While international sales allow brands to reach a larger consumer base and diversify their presence in the market, changing regulatory practices make shipping more difficult for e – merchants.
Delivery Duty Paid (DDP) and DDU Shipping are two distinct shipping Inco terms (International Commercial Terms) that are accepted by the industry for shipping international parcels to meet the needs of brands operating in international markets expand. Both have unique considerations and advantages.
For UE commerce brands looking to expand their international shipping, it is crucial to understand the differences between DDP and DDU in order to successfully communicate the total target cost to the customer, manage transparency throughout the shipping process, the international one Navigating customs, and ultimately delighting customers.
What is a Duty Unpaid Delivery (DDU)?
Duty Unpaid Delivery means the buyer is responsible for duties, taxes, and other charges imposed by the destination country. As soon as the package or parcel reaches the customs of the destination country, in DDU, the buyer will only then be contacted and informed of the required fees. The buyer must pay their country’s duties and taxes before the package is sent to you by the customs door, depending on the country of destination and postal authority or delivery. Customs brokers may also collect customs duties prior to delivery to the recipient’s door. In addition, the DDU does not always include package tracking, nor do ecommerce merchants need to display total shipping costs (including taxes and duties) at the cart level.
The DDU Advantage
For low-value purchases, DDU can be a good choice for brands shipping internationally. It’s affordable and easy for ecommerce merchants who don’t care about quick or transparent tracking. Merchants can display a lower price in the shopping cart or at the checkout as they do not have to account for taxes or duties, which can also help attract customers to cheap purchases. Because the value of the product is low, tracking is often not required and the retailer may be willing to pay for returns and lost packages.
The Cons of the DDU
While the DDU can be an easy option for less expensive purchases, it has serious disadvantages for merchants selling higher-quality products. First, the DDU can cause delays once the parcel reaches customs, as the parcels have not previously been cleared for entry into the destination country. This could affect the transit status and visibility while packages are in customs.
Second, postal authorities and postal consolidators often use DDU, which can lead to interruptions in transit times depending on the country of destination.
Third, due to the overlap between customs approvals, fee payments, and different postal delivery speeds with the DDU, the transit time can vary widely and be between 7 and more than 21 days. This may not meet customer expectations. With this variable shipping timeframe, the lack of transparent tracking means shippers and customers have no line of sight of where their package is, leading to frustration. Or tax burdens that many customers face when the shipment reaches their country. Under DDU, most e-commerce shoppers are unaware that they will have to pay taxes and duties because e-commerce merchants do not display the total cost of delivery at the cart level. Surprised and dissatisfied customers can refuse to pay for their package delivery from customs, which is an important customer relationship and a reverse logistics challenge for merchants who now have to manage frustrated buyers and the return process. The process can be rearranged as the e-commerce seller is now billed for both the initial shipping and the return shipping.
Ultimately, DDU can leave many e-commerce brands and their customers with a lack of transparency in the buying, shipping, and returns process. You wait more than 7 to 21+ days for the package you want and you will also be charged unexpected fees once the package is in the country. In short, DDU leads to dissatisfied customers and increased friction in the shipping and returns process.