Delivery Duty Paid (DDP)
What is Delivery Duty Paid?
Delivery Duty Paid (also known as DDP) is an international shipping term that means the e-commerce merchant assumes responsibility for the duties and taxes to be paid at customs and does it ahead of time.
Example of Delivery Duty Paid (DDP) When Shipping Internationally
Let’s say for your e-commerce business you sell t-shirts and you’ve expanded into markets outside your home country. Whenever you deliver to a different country your t-shirts will have to go through that country’s customs agency where they will inspect the product, look at it’s total value, assess and calculate the taxes on it, then collect those fees before continuing to deliver it to your customers.
By taking a DDP approach, you’ve already figured out what those fees are going to be and your business pays those fees before the t-shirts reach the customs agency. Tools such as Shippo allow your business to do this.
Pros and Cons of DDP
There are two main pros to choosing to take DDP strategy. Those are:
Paying the cost of duties, taxes, and customs fees will help alleviate the cost of shipping for your customer and entice them to buy your product more.
Paying customs ahead of time speeds up the shipping process, so your customers get their products faster and are happier as a result.
The downside of DDP are fairly obvious in that paying for these fees can add up quickly for your business, especially if a large portion of your customer base is located internationally.