelmingly offset the costs captured at checkout. 

• FlavorCloud helps merchants scale globally by taking on the burden of risk, allowing for smooth expansion to new markets without added complexity. 

Have more questions about the benefits of DDP? We’re happy to help! Connect with us today and we can help you seamlessly switch over to DDP with a strategy tailored for your business.