DDP, DDU and DAP: Incoterms explained
Incoterms? Is that yet more jargon that needs debunking? You won’t generally find this term used much outside of fulfilment and shipping quarters, but essentially abbreviated terms like DDP are commonly referred to as Incoterms. Defined by the International Chamber of Commerce, Incoterms are vital components of global e-commerce. There are several that are used across the industry that all bear relevance and are of equal importance.
DDP and DDU – What’s the difference?
Although there is only one letter difference in terms of the acronym, there is a marked difference in both Incoterms and what they mean.
DDP – Delivered duty paid
DDU – Delivered duty unpaid
Essentially, the major difference between DDP and DDU is responsibility and the point in the journey where this is assumed by the buyer. DDP provides the most protection, and ensures the merchant takes the main bulk of responsibility. It provides a better customer experience, and is commonly used for cross-border shipping. Where DDU differs is that the fees and taxes are assumed by the buyer, once the shipment reaches the designated destination. Once the goods arrive at a particular destination, that’s when the responsibility is passed onto the buyer. Merchants have the option to increase costs and fees to the buyer in order to cover the costs of DDP.
Not to be outdone, we also have the Incoterm DAP. Although much less utilised than its counterparts, DAP stands for delivered at place. This means the seller assumes full responsibility for any costs and risks incurred for delivering items.
Why is DDP beneficial?
As mentioned above, many merchants opt for DDP shipping as their go-to shipping method. It’s reliable, safe and efficient, so what’s not to like? We’ve broken down the benefits and added a little further detail, so you know exactly what benefits you’ll reap as a merchant.
1. Safe delivery
Regardless of whether shipments are made via air or sea freight, the agreement terms of DDP means merchants are bound by this. Therefore, there are no surprises for buyers or sellers, the process is seamless!
2. Smooth buying process
Although it may seem that merchants have to take on the bulk of responsibility when it comes to fees and tariffs, the benefits to the buyer are plain to see. If a buyer has to fork out customs fees for international shipping, then there’s a likelihood that sales start to fall through the gap. This isn’t best practice from a business standpoint, as nobody wants to lose sales. DDP shields both you and the buyer from this – with no surprise fees, the buyer can kick back and relax without worry, and you can watch your revenue increase.
3. Fixed, cheaper fees
Whilst DDP shipments can be a little expensive upfront, fees are generally fixed. On average, DDP fees can be 3-4 times cheaper than the brokerage fees incurred by DDU. Equally, you may be charged disbursement fees – a percentage on duty amounts that they advance on your behalf.
Paying additional fees in the interim will benefit you in the longer term, as your shipment will be cleared by your courier, ensuring a smooth delivery.
DDP shipping fees
When ascertaining the best shipping method to employ for your e-commerce fulfilment, you need to be clear on the total fees and how this may impact your e-commerce store – for better or worse. Sellers are responsible for all of the following fees:
- Shipping fees
- Shipping insurance
- Damage fees
- VAT
- Storage
- Import and export custom duties
Implementing DDP shipping for your e-commerce store
Whether you opt for the benefits of DDP, or if you decide DDU is better for your business needs, communicate with your customer base and inform them of your policies and what to expect when it comes to fees. Customers appreciate communication and being kept in the loop. You could implement a little FAQ section or insert policy info on your website or within email communications. That way, customers know exactly what to expect when purchasing items from your store.
Your shipping options with The Storage Place
Whether you opt for DDP shipping, DDU or DAP, getting an expert fulfilment centre to take care of your shipping needs is the best tactic to adopt. A good fulfilment company can advise on the best shipping methods for your business requirements, and help scale your business through with global e-commerce fulfilment.
The Storage Place has everything you need for fast, efficient shipping. With a deluge of experience to call upon and our local port only 15 minutes away, we’re best placed to solve your shipping needs and help your business expand. Contact us today and find out we can help scale your e-commerce fulfilment.
