Many have imported different products from China, and many of them use Alibaba DDP shipping. Alibaba is the place to go when looking for suppliers of private-label products in China. On the surface, using Alibaba DDP shipping seems relatively straightforward.
But how do you find reliable suppliers, negotiate with them, and get your products shipped? In this article, we’ll cover all of these things. In this article, we will be reviewing of Alibaba DDP shipping.
What Is Alibaba?
Alibaba is the largest ecommerce company in the world – yes, even more, significant than Amazon. This is primarily because of an ecommerce site in China that Alibaba owns called Taobao.
However, Alibaba also owns Alibaba.com, a supplier directory of factories in China. Alibaba is the number one website that most importers use to start looking for products.
Alibaba also owns Aliexpress.com, which allows foreigners to buy cheap individual products from China. That’s the critical difference between Alibaba and Aliexpress – Alibaba is for buying many products for your business, and Aliexpress is for buying one or two products for your personal use.
What Is the DDP Shipping Method
A Delivered Duty Paid (DDP) shipping agreement is the Incoterm that places the maximum obligations on the seller and minimum on the buyer.
In a Delivered Duty Paid (DDP) arrangement, the seller delivers the goods to the named place in the buyer’s country, with import duties paid, including inland transportation from the import point to the buyer’s premises.
That means the seller has goods available in the country of import and pays all costs, including import duties, taxes, and other charges related to delivery, cleared for import.
So if you are asking “do I have to pay import tax from Alibaba”, Absolutely YES.
A DDP transaction will read “DDP named place of destination.” For example, assuming goods imported through Baltimore are delivered to Silver Spring, the Incoterm would read “DDP, Silver Spring.”.
Why Choose DDP as The Alibaba Shipping Method
Alibaba DDP shipping allows little responsibility on buyers until the products are entirely delivered. This shipment option is ideal for buyers and Alibaba suppliers due to several reasons:
- It helps inexperienced buyers in the shipping process
- It allows hassle-free shipping options for buyers
- It assists buyers who have not yet built partnerships or do not import frequently
- It provides complete control over shipping costs for seasoned sellers
- It gives Alibaba suppliers shipping options with the highest price to increase their profits
Disadvantages of Alibaba DDP Shipping
Below are the disadvantages of Alibaba DDP shipping
- DDP shipping is less cost-effective to import goods for both sellers and buyers
- These sellers have many responsible agents to handle the buyer’s expectations
- DDP is not ideal for sea freight. It is usually used for air express or parcel transportation.
So how does shipping work on Alibaba, We are focusing on DDP shipping
How Much Does DDP Cost Buyers, and Who Pays Freight on DDP?
In Alibaba DDP shipping, the supplier takes responsibility for all transportation costs. These landed costs include customs clearance fees, import duties, inspection, and VAT. In essence, the seller incurs all the costs related to the delivery process.
DDP shipments only require buyers to pay fees related to offloading the products by paying through Alibaba. The DDP shipping costs should not be 40% higher than the FOB price. Otherwise, a buyer should consider using his freight forwarder with the FOB term.
How to Find a Reliable DDP Service?
Alibaba DDP shipping vary by the shipping company. Yet, DDP shipping is reasonably straightforward. Note that some freight forwarders may not allow shipping DDP. Besides, the freight forwarder that does may refer to it by another term.
Let’s look at the channels to find shipping companies that provide Alibaba DDP shipping.
1. Use the Search Engine
You can use search engines like Google or Baidu to look for a shipping company. You can search for “DDP service provider” by visiting their websites or social media.
Here are the most well-known shipping companies that can fulfill your DDP shipping needs:
DHL Express: This courier company bills the sender for the DDP shipping costs paid upon shipment arrival. For instance, the administration fees, import taxes, and customs duties paid.
UPS Courier Company: It permits the shipper, receiver, or a third party to be billed for import and customs duties. The freight cost and taxes paid are usually billed to the receiver.
FedEx Courier Company: You can charge transportation costs to the recipient or sender via FedEx. There is no DDP shipping fee from FedEx in the US; if you ship from China to the USA, You have to alter your option.
2. Get Recommendation by Acquaintances
Asking for recommendations from your contacts is another way to reach DDP service providers. These business contacts include your suppliers, business partners, or others.
3. Hire a Sourcing Agent
Sourcing agents could help find good shipping companies too. They are often experienced in sourcing, inspection, clearing customs, and shipping.
4. Search on Alibaba
There’re various DDP suppliers on Alibaba, and all of them are verified, so it’s more reliable to find suppliers online directly.
Notably, Alibaba sets up a robust security system and dispute procedure; it protects you against more scams during deals with DDP suppliers.
Alibaba DDP Shipping Buyers and Sellers Responsibilities
1. Seller’s responsibility
While EXW (Ex Works) represents the minimum obligation for the seller, DDP represents the maximum obligation. And the onus for responsibility, cost, and risk lies squarely on the shoulders of the seller.
As mentioned above, the seller (exporter) is responsible for all costs involved in delivering the goods to a named destination and clearing Customs in the country of import. Under a DDP Incoterm, the seller provides door-to-door delivery, including customs clearance in the port of export and destination. Thus, the seller bears the entire risk of loss until goods are delivered to the buyer’s premises.
The seller may also need to obtain import licenses, permits, or specific payment options with Customs. If the seller cannot obtain an import license, the DDU (Delivered Duty Unpaid) term should be used instead of DDP (Delivered Duty Paid).
2. Buyer’s responsibility
In a Delivered Duty Paid shipping agreement, the buyer has minimal responsibilities. These are to unload the goods at the prearranged transfer point and freight them to their final destination.
The buyer is not required to help or advise the seller on import responsibilities or any other documentation, nor does the buyer accept any risk during shipping under this arrangement.
Benefits of Buyers and Sellers
1. Seller’s benefits
As with any shipping Incoterm system in which the seller controls the export of the goods, a DDP arrangement allows the seller to control the logistical costs and adjust them accordingly to maximize profit.
It also allows the seller to choose which shipping service is willing to offer the most significant commission for the contract. These benefits are not necessarily passed on to the buyer.
2. Buyer’s benefits
For an inexperienced or busy buyer, the benefits of Delivered Duty Paid are myriad. As, primarily, the whole responsibility for the freight and paperwork of the goods is down to the seller, it gives the buyer a chance to arrange for the sale or use of the products they are about to receive.
The buyer enjoys a hassle-free situation as they have very little in the way of responsibility until the goods fully arrive.
Considerations for Importers and Exporters
A Delivered Duty Paid shipping agreement benefits buyers with little shipping knowledge and who want a hassle-free experience. An experienced seller also benefits from this system as they would have total control over costs, including factors that could maximize their profit.
Importers/buyers with more experience are more likely to avoid this shipping agreement, as they are more likely to have more cost-effective ways of importing their goods. These companies will have a network of responsible agents that can capably deal with the buyer’s demands.
The DDP shipping agreement is more suitable for buyers that have not managed to form these relationships yet, or do not import very often and so go for the most trouble-free shipping system. Generally speaking, we don’t recommend DDP for ocean shipping. However, it is more common and makes more sense for air express or parcel shipping.
DDP Shipping Alibaba Compared to DAP
DAP (Delivered At Point) differs from DDP in that under DAP, and the buyer is responsible for customs clearance, duties, and taxes. Under DPP, the seller must clear the goods and pay for the import duties and taxes.
DAP is more beneficial for goods transport when there is no necessity to clear the goods at borders or customs. One of the benefits of DDP for buyers is that all the documentation is taken care of, whereas with DAP, there is far more paperwork to deal with for buyers.
DDP Alibaba shipping is one of the most common trade terms to ship globally. It assumes full responsibility, costs, and risks to the suppliers. Most sellers only ship DDP when using air freight or sea freight.
Buyers will benefit highly from DDP with less liability, risks, and costs. But, remember that some freight forwarders offer unreasonably low delivery charges. These cases will mostly turn out to be scams.