This post was written and contributed by Steve Carr of Zenda
For as long as eCommerce has been around, DDU shipping has been the primary way to ship a package to a cross-border customer.
As a refresher, DDU – or Delivered Duties Unpaid – is a shipping arrangement between a shipper and their customer that puts the burden of paying import taxes and duties onto the consignee.
Practically speaking, DDU specifies that the consignee is the importer of record, and therefore has the onus of paying any owed taxes and duties that were not collected during checkout. So, if you ship parcels to international customers, chances are that you are shipping DDU, and your customers are paying additional taxes and duties when their order arrives.
So, what’s the big deal? What could go wrong, you ask?
Plenty, but the issues begin before the actual delivery, and start when the customer places the item into the merchant’s shopping cart.
Unbeknownst to the customer, taxes and duties on that purchase already exist, but they are very rarely calculated or even disclosed. The customer, therefore, may initially feel good about the “visible” price they are paying during checkout.
However, as soon as the package shows up in their home country, their government’s customs agents will review the items being purchased – including the price paid for the items, and the types of items being shipped – and assess a tax, or a duty, or perhaps both.
Unless the items being shipped are tax- and duty-free (which is rare), these fees MUST be paid to the importing country’s customs office. With a DDU shipment, the only way to collect these fees is to require the customer to pay at the very moment that the package is being delivered.
This almost always creates two problems: 1) the customer is surprised to find out that they owe more money, and 2) until they pay the outstanding fees, they won’t get their package.
In a very real way, the package that you shipped is held hostage until your customer forks over more money. If they never pay these fees, the package will be returned back to the shipper.
Obviously, the surprises caused by DDU shipping can very easily contribute to an overall poor purchasing experience from that merchant.
Of course, these issues could have been avoided had the merchant taken measures to 1) inform the customer what taxes and duties were required to purchase and import their chosen items, and 2) allow the customer to pay these fees during the checkout process so that there were no surprises or delays upon the package’s delivery.
Given the potential of upsetting a cross-border customer, what can you do to avoid a disaster?
If you, as a merchant, want to set clear, upfront expectations with your customers, and not cause any grief at the point of delivery, you can do the following:
- Calculate and display accurate duties and taxes within the shopping cart (at the point of purchase)
- Allow the customer to pay all owed taxes and duties during checkout, before the item is shipped
- Ship the package via DDP delivery so that there will be no unnecessary delays or headaches as it makes its way to the customer’s front door
How can Zenda help?
Zenda – a sister company to British Airways, and a new cross-border shipping partner with ShipperHQ – was designed for DDP shipping.
Zenda is one of the few cross-border shipping companies that can quickly and accurately calculate taxes and duties on your cross-border shipments.
Your customers will not only see what fees are required on their purchase, they can pay these fees during checkout, and know that their package will clear their country’s customs office without delays or additional money owed. This way, you’ve provided accurate and transparent information which will go a long way towards keeping your customers happy (and returning in the future).