Delivery Duty Unpaid (DDU)
What is Delivery Duty Unpaid (DDU)?
Delivery Duty Unpaid is where e-commerce customers will pay for all the duties and taxes before or once the item arrives at their country’s customs department.
If these fees aren’t paid by the customer beforehand, their customs agency will contact the customer, get the payment, then continue the process to ship to their destination.
Example of Delivery Duty Unpaid (DDP) When Shipping Internationally
Let’s say you sell books on your e-commerce store and you’re looking to sell and ship those books to another country like Australia.
Part of the process of shipping to Australia is that once those books arrive at the country’s borders, their customs agency will inspect the package, look at the value of the product, and then calculate the taxes and fees owed on importing these goods before continuing to ship those books to your customers.
If you don’t know what the duties, taxes, and fees will be before shipping to Australia, or you’d rather not pay them yourself, you can default to using the DDP model.
Pros and Cons of a DDP Model
The number one benefit to choosing a DDP model is simply that it will help save your business money on shipping costs. Duties, taxes, and fees can add up, especially if you are shipping to a foreign country regularly or if you ship certain items.
The drawback to choosing DDP is that customers may already be paying more for the shipping label. The addition of paying duties, taxes, and fees may be enough for them to decide that importing your product will be too expensive, and they will look elsewhere.
One strategy some e-commerce companies take is to simply bake in the cost of passing a product through customs into the overall price of the product itself. Then those companies would pay the customs cost themselves before shipping (also known as Delivery Duty Paid or DDP).
The key to having a successful DDU model will be to limit the cost of the international shipping label itself so that once the extra import fees are added on, it won’t be past the customer’s comfort level. With Shippo, you can get deeply discounted international shipping label rates such as up to 86% of UPS International services.