If you are researching options to ship your orders internationally, you may have come across the term DDP, or Delivered Duty Paid. Under this form of customs clearance, the seller is responsible for handling the destination customs formalities, including payment of duties and taxes before delivery to the consumer. DDP is a popular option for international shipping, developed by the International Chamber of Commerce, a group dedicated to standardizing different shipping methods worldwide.
DDP shipping is the fastest, most efficient, and most consumer-friendly shipping option for online retailers and marketplace sellers for B2C traffic. DDP is used when shipping goods by air or sea freight. DDP shipping is an excellent deal for the buyer but could be a bit more burdensome for the seller since it has the potential to reduce profits if it’s not handled correctly. Since every country is different in its rules and laws for custom exports, DDP works best for high-value items, typically with an average order value above $30. That said, if you are considering a better way to ship your global online orders, DDP is the solution for you.
Related: Hacks For Saving On Shipping Costs
How Does DDP Shipping Work?
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 arrival time to the destination and paid to the destination customs/tax authorities immediately so that the shipments can be released 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.
Frequently with DDU shipping, the consumer will receive a call from customs once the package has arrived in their country and will often need to go to the post office themself to pick up the shipment. Given the circumstances and higher cost, it’s not uncommon for consumers to call customer support, cancel their order, or refuse to pick up the shipment themself resulting in the package being returned to the sender. All of these are unadvantageous for your company and can lead to decreased sales, hurt brand reputation, and more.
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. Consumers/receivers need to be made aware that they are responsible for all duties/taxes that may be assessed to make this shipping option work. Consumers are often unaware of this and become frustrated when they can’t have their shipment released.
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 confirmations, and shipping policies what your customers can expect for international shipping.
Here are the more specific benefits of DDP shipping:
Fixed Fees are Cheaper Than DDU Fees
Understanding why DDP shipping can be cheaper than DDU fees takes an understanding of the customs process once a package enters the country in which a customer has purchased an item. When a consumer’s package arrives at customs, they’ll receive a phone call requesting fees before customs can release the package to them or the post office for them to come to pick up a package. It’s also not uncommon for customs to hire an independent customs broker to collect these duties on their behalf.
There are often brokerage, storage, and late pick-up fees associated with this process. All of these costs put together can be very hard to estimate or communicate with a client before the sales process takes place. DDP shipments could be a little more expensive upfront because the payment is processed by the courier company to customs on your behalf for an additional fee. That said, these fixed fees can be as much as 3-4 times less expensive than DDU brokerage fees.
Shipments Clear Customs and Are Delivered Directly to the Consumer’s Door
When duties/taxes are paid upfront, there is a lot of time and money saved through the process. This allows the package to be shipped out from customs immediately after arriving and eliminates the hassle associated with needing to pick the parcel up from the post office. Additionally, suppose consumers don’t pick up their packages in a timely manner. In that case, they could rack up a large number of late pick-up fees that could make picking up international parcels even more expensive than they were before. With the ease that DDP allows, you’re much more likely to receive repeat business as customers will remember how easy the process was for them.
Recipients Won’t Abandon Shipments
Under DDU, when a consumer receives a call that they need to pick up their package themself and need to pay additional fees for the parcel to be released, frustration is a common reaction. Some individuals may flat-out refuse to pay the fees, while others may forget or not care enough to pick up the package themself. When parcels are abandoned at customs, this can become too costly to the seller, who will need to end up losing the product, sale, and the additional money spent if you’d like the item shipped back to you. When the product is sent directly to the consumer’s door, this problem is virtually eliminated.
Looking to get started with DDP shipping solutions today? Check out Parcll to see how we’re making an impact in the shipping industry.
The Timeline For DDP Shipping, Examining Liability
DDP shipping is different from DDU shipping in terms of when the liability of the package is shifted over to the consumer. The DDP process follows a specific timeline that can be easily traced and tends to be much less confusing and impractical than DDU shipping.
1. Carrier Takes Possession of the Shipped Item
This is the initial handoff of the item to the courier company. The item may either be picked up or dropped off with the carrier, but either way, liability for the good is still placed on the seller. Trusted carrier services are preferable when considering this will decrease the overall cost of shipping in general.
2. Parcel Is Shipped Via Various Methods of Transportation
Whether by ship, plane, or vehicle, the product is next shipped through a trusted partner. This is essential since the seller is still liable for the product. Thus ensuring that the package will actually arrive is extremely important.
3. The Parcel Arrives at Destination Country and Charged VAT
Once the package arrives at the destination country, a value-add tax (VAT) is charged. The seller is still liable for the parcel and this cost. However, as previously discussed, this can be paid to the courier service in advance to ensure that the package gets to the consumer’s door without delay.
4. The Consumer Receives Their Parcel
After the consumer receives the product through delivery, the consumer becomes liable for the package. That being said, the companies that sell may expect to hear about any issues with the product or delivery at this point. However, costs are cut down an extreme amount by ensuring that the product actually gets to the consumer without any need for them to pick it up themselves or pay any additional costs along the way that they were previously unaware of.
Related: What Is VAT Shipping?
What Are the Charges When Shipping DDP With Parcll?
Parcll is the leading provider of parcel shipping DDP. Our delivery offers superior DDP shipping solutions to Europe and beyond. For each destination we serve, our team operates our own customs clearance hubs (and subsequent delivery network).
With Parcll, the following duties/taxes apply when shipping DDP into Europe:
In 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 (Parcll 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 (Parcll can help you with that calculation upfront).
To this day, DDP shipping remains one of the most popular forms of international shipping, and Parcll remains one of the leading providers of DDP solutions with a wide variety of locations. With less liability placed on the part of the consumer, there is less cost incurred and less probability of something going wrong during the process. This is invaluable for your brand as you establish a steady consumer base that’s dedicated to your high-quality products and services.
Parcll can ensure that each order is the most hassle-free and easy process for all parties involved. You shouldn’t only rely on domestic purchases for stable and reliable transactions. There’s a whole world of consumers who are just as excited about your products. Why not provide them with reliable access to them?
With Parcll, the calculation is extremely easy and straightforward. Contact us today to learn more about our affordable and easy to use DDP shipping solutions.
Looking for international shipping solutions made easy? Parcll is a wonderful place to start.
- By Aaron Cope
- Oct 29, 2020
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