What are landed costs, duties and DDP in international shipping?

International shipping can open up valuable new markets, but it also exposes one of the biggest gaps in the customer experience: the difference between what a customer pays at checkout and what they may still need to pay at delivery.

We see this often with retailers expanding overseas. A customer places an order, pays for shipping, waits for the parcel, then gets asked to pay duties, taxes or customs fees before it can be delivered. Even when the charge is legitimate, it can feel like a surprise.

That is why landed costs matter. They are not only a customs or finance detail. They affect checkout conversion, delivery success, customer trust, support workload and margin. Starshipit's Evolving Expectations 2026 report found that 65.2% of retailers cite international shipping costs as a top challenge, while 47.8% identify customs compliance as a key challenge. For growing retailers, cost transparency is part of building an international shipping experience customers can trust.

Table of contents

• What are landed costs?
• What are duties and taxes in international shipping?
• What does DDP mean?
• What is the difference between DDP and DDU?
• Why do unexpected duties hurt customer experience?
• How can you show duties and taxes at checkout?
• How does Starshipit Landed Costs work?
• Landed costs checklist for retailers
• Conclusion
• FAQs

Customers usually care about the final amount they need to pay; not how many systems, carriers or customs authorities sit behind it. If they only see part of the cost at checkout, the rest can become a surprise at delivery.

For example, a customer in the US buys a NZ$180 jacket from a New Zealand retailer. The retailer charges NZ$25 for shipping at checkout. If duties, taxes or carrier fees are charged later, the customer may feel they were undercharged or misled, even if the retailer followed the correct process.

That is why we recommend treating landed costs as part of the checkout and delivery experience, not as an afterthought once the parcel reaches the border.

Duties are usually linked to the type of goods being imported. Taxes are often broader consumption taxes, such as VAT or GST. Some destinations may also apply customs processing or carrier remittance fees.

If you are selling into multiple markets, it is worth avoiding one fixed duties-and-taxes assumption across every country. A beauty product, shoe, supplement, handbag and electronic device can all be treated differently. The same product may also attract different rates depending on where it is made and where it is being shipped.

What does DDP mean?

DDP stands for Delivered Duty Paid. In DDP shipping, duties and taxes are paid before delivery, so the customer should not be asked to pay those import charges when the parcel arrives.

• Duties and taxes are calculated before or during checkout.
• The customer pays the relevant amount upfront.
• The shipment is sent with the right DDP data.
• Duties and taxes are remitted through the appropriate workflow.
• The customer receives the parcel without a surprise customs bill at delivery.

The International Chamber of Commerce defines Delivered Duty Paid as a seller obligation where the seller clears goods for import and pays duties and customs formalities before delivery.

For retailers, DDP can create a clearer customer experience. It can also make margin planning more predictable because the import cost is visible earlier in the order journey, before the order is packed and shipped.

What is the difference between DDP and DDU?

DDP and DDU describe who pays duties and taxes, and when.

DDP means Delivered Duty Paid. The seller handles duties and taxes before delivery, usually by collecting the cost from the customer upfront or absorbing it into the price.

DDU means Delivered Duty Unpaid. The term is older and is often used informally in eCommerce to describe a receiver-pays model. In practice, the customer may be asked to pay duties, taxes or fees when the parcel reaches the destination country.

DDU can still be appropriate in some cases, especially if your business is not set up to calculate or remit duties upfront. But it does create more friction for the customer. A customer who has already paid for the order may not expect a second payment before delivery.

Why do unexpected duties hurt customer experience?

Unexpected duties create a trust problem.

• From the customer's point of view, the order was already paid for. If a carrier asks for more money before delivery, they may think:
• The retailer hid the real cost.
• The shipping price was inaccurate.
• The order is more expensive than expected.
• The delivery is delayed or difficult.
• Buying internationally from that retailer is not worth it again.
• For your team, surprise duties can lead to:
• More support tickets
• Refused deliveries
• Delayed parcels
• Returned orders
• Negative reviews
• Lower repeat purchase confidence
• Margin pressure if the retailer chooses to reimburse the customer

This is why checkout transparency matters. International customers need to understand the total cost before they commit. If duties and taxes are not shown at checkout, your checkout and shipping policy should clearly explain that the customer may need to pay import charges on arrival.

How can you show duties and taxes at checkout?

You can show duties and taxes at checkout by connecting product, order, carrier, and destination data before the customer pays.

• Accurate product descriptions
• Correct HS codes
• Country of origin for each SKU
• Product value and currency
• Shipping cost
• Destination country and postcode
• Carrier and service details
• Checkout rates or a landed cost calculation tool

The goal is to move from estimated or hidden import costs to a clearer landed cost before purchase.

Start with your product catalogue. If HS codes or country-of-origin data are missing, duties and tax calculations can be inaccurate. This is especially important if you have a large catalogue, bundles, variants or products made in different countries.

Then review the checkout experience. Customers should be able to see whether duties and taxes are included, excluded or payable on delivery. Use plain language. "Duties and taxes included" is clearer than a technical customs note buried in the footer.

Finally, make sure the shipping workflow matches the promise at checkout. If you collect duties and taxes upfront but send the order with the wrong customs data, you can still create delivery friction.

If you already use Starshipit for international shipping, this helps reduce manual work around duties and taxes while giving customers a clearer cost before they buy.

Conclusion

Landed costs help you understand the full cost of an international order before it reaches the customer. Duties, taxes, customs fees and carrier charges can all affect the final amount, so showing those costs clearly at checkout can protect customer trust and reduce delivery friction.

If you are expanding internationally, DDP shipping and landed cost transparency can make cross-border growth more predictable. To show duties and taxes upfront from one platform, explore Starshipit Landed Costs or talk to one of our shipping experts.