When shipping internationally, you have a fundamental choice: who pays the duties and taxes?
Your Two Options
DDU (Delivered Duty Unpaid)
- Your customer pays duties and taxes when the package arrives
- Also called DAP (Delivered at Place)
DDP (Delivered Duty Paid)
- You collect duties and taxes at checkout
- Customer pays nothing on delivery
Why DDP is the Industry Standard for Premium Brands
The Reality of DDU Customer Experience
When you ship DDU, your customers face:
- Surprise fees at delivery (typically 20-40% of order value)
- Packages held at post office or customs facility
- Time off work to collect packages and pay fees
- Customs paperwork to complete
- Additional delays of 3-7 days for clearance
The Hidden Costs of DDU for Your Business
When customers refuse packages due to surprise fees:
- You refund the full order amount
- You pay return shipping (often 2x the original cost)
- You lose the customer (68% won't reorder after duty surprises)
- You receive negative reviews about "hidden fees"
The Benefits of DDP
- Fewer refused packages (refusal rates drop from 25% to under 5%)
- Higher customer lifetime value (transparent pricing builds trust)
- Direct door delivery (no customer trips to customs offices)
- Faster processing (pre-paid packages clear customs quicker)
- Competitive advantage (match the experience of local retailers)
Setting Up DDP with MasonHub
Requirements for DDP
- Shopify Requirements
- Advanced Shopify or Shopify Plus plan
- HS codes for all products (customs classification)
- Country of origin for all products
- 0.85% transaction fee on orders with duties calculated
- Carrier Support
- Express carriers typically support DDP. Check your rate card for services that say "DDP" to see rates
- Use Passport or Global-e
- Postal services often don't support DDP
- MasonHub's carriers offer DDP to most destinations
- Always verify DDP availability for your target markets as some countries do not offer DDP--only DDU
Making the Business Decision
Use DDP When:
- Your average order value exceeds $75
- You're building a premium brand experience
- Targeting EU/UK markets (VAT regulations make it essential)
- Your customer acquisition cost is high
- You want to compete with local retailers
Consider DDU Only When:
- Testing new markets with minimal volume
- Selling B2B where buyers expect to handle duties
- Margins cannot support any additional costs
- DDP isn't available to certain destinations
DDP Pricing Strategies
Option A: Build Duties Into Product Prices
- Add 15-25% to international prices
- Simple for customers (one price, no surprises)
- Risk: Estimating incorrectly affects margins
Option B: Show Duties Separately at Checkout
- Shopify calculates exact duties dynamically
- Passport and Global-e also show duies at checkout
- Most transparent approach
- May increase cart abandonment slightly
Option C: Free Shipping Threshold with DDP
- Example: "Free international shipping over $150 (duties included)"
- Increases average order value
- Clear value proposition
Regional Considerations
European Union
- DDP essentially required for good customer experience
- VAT applies to all orders
- Complex regulations make DDU extremely frustrating for customers
United Kingdom
- Similar to EU requirements
- VAT threshold at £135
- High expectation for transparent pricing
Canada
- DDP highly recommended
- Geographic proximity sets high delivery expectations
- Very high duty refusal rates with DDU
Australia/New Zealand
- DDP preferred due to long shipping times
- Duty surprises after 2-week shipping create poor experience
- High cost of returns makes refusals expensive
Critical Implementation Steps
- Add HS Codes to Every Product
- Required for duty calculations
- Wrong codes = wrong calculations = you pay the difference
- No HS code = no duty calculation = order problems
- Account for All Fees
- Duties and taxes are just part of the cost
- Handling and brokerage fees aren't included in calculations
- Consider adding buffer to shipping prices
The Bottom Line
For most brands, DDP is the right choice. The improved customer experience, reduced refusals, and operational efficiency far outweigh the setup complexity. Your international customers expect the same seamless experience as domestic ones.
Recommended approach:
- Start with DDP to high-value markets (EU, UK, Canada, Australia)
- Use threshold strategies to protect margins
- Expand DDP as you grow internationally
- Monitor performance and adjust pricing as needed
The investment in DDP setup typically pays for itself within 90 days through reduced refusals and improved customer satisfaction. Make the choice that puts your customer experience first.