What does DDP mean in fashion?
DDP (Delivered Duty Paid) is an Incoterms rule where the seller delivers goods to the buyer's named place with import duties and clearance paid.
In short
DDP, or Delivered Duty Paid, is an Incoterms rule from the International Chamber of Commerce under which the seller bears all costs and risks of delivering goods to the buyer's named destination, including import clearance and duties. The buyer only needs to unload the goods.
How does it work in practice?
Under DDP the seller arranges transport, export and import formalities and pays duties and, depending on the contract, import taxes. In fashion this shows up in two situations:
- Wholesale: a brand quotes DDP prices to an overseas retailer, so the retailer's landed cost is predictable.
- DTC e-commerce: the brand collects duties at checkout and ships duty-paid so the consumer pays no extra fees on delivery.
- Sourcing: some full-package suppliers or agents offer DDP prices to brands.
Why does it matter for fashion businesses?
DDP simplifies the buying decision for the customer and reduces refused deliveries, but the seller takes on the cost, compliance and risk of importing in another country. That requires correct HS codes, valuation and the ability to act as importer of record or work with a partner who can. Pricing must include enough margin to absorb duty changes and freight fluctuations.
How is AI changing it?
Cross-border commerce platforms use AI to classify products and calculate duties and taxes in real time at checkout. Landed cost models help wholesale teams build DDP price lists per market and update them when tariffs or freight rates change.
Common pitfalls
- Underestimating import taxes and fees in the DDP price.
- Lacking a legal entity or representative to import in the destination country.
- Unclear treatment of VAT or sales tax in the contract.
Before switching wholesale customers to DDP terms, brands should model the full cost per market, check whether they can legally act as importer and clarify in contracts how tariff changes during the season will be handled.
Frequently asked questions
What is the difference between DDP and DAP?
Under DAP the seller delivers to the named place but the buyer handles import clearance and duties. Under DDP the seller handles and pays these as well.
Why do e-commerce brands offer DDP shipping?
Duty-paid delivery avoids unexpected charges for consumers, which reduces refused parcels and improves the customer experience.