With the advent of international e-commerce, a new genre of Incoterms came into the picture. Any medium to high volume business should be aware of their options in order to maximize ease and efficiency.
If you are researching options to ship your orders internationally, you may have come across the term DDP, or Delivered Duty Paid. Under this method of customs clearance, the seller is responsible for handling the destination customs formalities including payment of duties and taxes prior to delivery to the consumer.
YunExpress USA is a Delivery Duty Paid shipping service because it’s the fastest, most efficient and most consumer-friendly option for online retailers and marketplace sellers for B2C traffic. If you are considering a better way to ship your global online orders, DDP is the solution for you.
But what’s the difference between DDP and DDU? Here’s everything you need to know.
Related: The Global Ecommerce Evolution
Before understanding the difference between Delivery Duty Paid and Delivery Duty Unpaid, it’s important to understand the context of business-to-consumer delivery. With most businesses offering a range of customized options taking into consideration time and location, product delivery has come a long way from its nascent days, be it online via an eCommerce website or offline with a larger business entity.
In lieu of pleasing customers and differentiating the brand from its competitors, bigger players now offer services that not only live up to the customer expectations but to some extent raise them to the next level while creating a memorable experience of purchase. For domestic deliveries, consumers now expect free delivery. For international orders, this is not required, however consumers become more and more demanding in terms of the quality of their international deliveries as well.
Delivered Duty Unpaid vs Paid
Delivered Duty Unpaid, or DDU, is mostly referred to in the world of ecommerce when the seller is only responsible for delivery to the consumer, but does not account for any customs related charges at destination. The seller will only bear the pure cost of shipping to the buyer.
Once the product reaches the buyer’s country, it is their responsibility to pay any applicable customs duty and/or taxes as well as customs clearance fees charged by a broker at destination. Also, in some instances, buyers may need to provide additional documents such as an import permit. Buyers face thus additional cost, but besides that, very often DDU shipments lead to long delays for customs clearance processes at destination. If shipments are handled via postal channels, receiving postal operators often do not have efficient processes in place for quick clearance. Delays in clearance and parcel deliveries can easily reach anywhere from 3-10 days.
The seller usually prefers DDU when the cost of the actual product is not high and adding import duties and taxes to the checkout price online will make it a less favorable deal for the buyer. However, when selling DDU, it is the seller’s responsibility to inform the buyer regarding the additional fees payable when the product reaches the buyer’s country. Very often, sellers do not inform their buyer’s properly, and buyers are unaware of those possible additional charges, which leads to unexpected charges at destination for the buyer and therefore a negative consumer buying experience.
Find out more about DDP delivery with YunExpress USA.
Delivered Duty Paid
How Does DDP Shipping Work?
With DDP (Delivered Duty Paid), the seller is responsible for the delivery of products to the buyer’s door, including payment of all customs related fees at destination, e.g. possible duties, taxes and customs clearance charges.
To understand how DDP shipping works, let’s back up a bit. When you ship products to other countries/regions, each can have a different set of customs regulations and duty/tax rates depending on the commodity being imported. These duties and taxes are automatically calculated at the time of arrival to the destination and paid to the destination customs/tax authorities immediately so that the shipments can be released immediately for delivery without having to contact the receiver for any payment of duties/taxes. So with DDP clearance, duties and taxes if assessed are automatically invoiced to the seller/shipper in the origin country.
However, under DDU clearance, or Delivered Duty Unpaid, it is the receiver’s obligation to pay any duties or taxes assessed before the shipment is released from customs and sent out for delivery. As you can imagine, this is frequently a hassle for consumers who often are not even aware of or expecting to be charged duties/taxes on their orders or who thought they were done with all charges related to the transaction at the time of checkout.
While it may increase the cost of selling online and may reduce profit margins on first glance, the consumer experience is much better with DDP Shipping. Consumers will enjoy the same smooth delivery experience as if the item they purchased was delivered locally. No unforeseen charges or delivery delays will occur.
Since the seller holds the responsibility of paying the necessary duties and taxes and providing the necessary documents when the parcel reaches the destination country, it is important for them to understand the import rules and regulations of these countries. Work with an expert like YunExpress to get the right information.
What are the Benefits of Using DDP Shipping?
Shipping under DDU terms may appear to be cheaper at checkout, but this option comes with headaches for both the sender and the receiver. To make this shipping option work, consumers/receivers need to be made aware that they are responsible for all duties/taxes which may be assessed. Consumers are often unaware of this and become frustrated when they can’t have their shipment released in time.
DDP shipping is more expensive on the front-end, but it results in a positive customer experience during delivery. To make things easier, you can include these duties/taxes at checkout, collect them from the customer and pay for DDP shipping. Be sure to communicate on your product pages, email confirmation and shipping policies what your customers can expect for international shipping. Offering a DDP shipping solution is actually a huge selling point!
Find out more about what you get with YunExpress Parcel Direct Service.
Here are the benefits of DDP shipping:
- DDP clearance fees are much cheaper than DDU fees
- Shipment will clear customs and be delivered to the consumer’s door
- Consumers won’t be contacted for additional fees
- Shipment won’t be abandoned by recipients
- No surprise fees for the seller or the buyer
- Smooth, easy delivery experience
So finally, what are the charges when shipping DDP with YunExpress?
Yun Express USA offers superior DDP shipping solutions to Europe and beyond. We operate our own customs clearance hubs (and subsequent delivery network) for all destinations we serve.
With YunExpress, the following duties/taxes apply when shipping DDP into Europe:
Into the UK, there are no taxes or duties for orders below GBP 15. Between GBP 15-135, sellers will only pay 20% import tax, but no duties. For high value orders from GBP 135 and up, duties possibly apply, depending on the commodity (YunExpress can help you with that calculation upfront).
Into all other EU destinations, there are no taxes or duties for orders below EUR 22. Between EUR 22-150, sellers will only pay 21% import tax, but no duties. For high value orders from EUR 150 and up, duties possibly apply, depending on the commodity (YunExpress can help you with that calculation upfront).
In the current market climate in retail, where the consumer is of primary importance and customer experience plays a vital role in defining the marketing strategy for any organisation, DDP shipping solutions play a vital role in international business for the eCommerce industry. It allows the buyer to pay all charges upfront at the time of checkout and helps in presenting a seamless and beneficial consumer experience.
With YunExpress, the calculation is extremely easy and straightforward. Contact us today to learn more about our affordable and easy to use DDP shipping solutions.