由 caicai8478 Key Summary
DDP (Delivered Duty Paid): The seller bears all logistics, customs clearance, and tax risks and responsibilities from the point of shipment to the destination. This is the Incoterms® term that places the greatest seller responsibility.
COD (Cash on Delivery): The seller bears the risk of payment collection and rejection, while the buyer is only responsible for payment upon receipt.
While both impose a greater burden on the seller, the source and nature of their risks are completely different. The following diagram clearly contrasts the flow of risk and liability in each:
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Risk and Liability Allocation in DDP (Delivered Duty Paid)
Under the DDP model, the seller essentially acts as a “domestic seller,” responsible for all matters related to the international leg.
Seller: The Bearer of Maximum Risk
Responsibilities and Risk Points:
Transportation Risk: The seller bears all risks of damage or loss of the goods before delivery to the designated destination.
Import customs clearance responsibilities and risks: This is the core and most risky aspect of DDP. The seller must:
Find a reliable customs broker in the buyer’s country to handle customs clearance.
Accurately declare goods, ensuring compliance with all regulations, standards, and certifications (such as FDA, CE, RoHS, etc.) in the destination country. Any non-compliance will result in customs detention, fines, or return of shipment.
Accurately estimate and pay all taxes and fees: including tariffs, value-added tax (VAT), consumption tax, customs clearance service fees, etc. Any inaccurate estimates (such as miscalculated tax rates) will result in losses borne by the seller.
Risk of logistics cost fluctuations: Additional costs incurred during transportation, such as fuel surcharges, peak season surcharges, and congestion charges, are the seller’s responsibility.
Risks of local delivery in the destination country: These include last-mile issues such as delivery delays, unacceptable delivery, and incorrect addresses.
Summary of the impact on sellers:
Highly professional requirements: In-depth understanding of the import and export regulations and tax systems of the buyer’s country is essential.
Complex cost control: The quote must include all potential costs; otherwise, losses are likely.
Risks are complex and diverse: Facing political, legal, and logistical uncertainties.
Buyer: Minimum Responsibilities and Risks
Responsibilities and Risk Points:
Provide Necessary Customs Clearance Information: Upon the seller’s request, provide documents and information necessary for import customs clearance (such as a tax number).
Receive Goods: Receive duty-paid goods at the designated location.
Bear Unloading Costs: If not stipulated in the contract, the buyer bears the unloading costs and risks.
Almost Zero Risk: All risks prior to delivery of the goods are irrelevant to the buyer. The buyer is effectively trading on a “cost, insurance, and delivery” basis, providing peace of mind.
Risks and Responsibilities in COD (Cash on Delivery)
COD is a payment method that changes the payment collection process, introducing unique risks.
Seller: Bear Payment Risk
Responsibilities and Risk Points:
High Refusal Rate: This is the greatest risk of COD. Buyers may place an order on impulse, then change their minds upon delivery, be dissatisfied with the product, or refuse to accept the goods due to a temporary lack of funds.
Slow and costly cash flow: It takes time (days to weeks) for logistics providers to settle payments with sellers. Furthermore, logistics companies charge additional collection fees.
Round-trip freight loss: If a shipment is rejected, the seller must cover both the outbound and return shipping costs. If the shipment is not valuable, the seller may abandon the shipment, resulting in a 100% loss.
Cargo damage risk: Returned goods may be damaged in transit, making it difficult to determine liability.
Fraud risk: Fraudulent acts such as false addresses or malicious refusal of delivery may occur.
Summary of the impact on sellers:
Increased operating costs: Collection fees are required, and capital turnover efficiency is reduced.
Erosion of profitability: Rejection and return rates directly impact profits.
Increased operational complexity: The seller must process a large number of returns and refunds.
Buyer: The Party with Immediate Payment Duty
Responsibilities and Risks:
Fulfilling Payment Obligations: Upon signing for the goods, full payment must be made by cash or credit card.
Long Inspection Time: The courier may have very limited time to inspect the goods before deciding whether to pay.
Minimally Low Risk: This eliminates the risk of delayed delivery after prepayment, giving buyers the initiative to pay.
Comprehensive Comparison and Conclusion
Responsible Party: DDP (Delivery Duty Paid) and COD (Cash on Delivery)
Seller: Highly Responsible, Highly Risky
- Bears all transportation risks
- Responsible for import and export customs clearance and pays all taxes and fees
- Faces regulatory risks in the destination country
- Complex cost control and quotation processes. High risk, focused responsibility
- Bears high rejection rate and return risk
- Slow capital recovery and additional handling fees
- Potential loss of round-trip shipping costs
- Must handle a large number of returns
Buyer: Lowest Responsibility, Lowest Risk - Simply collects goods at destination
- No need to worry about customs clearance and taxes
- As simple as shopping domestically. Simple responsibilities, very low risk
- Payment is due upon receipt
- Short inspection time and high decision-making pressure
- Avoids the risk of non-delivery after payment
Final Conclusion
Who bears the most responsibility? — Undoubtedly, the seller.
DDP transforms the seller from an “exporter” into a “cross-border logistics provider + importer,” assuming the core risks of the international supply chain.
COD shifts the seller from a secure “payment first, delivery later” model to a passive “delivery first, payment later” model, assuming core credit and payment risks.
In practice, a DDP + COD combination presents the highest risk for sellers: sellers must deliver goods to the customer’s doorstep, tax and shipping included (assuming the DDP risk), while also facing the risk of customer rejection (assuming the COD risk). This model is typically adopted only in specific markets (such as cross-border e-commerce) and when sellers have high confidence in their products and customer base.