Selling across the border is an excellent way to expand your reach and grow your eCommerce business. International selling puts you in front of a larger audience and is a powerful way to scale your business.
However, there’s one big issue many businesses notice when they start selling internationally: cart abandonment.
Many sellers notice a huge spike in shopping cart abandonment when they start selling across the border. The reason? High shipping costs. The top reason that customers abandon their carts is because of high shipping costs.
Imagine that you are a customer trying to buy a $20 t-shirt. All of the sudden, the price nearly doubles when the customer gets a call from customs about paying the duties and taxes. It’s no wonder so many people cancel their orders or abandon their carts for international shipping.
One of the best ways to reduce cart abandonment and keep your customers satisfied is with Delivery Duty Paid (DDP) shipping.
Today, we’ll explore DDP shipping and how it reduces cart abandonment for international eCommerce.
International Cart Abandonment
First, it’s important to understand why so many international buyers abandon their carts. The total landed cost, or the total price of the purchased item, taxes, and duties are not always visible to customers. Depending on which shipping method the seller chooses, the international customers may not know the total landed cost at the time of purchase. Instead, they will be called by customs when their package arrives in the destination country. Customs will charge the buyer for the duties and taxes, requiring this payment before final delivery. The lack of transparency and unexpected cost can frustrate and upset customers, leading to cart abandonment.
What is DDP?
International eCommerce introduces new taxes and duties that don’t apply to domestic sales. These value-added taxes will be the responsibility of the brand or the customer depending on which shipping method is chosen.
With Delivery Duty Unpaid (DDU), the VAT is charged to the customer when the package arrives in the destination country. The customer is required to pay the fees to get their shipment. Again, with DDU, the customer may not be aware of the total landed cost until they are contacted to pay the additional fees.
On the other hand, the eCommerce brand must pay for all of the value-added tax (VAT) and duties with Delivery Duty Paid (DDP). The business can calculate the total landed cost of the item and pass this cost on to the customer in the shopping cart. This way, there are no hidden costs that customers will not know about.
Ways DDP Reduces Cart Abandonment
Even if the brand passes the VAT onto the customer at checkout, DDP is still less likely to result in cart abandonment than DDU. Here’s why:
Customers do not want to be surprised by hidden costs and fees. They expect transparency when purchasing goods. DDP eliminates the surprises and presents the total landed cost upfront in the shopping cart. Customers will know exactly what they must pay and can make an informed decision at the time of purchase.
Quick fulfillment is crucial for keeping your customers satisfied. If a package takes too long to arrive, and customers do not know where the package is, they may cancel the order. DDP reduces shipping time because it lessens the time packages spend in customs.
DDP also provides a transparent view of the shipping process. Both the business and customer can follow the progress of the package. This gives buyers the peace of mind to know that their items are on the way.
Happy customers are less likely to abandon their carts. Since the customer will not have any hidden fees, there’s less friction during the purchase. DDP helps keep the customer happy, thus reducing the chance of cart abandonment.
Time to Evaluate Your International Shipping
DDP is a proven strategy for reducing international cart abandonment. It offers a transparent purchasing and shipping experience for customers, allowing them to see the total landed cost of the purchase in the cart.
If your business currently sells internationally or is considering expanding internationally, now is the time to evaluate DDP and international shipping. Of course, this takes time. If you’re spending too much time on basic eCommerce operations, you won’t have the time you need to dedicate to international shipping.
That’s where Listing Mirror can help. With our #1 multichannel eCommerce software, you can streamline inventory management, order fulfillment, inventory syncing, and warehouse management for your multichannel eCommerce business. Try Listing Mirror out for yourself risk-free for 14 days. Click the button below to get started!
Erin is the Co-Founder of Listing Mirror.