What is DDU? Risks, Responsibilities, and Usage
Selling globally is a huge opportunity for merchants, allowing you to reach billions of consumers and grow your business. But intricate regulatory practices and procedures make international shipping a challenge, so it’s important to understand the basics. If you’ve been researching how to handle your logistics internationally, you might have come across the term DDU in shipping.
International Commercial Terms, also known as Incoterms, are a set of predefined contractual terms that the International Chamber of Commerce has designed to help exporters and importers determine who is responsible for paying which costs when shipping goods internationally.
The country or destination you ship to may impose taxes or duties on your shipment, depending on factors such as the country of origin, the reason for export, retail value of an order, and shipping destination. As every country has its own unique set of rules and regulations for importing, it is a complex process.
With FlavorCloud, it’s easy to expand your online store into new markets, convert more international sales, and ship across borders hassle-free. FlavorCloud has the largest cross-border carrier network with the most comprehensive coverage, delivering the best shipping rates and routes. Our customers experience an average increase of 80% in international cart conversion rate!
But when shipping internationally, it’s important to understand terminology in advance to make an informed choice.
What does DDU Mean?
DDU stands for Delivered Duty Unpaid. In a DDU shipment, the merchant must ensure the safe delivery of goods or merchandise to the specified destination and assume all risks during transportation. The merchant pays all charges up to the point of delivery to customs. These DO NOT include taxes and duties of the importing country.
DDU shipment requires the consumer to complete all paperwork and pay taxes and duties, which can lead to a poor customer experience.
Risks of DDU
Once the goods or shipment arrives at the country it’s being imported to, the consumer takes on all responsibility and must complete customs clearance. This means that if things go wrong, it may delay the release of goods by weeks or months. Consumers may be surprised at the additional charges and can even refuse the items, leaving the merchant with costly return fees or lost inventory.
Responsibilities of the Merchant
The primary responsibilities of the merchant in a DDU shipment are:
- Enclosing documentation and an invoice
- Passing on all financial liability as the importer of record to the consumer.
- Leaving all duties, license, and formalities to end consumer
Responsibilities of the Consumer
- Import formalities, duties, tariffs, and taxes
- All inspection and customs related costs
- Collection of all commercial documentation, authorizations, and licenses needed for import and then arrangement for import clearance and other formalities
DDP vs. DDU
You may think it’s easier and more affordable to send shipments DDU since you pass on responsibility and payment of customs clearance to the consumer. However, bear in mind your customers may be caught unaware and will be faced with hassle and unexpected costs. This leads to a negative customer experience, reduces conversion rates for international sales, and impacts customer lifetime value and repeat purchases.
When shipping DDP (Delivery Duties Paid), the consumer prepays duties and taxes at purchase. The merchant takes on the responsibility of importer of record, and consumers will receive their goods without further delays or surprise fees. DDP is a much smoother process providing customers with a better experience.
FlavorCloud provides a managed service, taking on responsibility for customs clearance through our extensive global network, offering guaranteed DDP shipping. We get your customer’s package expedited through customs. It’s like TSA Pre-Check for packages!
We automate product classification and calculate accurate duties, taxes, and fees, making cross-border shipments and logistics affordable, easy, and friction-free.
Now that you understand DDU, you can make an informed decision on how to ship your goods.
If you’re ready to tap into the world’s largest carrier network, with the best-negotiated shipping prices and grow your business globally, please get in touch at: email@example.com.