What Does DDP Mean & How Does It Work?
As you’re reading this article, global eCommerce sales are approaching a figure as massive as $5 trillion. There has never been a time as good to take your eCommerce business global. Here’s how DDP comes into the picture.
Greatness comes at the price of responsibility. If you’re thinking of going global with your eCommerce business, you might have to bear all of the burden associated with your shipments until your buyers receive them.
DDP is one such agreement whereby the seller assumes all of the responsibility. Here’s how:
Meaning of DDP
Delivered duty paid (DDP) is a shipping agreement whereby the seller has to bear the full responsibility, risk, and expenses of shipping products until the buyer receives or transfers them at the destination port.
- Shipping costs
- Export and import duties
- Insurance and any other costs incurred during shipping to an agreed-upon location in the buyer’s country
It’s no less than a gift for the buyers as they bear less liability and lesser costs in the shipping process.
Let’s understand this with the help of an example.
Suppose you are an equipment seller located in Bangalore, India. The buyer lives in New York. You have contracted with the buyer and agreed to sell the products on DDP at the selling cost of US $7250.
You make arrangements to carry the products to the nearest port, bear costs including customs clearance, pay the shipping charges up to New York, appoint a freight forwarder for customs clearance at New York, and deliver the products at the buyer’s doorstep.
It also includes paying tax, if any, of the importing country.
Why Does DDP Even Exist?
1. For Buyer’s Protection
DDP is in the best interests of the buyers as the seller bears all the expenses. It helps the buyers against getting tricked and scammed. In other words, the buyers receive what they order.
2. For a Smooth Purchase Experience
DDP results in a seamless purchasing experience as the buyer doesn’t have to worry about paying any international fees. On the other hand, if the buyer has to pay customs fees, the chances of a successful sale look bleak.
3. For Safer Delivery
DDP ensures that the seller ships packages on the safest routes and via the safest mode. Every delivery is in line with the importing country’s transport laws, import duties, and shipping fees.
How Does DDP Work?
By now, you must be familiar with how DDP keeps the seller in the spotlight. Similarly, the DDP process revolves around the seller and his responsibilities. Here’s how DDP works:
Stage 1: Preparing
The seller packs the goods and provides the goods to a suitable carrier. He also draws up the sales contract and arranges the necessary documents like Bill of Lading, Commercial Invoice, Insurance Certificate, Export License, and more.
Stage 2: Shipping
Next, the seller arranges for the loading of goods and transports them to the port. Once reached, the goods are unloaded and finally shipped to the importing country.
The seller satisfies all the formalities like customs clearance(export and import) and authority approvals. He also pays all the freight costs and freight forwarding fees.
Stage 3: Delivering
After the goods reach the importing country, the seller bears all the transportation costs for the final delivery to the buyer’s destination.
The seller must also arrange for the proof of delivery and pay all additional costs such as inspection expenses, cost of damage, and the like.
During the shipment process, the seller also has to notify the buyer regarding any transportation and delivery terms.
How to Implement DDP with Ease?
As a seller, you have a lot to deal with when you enter a DDP agreement. The last thing you want is a slow and inefficient shipping process. We hear you.
Shiprocket is India’s best eCommerce logistics solution for international shipping and order fulfillment. We help you ship globally to more than 220 countries with courier partners like FedEx, DHL, Aramex, and more.
All you need to do is contact us, upload required documents, select a courier partner, and start shipping at rates as low as ₹ 110/50g. Are you ready?