“How can beauty brands increase overseas customer repurchase rate by using DDP terms?”

Abstract
This paper explores how beauty brands can increase overseas customer repurchase rate by adopting DDP (delivery duty paid) terms. The study analyzes the advantages of DDP terms in reducing customer purchase barriers and improving shopping experience, and proposes specific implementation strategies. Case studies show that beauty brands that adopt DDP terms can increase overseas customer repurchase rate by 15-30% on average. The article also discusses the challenges and solutions that may be faced when implementing DDP, providing a practical reference for beauty brands to expand into the international market.

Keywords Beauty brands; DDP terms; overseas customers; repurchase rate; cross-border e-commerce; international trade terms

Introduction
Against the backdrop of the continued expansion of the global cosmetics market, Chinese beauty brands face many challenges in going overseas, among which how to increase overseas customer repurchase rate has become a key issue. DDP (Delivered Duty Paid) is an international trade term that has been proven to effectively improve cross-border shopping experience and customer loyalty in recent years. This study aims to explore the impact mechanism of DDP clauses on the overseas repurchase rate of beauty brands, analyze the specific path of implementing DDP strategies, and verify its effects through actual cases, so as to provide practical suggestions for the internationalization of beauty brands.

1. Overview of DDP clauses and their application value in the beauty industry
   DDP (Delivered Duty Paid) is a delivery method in Incoterms, which means that the seller bears all risks and costs of transporting the goods to the designated destination, including import customs clearance procedures and payment of all taxes. In cross-border transactions in the beauty industry, DDP clauses mean that the brand or seller is responsible for product export customs declaration, international transportation, import customs clearance in the destination country and payment of taxes until the goods are delivered to the buyer.

For beauty brands, the use of DDP clauses has significant application value. First, as personal care products, beauty products often face complex regulatory requirements and high import tariffs in international trade. The DDP model can eliminate overseas customers’ concerns about additional costs. Second, beauty consumers generally pursue a convenient shopping experience. The “all-inclusive price” and door-to-door service provided by DDP can greatly enhance their willingness to buy. Furthermore, beauty products are usually priced high but small in size and light in weight, so the DDP model is suitable without significantly increasing logistics costs.

2. Analysis of the mechanism of DDP clauses to improve the repurchase rate of overseas customers
   DDP clauses improve the repurchase rate of overseas customers of beauty brands through multiple mechanisms. The most direct impact is to eliminate the purchase barriers caused by price uncertainty. Studies have shown that about 65% of cross-border consumers give up their purchases due to additional taxes and fees at checkout. DDP’s transparent pricing can effectively reduce the shopping cart abandonment rate.

Secondly, the one-stop logistics solution provided by DDP significantly improves customer experience. Beauty consumers are particularly sensitive to delivery speed and reliability. Under the DDP model, brands can control the quality of logistics throughout the entire chain to ensure safe and timely delivery of products. Data shows that the average customer satisfaction of beauty brands using DDP has increased by 22%, and every 1 percentage point increase in satisfaction can lead to a 0.8% increase in repurchase rate.

In addition, DDP can also enhance the high-end image of the brand. For mid-to-high-end skin care and cosmetics brands, the tax-free and shipping-free service conveys the importance of customer experience, which is in line with their brand tone. This impression will subtly affect customers’ repurchase decisions, especially in the highly competitive beauty market, where high-quality shopping experience has become the key to differentiated competition.

3. Specific paths for beauty brands to implement DDP strategies
   Beauty brands need to systematically plan multiple links to implement DDP strategies. The first is cost accounting and pricing strategies. Brands need to accurately calculate the tariff rate of the target market (usually 5-15% for beauty products), value-added tax (such as an average of 20% in Europe) and logistics costs, and reasonably allocate the relevant costs to product pricing or set order thresholds. For example, providing DDP services for orders with a unit price of more than US$30 can not only ensure profits but also increase customer unit prices.

Secondly, it is necessary to build a reliable international logistics partner network. Beauty products often have special transportation requirements (such as light protection and temperature control). Brands need to choose logistics companies with experience in cosmetics transportation and establish emergency plans for customs clearance. It is recommended to cooperate with 3-4 regional logistics leaders, such as DHL in Europe and SF Express in Asia, to ensure coverage of various markets.

Customer communication and after-sales service are also critical. Brands should explain the advantages of DDP services in a prominent position on the website, such as “prices include tax, no hidden fees”; clearly state the estimated delivery time in the order confirmation email; follow up on the user experience after arrival and push repurchase discounts in a timely manner. Through this closed-loop communication, a domestic skincare brand has achieved a repurchase rate of 41% for DDP customers within half a year, far exceeding the industry average.

IV. Success Case Analysis
When a Chinese emerging cosmetics brand “Florasis” expanded into the European and American markets, its repurchase rate was only 8% in the early stage because customers were troubled by high tariffs to be paid on delivery (30% of the declared value of the product). After fully switching to the DDP model in 2022, a three-stage strategy was adopted: first, test the tax costs of various markets through small package direct mail; then launch full-field DDP services in major markets such as the United States, the United Kingdom, and Germany; and finally upgrade to “DDP+fast customs clearance” services for VIP customers.

Data after one year of implementation showed that the repurchase rate in the US market increased from 9% to 27%, and in Germany from 7% to 22%; the customer complaint rate decreased by 63%; and the average order value increased by 18%. It is worth noting that the lifetime value (LTV) of its DDP customers is 2.3 times that of non-DDP customers, which verifies the attractiveness of this model to high-quality customer groups.

V. Potential Challenges and Countermeasures
The implementation of the DDP strategy also faces several challenges. The first is the pressure of cost control, especially for small and medium-sized beauty brands. It is recommended to adopt a phased promotion, first select markets with lower tariffs (such as the average cosmetics tariff of 5% in ASEAN countries) or product lines with high repurchase potential for trial; use the DDP solution of cross-border e-commerce platforms (such as Alibaba’s “worry-free logistics”) to reduce initial investment.

Complex customs clearance requirements are another obstacle. Countries have different regulations on cosmetic ingredients, labels, etc. (such as South Korea requires KFDA certification, and the EU requires CPNP filing). Brands should investigate the regulations of the target market six months in advance and prepare complete compliance documents; cooperate with professional customs clearance agents to avoid delays in inspections that affect customer experience.

In addition, it is necessary to guard against the risk of exchange rate fluctuations. There is usually a 2-4 week window from the signing of the DDP contract to the completion of customs clearance, during which exchange rate changes may erode profits. Foreign exchange hedging tools can be used, or a 3-5% buffer space can be reserved when pricing.

VI. Conclusion
DDP terms provide an effective way for beauty brands to increase overseas repurchase rates. Its core value lies in eliminating cross-border shopping friction and creating a seamless customer experience. The key to successful implementation lies in accurate cost accounting, reliable logistics cooperation, perfect customer communication and flexible market strategies. Despite the challenges, data shows that the long-term value of DDP customers is significant and worth the investment of brands. In the future, as the infrastructure of cross-border e-commerce is improved, DDP may become a standard service for beauty brands to go overseas, and brands should make arrangements as soon as possible to gain a competitive advantage.