If you’re part of the international trade, then there is a good chance you’re familiar with Delivered Duty Paid or DDP shipping. Today, eCommerce players continue to navigate the complexities attached to international shipping. Typically, companies hire the expertise of a dedicated third-party logistics partner to improve overall shipping efficiency and reduce costs at the same time.
The focus of this post is to shed light on the benefits and use cases of Delivery Duty Paid.
What is DDP Shipping?
DDP or Delivery Duty Paid is a shipping arrangement where the seller assumes all of the responsibility, risk, and costs associated with transporting goods until the delivery. When it comes to global trade, DDP has become a standard shipping method.
Under DDP, the seller covers the shipping costs, duties, added fees, and other expenses throughout the transporting of goods and until the time of delivery. The International Chamber of Commerce developed DDP to standardize and improve international shipping. At its core, DDP shipments favor the buyer because they assume fewer costs and less liability.
In line with DDP, each country has its own customs rules, and policies related to international shipping. For instance, a US seller shipping products to Canada will have different requirements than a US seller shipping products to Europe.
So, if you run operations throughout the EU, then you will have to register for a unique VAT number. Companies that operate throughout the EU usually have to deal with added VAT requirements to ensure business registration with a dedicated VAT number in a specific EU country. In short, the requirements can vary from one EU country to another.
Major Benefits of Opt for DDP Shipping
Oftentimes, consumers refuse to accept a package if they have to pay additional duties and taxes at the time of receipt. This, in turn, causes lower conversion and higher return rates for sellers. The good news is that the costs associated with DDP can be built into a company’s pricing to provide a seamless shipping experience.
Let’s have a quick overview of the benefits that come with opting out of DDP:
1. High Conversion Rate
In some cases, international customers have doubts about whether or not their orders will experience delays or incur import duties and taxes upon arrival. Fortunately, DDP shipping improves international sales conversion rates. On average, sellers who offer a DDP shipping option can increase their conversion by 30%.
2. Optimized and Streamlined Checkout
One of the hallmark benefits of the DDP shipping option is that it helps the seller optimize and streamline the entire checkout experience. The idea is to display fees and duties upfront to be transparent with your customers. This approach cuts out pre-purchase customer inquiries on orders and builds trust with the shoppers.
Essential Use Cases of DDP Shipping
Here’s a quick overview of different use cases of DDP:
1. Ensure Safe and Efficient Delivery of Products
DDP makes sure that the delivery of goods reaches safely to the destination. When it comes to international trade, just a single element can halt the delivery process. However the DDP option ensures the seller is aware of the laws of a destination country and is highly attentive to ensure the successful delivery of packages through safe routes. With DDP shipment, buyers can deliver items safely through air or sea freight.
2. Protect the Interests of the Buyer
One of the main use cases of DDP is that it protects the vested interests of the buyer. DDP shipments facilitate the buyers to avoid fraudulent activities. Sellers take all the risks and responsibilities of shipping products, which makes it in their best interest to ensure customers get their orders on time and without issues. Remember that the cost and time related to the DDP shipping are huge and dissuade scammers from using it in the first place.
3. Hold Involved Sellers Responsible
DDP shipment holds one or more sellers responsible for cost and risks until the time of delivery of products. For instance, when it comes to paying international fees, DDP makes sure the buyer doesn’t have to stress about covering added fee and ensure a smooth buying experience.
From Shopify to WooCommerce, many renowned brands are already reaping the benefits of DDP solutions. In 2022, DDP continues to be the most attractive shipping solution for international eCommerce fulfillment and retail businesses. Whether you realize it or not, your close competitors are already leveraging DDP shipping.