What is DDP? A Complete Explanation of DDP Shipping

There are billions of consumers around the globe, presenting a huge opportunity to grow your business through selling internationally. However, consumers considering cross-border purchases cited high shipping costs (51%) and long delivery times (47%) as their top two concerns. Interestingly, these are also two of the top three reasons cited by consumers for cart abandonment.

But how do you address these consumer concerns about international shipping? Especially when you consider rates involve confusing elements like duties, taxes, and fees. These can be difficult to project accurately and, if misestimated, often result in unexpected additional charges when customers receive their delivery. This leads to a less than stellar customer experience, reducing customer satisfaction, customer lifetime value, and repeat purchases.

To sell internationally, you need competitive cross-border shipping rates and fast delivery times. Shipping DDP is the first step to achieving this. An even better solution is guaranteed DDP shipping through FlavorCloud. We offer a managed service which takes on responsibility for your goods clearing customs. We accurately calculate landed costs while providing the best-negotiated shipping rates and routes through our global carrier network.

By integrating FlavorCloud into your shopping cart, you can increase international conversion rates—our customers experience an average increase of 80% in conversion rate!

What does DDP stand for?

DDP stands for Delivery Duty Paid shipping. It is an agreement where the merchant takes responsibility for transporting goods to a destination specified by the customer. This agreement entails the merchant paying all shipping-related costs through delivery, including transport, export, and import duties, shipping insurance, VAT if applicable, and storage. Plus, it means navigating customs, potential shipment inspections, and bearing the risk of damaged goods costs or replacement.

What is the difference between DDP and DDU?

DDU shipping means the customer is responsible for paying taxes and duties to clear customs. It often comes as a surprise, so is a poor customer experience. As a result, it can lead to customers not accepting goods, financially impacting the merchant. DDP is a much better option because it covers all costs upfront prior to shipping and creates a better customer experience without any unexpected charges when they receive their goods.

What does DDP mean for your business?

DDP means that the customer doesn’t need to worry about any surprise charges at the time of delivery or problems relating to damages to the shipment while it is in transit. The merchant handles everything until the buyer takes possession of the delivery at their specified delivery address.

Customers expect this when buying goods, so DDP allows you to remove unwanted risks or surprise fees for your customers at the time of delivery. With FlavorCloud, all shipping costs, fees, and taxes are accurately calculated at checkout when the customer completes their online purchase. This means costs are transparent for the customer which reduces cart abandonment rates, increasing conversions and revenue.

What does DDP mean in terms of shipping?

Merchants are responsible for all aspects of DDP shipping, including any liabilities or damages that might occur until the product arrives at the customer’s delivery address. This shipping process includes the following steps:

Prepare the goods for shipping

This step includes packaging plus preparation of invoices and customs documentation. This step involves identifying the correct classification code for the shipped product, also known as an HS code. It’s important to get this right since the code is used by customs authorities worldwide to determine duty and tax rates for the specific type of product. Getting this wrong can be costly. FlavorCloud automates this process, providing accurate invoices, labels, and customs documentation.

Carrier selection

Selecting a reliable cross-border carrier to transport the goods is essential to minimize risks due to damages and delays during package transportation. FlavorCloud’s high-quality global carrier network offers deeply discounted shipping rates, optimized routes, and worldwide door to door delivery.

Manage import, export, and customs clearance

Import, export, and customs clearance requirements vary by country. It’s important to properly prepare all paperwork and make arrangements to ensure packages don’t get stalled at customs. Getting this right means avoiding delivery delays and meeting customer delivery expectations. Delays in customs increase costs by incurring storage and demurrage fees. FlavorCloud can help by managing this process for you, making it stress-free.

Transport from port to customer destination

Once the goods arrive in the port of arrival for the customer’s country and successfully clears customs, the merchant is still responsible for the shipment. It’s necessary to arrange for transport of the package to the customer’s delivery destination to ensure the package arrives on time and is undamaged.

Merchants are also responsible for all fees throughout the DDP shipping process until the package is delivered to the customer. These costs include:

  • Shipping and transportation costs – from the point of origination through to the buyer’s destination.
  • Import and export customs duties – these are based on the product classification or HS code.
  • Damages – the cost of any damages to the shipment while in transit or the cost to replace and reship goods that are damaged or lost in transit.
  • Shipping insurance – to cover potential loss or damages to goods during transport
  • Value Added Tax (VAT) – is the responsibility of the shipper if applicable
  • Storage and demurrage – These costs are associated with customs clearance and incurred during delays caused by customs authorities, other government agencies, delivery drivers, and carriers. These costs are unpredictable and unavoidable when they occur.

Summary

High shipping costs and long delivery times are top concerns for consumers considering international purchases. Increase your chances of winning their business, by shipping DDP.

FlavorCloud is the only company that offers guaranteed DDP as a managed service, getting your customer’s package expedited through customs. It’s like TSA Pre-Check for packages!

Looking for an easy way to implement DDP on your ecommerce platform? Schedule a demo today to see how simple it is to get started.

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FlavorCloud Team

Making international shipping easy