Tag Archives: international shipping

DDP vs. DDU Defined for eCommerce Sellers

Author: Jennifer Dunn  |  January 2, 2019
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When shipping cross-border, you’re quickly going to run into the acronyms DDP and DDUHere are those acronyms defined:

  • DDP stands for “delivery duty paid” and means that you, the merchant, have paid all customs, duties and associated fees on the shipment. Generally the shipping carrier you’ve contracted with will handle the heavy lifting on customs and duties and then bill you the total.
  • DDU stands for “delivery duty unpaid” and means that your buyer is responsible for paying any customs and duties fees associated with the purchase. Your buyer will be contacted by a customs broker and will be required to pay duties before receiving the shipment.  DDU is also sometimes referred to as DAP (Duties at Place).

What do DDP and DDU have to do with my eCommerce business?

When shipping cross-border, many countries will impose a duty or tax on your shipment. Whether a duty or tax is required depends on factors like the declared value of the shipment, the purpose of the shipment and origin and destination of the shipment.  

Every country sets it’s own customs and duties, and they can get complicated. For example, the U.S. Harmonized Tariff Schedule (i.e. the U.S. government document spelling out what customs and duties are owed on what products) is 3,863 PDF pages long and updates annually. Ouch.

When shipping products cross-border, a duty or tax may be owed on your product. As an online seller, it’s up to you whether you want to pay the duty or pass that cost along to your customer.

Should you ship DDU or DDP to your international customers?

The short answer is: It depends.

Shipping DDU Cross-Border
If you choose to ship DDU, your customer is ultimately responsible for paying customs and duties before she can receive her package.

Your carrier will deliver the package to a customs broker in your customer’s home country. A customs broker can be your carrier, the local post office, or another company who handles customs fees. Your customer is then responsible for paying the duty before she can take final possession of the package.

Shipping DDU has advantages when it comes to winning a sale. Without taxes and duties factored in, your price-conscious customer sees a lower price at checkout. A 2017 KMPG survey found that 57% of online shoppers hit “buy now” on the lowest price they can find.

If you aren’t careful to spell out during checkout that taxes and duties may be due on arrival, this may create a negative experience with your store when your customer realizes she has to pay even more just to spring her package from customs jail. Worse, if your customer isn’t quick to pick up her package, storage fees and other fees may apply. Or if she abandons the package, you may be on the hook for fess, return shipping and fines and penalties. In the worst-case scenario, your customer abandons the shipment at customs and cancels the sale, meaning you’re liable for paying the penalty yourself.

Shipping DDP Cross-Border
If you choose to ship DDP, you pay the cost for shipping, VAT or sales tax, customs, duties, etc. Because the duty has been paid upfront, your customer does not have to deal with the delay and hassle of paying a customs broker in her home country before she can receive her package. Your carrier will bill you for the customs costs.

However, this still leaves you with the expense. You may take the cost on yourself, pass this on at checkout, or include it in your item’s price.  ShipperHQ’s upcoming cross-border feature will help merchants finally understand total landed cost before shipping, and arm you with the knowledge you need to mitigate the cost of shipping DDP. 

Shipping DDP also has advantages.  Your shipment will arrive more quickly because it isn’t delayed in customs. And as eCommerce matures, savvy online shoppers now expect that they will have to pay customs and duties on cross-border purchases.

Conclusion

Whether you ship DDP or DDU will ultimately depend on the mix of products you ship internationally, and how receptive your customers are to either paying taxes and duties up front or dealing with customs brokers after the fact.

We want to hear from you. Do you ship DDP or DDU? What made you decide this? Do you plan on changing up your shipping strategy in the future?

ShipperHQ is actively working on a solution to make cross-border shipping easier for merchants.  Want in? Contact us to learn more about this .

 

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7 Cross Border Shipping Options Online Shoppers Expect

Author: Jennifer Dunn  |  December 19, 2018
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In part one of this series, we talked about what your cross-border customers want when it comes to customer experience. But now we want to talk about the aspect of online commerce we live and breathe here at ShipperHQ – shipping.

Shipping fails can derail your cross-border sales, but perhaps not always for the reasons that you think. Here are the 7 main things your customers are looking for when it comes to cross-border shipping options.

1. Clear shipping costs

Spell out shipping costs clearly and as early in the checkout process as possible. The last thing you want is for your customer to reach the final page of checkout and be hit with a huge fee.You should also be very clear on what each line item represents and why they are reasonable charges. Cross-border shoppers are accustomed to paying for shipping and fees.

Avoid showing shipping, handling, customs & duties and VAT all together in one lump sum, or you may risk scaring the customer off with sticker shock.

2. Options on shipping cost and speed

Some of your cross-border buyers need their product now, and are willing to pay a little more for shipping speed. Others shop around based on price and will try to stretch every dollar, euro or yen.

How you show shipping prices may depend on the market where you’re selling. Pitney Bowes’ survey found that Australians are more concerned with shipping price than speed, while Korean buyers were more concerned with speed than cost.  PayPal’s survey found that nearly and equal number of customers cited delivery cost (25%) and delivery time (24%) as reasons to abandon their cart.

According to the Pitney Bowes’s report, retailers are meeting cross-border customers’ shipping needs by offering a choice of carrier. They found that 83% of high-growth retailers used three or more carriers vs. just 53% of low-growth retailers.

3. Clear information on taxes, customs and duties

When shipping cross-border, retailers have two options when it comes to handling customs and duties. Delivery Duty Paid (DDP) means that the retailer pays all customs and duties. Delivery Duty Unpaid (DDU) means that the customer pays the final tally of customs and duties upon receiving the shipment.

Cross-border buyers want clear information about these fees, and taxes like VAT, and who will be responsible for paying them. The Pitney Bowes report found that some international shoppers (especially Canadians) prefer to see prices both DDU and DDP so they can compare and make a decision from there.

However, PayPal’s report found that 24% of global buyers cite having to pay customs and duties as a deterrent to making a purchase.

4. Doorstep delivery

Often called “last-mile” delivery, the process of getting your buyer’s shipment from the nearest shipping hub to their doorstep can be surprisingly tricky. Everything from laws curbing emissions in urban areas to underdeveloped shipping networks can make it difficult to delivery directly to your customer’s hands.

Retailers are looking at solutions ranging from courier services to drones to close the last mile. Use caution when choosing a last-mile carrier. Your customer will associate all aspects of shipping with her purchase from your online store, and a bad last-mile delivery experience will likely reflect poorly on your brand, and not the carrier.

5. Pickup options

But not every online buyer wants a package delivered to their door.

Forrester found that many buyers in France and the UK prefer picking their packages up from a central location or locker rather than trying to receive them at home or the office.

6. Tracking

PayPal’s report found that fraud and security are still top concerns when it comes to buying cross-border.

One way you can reassure your customer is to provide them with tracking so they can follow their purchase as it makes its way to their waiting hands. Not all carriers will provide, tracking, however, so make that one of your criteria when choosing a carrier.

7. Free shipping

Even though cross-border buyers are aware that international shipping comes with costs, they are also enjoying more free shipping as large online stores and marketplaces vie for their attention and purchasing power. In fact, PayPal found that 44% of shoppers cited free shipping as driving their cross-border purchase. This was the second biggest factor encouraging them to buy now, next only to price. 

Free shipping is an option for your retail store, even cross border.

Need help optimizing your shipping for cross-border customers? ShipperHQ has your back. Sign up for a 30-day no-risk free ShipperHQ trial and start delighting your cross-border buyers.

 

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6 Cross Border Customer Experiences Online Shoppers Expect

Author: Jennifer Dunn  |  December 18, 2018
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Global buyers are buying from retailers outside their own country or region. According to PayPal’s 2018 Cross-Border Consumer Research Report, 25% of online buyers around the world made a purchase from a retailer in the U.S. Cross-border shoppers purchase based on elements like price and product availability. But studies have shown that shoppers are looking for signs of trustworthiness from online retailers before clicking “Buy now.”

As global markets mature and eCommerce gains in popularity, more and more shoppers are making purchases across borders. So what exactly are online shoppers looking for when they make a purchase from an international retailer? And how can you attract these shoppers and keep them coming back for more?

1. Choice

PayPal’s report found that 38% of all online shoppers shopped cross-border to find items that they couldn’t purchase domestically.

A KPMG report found that 15% of U.S. shoppers, who are among the least likely demographic to buy from international retailers, still go across borders in order to obtain products that are unique or specialized.

PayPal’s report found that 38% of all online shoppers shopped cross-border to find items that they couldn’t find domestically.

2. Price

Not surprisingly, online shoppers shop based on price. PayPal’s report found that nearly half, 44%, of online shoppers make purchasing decisions based on price (shipping included.) According to PayPal, three quarters of buyers would prefer to pay in local currency, and 60% of those who don’t see that option report looking up exchange rates before making a purchase.

3. Localization

The 2017 Pitney Bowes Global eCommerce Report found that 72.4% of consumers are more likely to make a purchase when the website is in their own language.

Perhaps not surprisingly, shoppers in developed markets like the US, UK and China express a stronger preference for localized online stores.

For example, what do you call it when you buy something online but pick it up in person? In the U.S., that’s “In Store Pickup.” In the UK, it’s “Click & Collect.” Use the wrong language on your website and you end up with confused customers unsure of how they’ll ultimately take possession of their order.

As eCommerce networks are built out globally, though, we can expect the trend toward localization to grow as online buyers have more purchasing options in their own local languages and lexicons. That’s why we 😉 suggest working with a partner like ShipperHQ who understands the nuances of shipping across borders.

4. Refund policy & ability to return

A UPS consumer survey showed that 66% of online shoppers take an online store’s return policy into account when making a purchase. They found that online retailers earned customer trust when it came to returns by:

  • Specifying a return and/or exchange period
  • Specifying a warranty period
  • Providing pre-printed return labels with the shipment
  • Providing clear and upfront information about the store’s return policy

Be ready, though. A recent BBC article reported on the phenomenon of shoppers ordering multiple items of clothing online and sending the majority of the purchase back. While this is a win for the personalized and comfortable in-home shopping experience, keep an eye on this trend and build it into your pricing accordingly.

5. Payment Options

Depending on the market, your buyers may prefer payment methods you haven’t considered. According to Pitney Bowes, only about 30% of eCommerce transactions in Germany are paid for by credit card. Indian buyers have a strong preference for cash on delivery when making purchases. Be sure to research preferred payment methods as you develop new markets.

6. Seamless Checkout Process

It’s easy to lose a customer at checkout. Checkout best practices include requiring your customer to fill out as few fields as possible, while collecting the information you need. This includes providing a guest checkout option so your customer doesn’t have to pause during the order process to create an account.

Also keep in mind that addresses come in different formats depending on the country. Include the correct address fields for your customer’s country to avoid confusion. A few tweaks to simplify your checkout will help you avoid cart abandonment by your international customers.

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The Beginner’s Guide to Cross Border Shipping

Author: Jennifer Dunn  |  December 12, 2018
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As an online merchant, shipping products outside your home country and region can be a little terrifying. What’s up with customs? Why is shipping across a border so expensive? Where did these zillions of shipping carriers come from?

It can be tempting to stick to shipping to customers within your own borders and call it a day. But if you’re not shipping cross-border, you’re likely missing out.

Not long ago, we went over a whole slew of reasons why you should be shipping internationally. This includes all the usual suspects like “the market is out there,” and “your competitors are doing it,” but we think the whole list is worth a read.

And now if you’re sold on shipping cross border, but have no idea where to start, we’re here to help.

Choosing Your Products and Market

Much of your cross-border shipping experience is going to depend on where you are shipping and what products you are sending to customers. It’s a good idea to test your international shipping strategy by dipping a toe in the water before diving in.

Choose your market
Chances are you already know where your products are in-demand. Online shoppers are not always shy about attempting to have an order shipped internationally or writing into support to ask you to support their country.

Take a look at your store’s analytics. Do you get a lot of traffic from a certain country? Is your support team constantly fielding queries asking why you don’t ship to Region X? Then start there, where you know your products are already in demand.

Offerings like ShipperHQ can provide you with detailed analytics on the conversions you are not making internationally, which can give you some insights into the size of the opportunity.

Alternatively, you can choose to test the waters with a close market with long established cross-border shipping routes. In the U.S., that could mean Canada or Mexico. In the UK, that might mean the EU/Continental Europe.

Choose your products
Once you’ve chosen your market, your next step is to pick the products you want to ship internationally. We recommend starting with small, light and durable items. These types of items are less likely to run into snafus when making stops in the international shipping process.

But before you pack up a shipment of lithium ion batteries wrapped in U.S. postage stamps and send them on their way, there are a few things you need to know.

  • Country or Territory Regulations – International shipping between countries is highly regulated, and for all kinds of reasons.  Before you lovingly plaster a label on your first international shipment, read up on the rule. UPS has a handy resource where you can look up shipping regulations and restrictions based on point of origin and shipping destination. Some countries may require that you obtain a license or other special provision before importing goods. For example, you need extra permits to ship meat to Mexico, so they probably aren’t the ideal market to test out your new Steak o’ the Month subscription box.
  • Restricted items – Like the aforementioned lithium ion batteries, some items are universally restricted and/or require a lot of extra hoop jumping to ship internationally. This is because they can be dangerous, like high-powered magnets on an airplane, or illegal, like ivory. ( …Or because they’re postage stamps. UPS will not ship U.S. postage stamps outside the U.S.) But never fear, some restrictions are carrier-specific. So if one carrier won’t ship your product, another may answer the call. Don’t give up!
  • Keep it Simple – Cross-border shipping is more involved than domestic shipping, we suggest you start with high profit margin items that you can afford to lose if your first experiment doesn’t work out. In other words, consider testing the international shipping waters by sending books, not hot tubs.

Once you’ve chosen your products and market, don’t be surprised when things change up on you. Tariffs and treaties and other changes may suddenly mean that a new market opens up, or something that you happily shipped to your customers in Country X yesterday is suddenly prohibited today.

It can be extremely difficult to keep an eye on changes, especially with the current tariff unease worldwide. It’s essential that merchants use software to help them keep an eye on changes, not only  to the cost of shipping, but changes in what can and can’t be shipped.

Nail Down Shipping Logistics

Choose your carrier(s) – You have a ton of options when it comes to shipping items cross-border. Postal mail, like the United States Postal Service (USPS) or Canada Post is cost-effective, but often excruciatingly slow. Express carriers cost more, but can be much faster and offer perks like insurance and tracking that will give you and your customers peace of mind that the purchase is on it’s way.

Understand customs and duties – Think of customs and duties as taxes or tariffs on the items you import. Depending on things like what the product is, what it’s made of, it’s value and quantity, where you’re shipping from and the origin point of your products, you (or your customer) are likely going to have to pay extra as a cost of doing business for importing goods into a country.

You have a couple of options here:

  • Delivery Duty Paid (DDP) – This means you, the merchant, pay all the taxes and fees associated with shipping internationally. You are generally billed by your carrier for these fees. In some cases you may not know the fees until after the order is delivered.
  • Delivery Duty Unpaid (DDU) – This means that the customer is on the hook to pay all taxes and fees associated on the package. If you choose this route, be sure to let the customer know up front that they will be responsible for duties, otherwise you could end up with an angry customer.

The other option is to use a 3rd party custom and duties calculator to do all the work for you, and then choose to either pass all, some or none of that cost onto the customer.

ShipperHQ is releasing a solution in Q1 2019 which will handle all your customs & duties. Contact us for early access.

Optimize Your Customers’ Experience

Offer varied delivery options – Some of your customers will want their purchase immediately. Others may be more price-conscious and defect to a competitor if the total price climbs too high. One way you can please everybody is by offering up choices. The price-conscious customers can save some money with slower shipping options, while the people who forgot their mom’s birthday can shell out extra for express shipping.

These days, many online shoppers have come to expect free shipping, even on international orders. Check out our guide to offering free shipping without busting your budget here.

Be transparent about shipping costs – The last thing you want to do is surprise your customers with an enormous grand total when they’re about to hit “Buy Now.”  Or worse, shipping something around the world only for the customer to refuse to accept the shipment because of the high duties.

Shipping management software can help you give customers the whole shipping price story up front so you don’t end up with a bunch of products sitting in abandoned carts.  

Are you ready to ship internationally? Do you have any international shipping questions? Tips & tricks? Horror stories?

Let us know in the comments!

 

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5 Reasons You Should Offer International Shipping

Author: Jennifer Dunn  |  December 7, 2018
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When it comes to the problems with international shipping, we’ve heard it all – it’s expensive, international customers are demanding, our products are restricted, we can’t figure out customs.

Simply put, those are not good enough reasons to avoid shipping your products cross-border. Here’s why:

Your customers are out there

You have the supply, but is there demand? Survey says: Yes.

The Pitney Bowes 2017 Global eCommerce Study found that 70% of online shoppers shop internationally. And DHL found that every 7th online purchase is now a cross-border transaction.

Demand is only growing. Forrester reports that cross-border shipping will make up 20% of eCommerce by 2022, with sales equaling $627 billion. This is in part because eCommerce giants like Rakuten in Asia, Flipkart in India, and Amazon all over the place are rapidly introducing new populations and markets to online shopping. Familiarity with eCommerce, along with streamlined payments processes, mean more and more consumers all over the world feel comfortable shopping online.

If you’re curious about expanding into a new international market, you can first head over to Export.gov and see a frequently-updated overview of economic conditions in the country or region where you’re planning to sell.

Your competitors are doing it

DHL surveyed 1,800 retailers and 71% of those expected their cross-border sales share to increase.

Pitney Bowes also found that a third of the 1,200 online retailers surveyed considered international selling their top growth lever. In the same report, 93% percent of online merchants either already offered cross-border shipping or planned to by 2019.

For U.S. merchants, going international only makes sense because the U.S. share of global eCommerce sales is steadily decreasing as new markets emerge.

You have the data

The key to your first cross-border market may be hiding out in your website’s analytics right now.

According to the same DHL report, a large-scale analysis run in cooperation with SimilarWeb of the top 1,000 shopping websites in each European country showed that more than 1 in 4 of them had significant international traffic, even in smaller, less-connected markets such as Ireland or Croatia.

Fashion and electronics were the top cross-border sellers, but up-and-coming product categories included beauty and cosmetics, pet care, food and beverage, and sporting goods. Tools like ShipperHQ can provide analytics showing you where your customers and potential customers are located.

It’s getting cheaper and easier

When we talk to eCommerce merchants about international shipping two major concerns crop up over and over again: the cost and the hassle.

When in the U.S. you may be accustomed to shipping a parcel from Massachusetts to California for a few bucks, international shipping costs can appear staggering. And that’s without the addition of customs and duties. Further, unless you’ve nailed down relationships with carriers and set up shipping methods, your items can slip into a sort of a transit black box, with neither you nor your customer knowing exactly where the parcel is nor when it will arrive. Further, online shoppers now demand that their packages arrive quickly after they click “Buy Now.”

Fortunately, as cross-border commerce becomes more common, carriers are meeting the needs of both eCommerce sellers and customers. For example, premium or express shipping solves both the problem of parcel tracking and delivering the order to the customer within the expected time frame after the purchase.

Or, to let numbers do the talking, DHL’s survey found that online retailers offering premium cross-border shipping were growing 1.6 times faster than those who did not.

…And more profitable

According to Statista, the average order value of an international sale is $147 USD, which is 17% higher than an average domestic sale.  Further, DHL’s survey found that around 20% of cross-border purchases were worth over $200 USD. Perhaps savviness around shipping charges has your international customers demanding more bang from their buck (or Euro or yen) in each transaction.

Are you exploring cross-border shipping? ShipperHQ has over 10 years experience with thousands of merchants large and small in the international space. Contact us to discuss your needs, or to start a 30-day free ShipperHQ trial today.

 

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