Don't Say We Didn't Warn You
Updated: May 14, 2019
It's a re-occurring topic which comes back on almost every online FBA Sellers group 'Ship DDP its easier and cheaper'.
As you'll know by reading various other articles, it's more commonly a bad idea to ship DDP than to do so.
However, what is very concerning is having the insight and knowledge of HOW cheap rates are given by your supplier overseas, and how this may affect you as the importer.
This isn't some scare tactic to make you want to use Westbound Logistics! Use our worst rival if you must - just please understand our advice.
Suppliers will charge you for freight at what seems a great deal, either as a separate charge or built in to your product price therefore, an inflated price.
In reality, they'd have paid very little, zero, or gained a rebate from the origin Forwarder. Your shipment will arrive, and you'll need to pay the Freight Forwarder arrival charges. What should usually be small-fry, becomes a huge inflated array of land-side charges which are sometimes quadrupled or more.
This is because, the extra charges make up for the low/zero/rebated freight charges their Chinese office gave your supplier. They will have to send back a % to them to balance the books.
The result is; you've paid the supplier extra for freight, AND you've paid it again within hidden charges in the land-side procedure.
That's not all - DDP = Delivered Duty Paid so this means your supplier is happily offering to pay your dutiable fee's to HMRC on your behalf.
Do you think they'll declare the correct value and therefore pay the correct due amounts to HMRC?
You'll never know for sure but we must warn you, HMRC are having a huge clamp down on Amazon Sellers in particular due to hundreds of thousands of lost tax/duty revenue from mis-declaring customs entries.
It's very serious, and criminal to mis-declare. You may ask, how is it my fault? The entry must show the EORI number on the customs entry, so again tied in with this topic is many people make the big mistake of saying "Oh well I've never needed an EORI number, my forwarder or courier just does it and never asks".... That's the worst advice you can listen to. These people are not experts and are in danger of falling foul of incorrect procedures, and worst still advising others to do the same without perhaps realising.
Whoever the suppliers invoice is made out to, is the importer.
The Importer is shown as the 'consignee' on the bill of ladings.
The Importer's EORI must therefore be used as a declarant to HMRC that you are importing, therefore failure to do so could bring serious repercussions considering that HMRC have the power to backdate up to 6 years.
Imagine getting to year 6 of trading, and being asked to refund a difference of VAT/DUTY that you have incorrectly paid out already?
Shipping FOB, so you are in control with your appointed Freight Forwarder not only costs you less in total, it's also the safest way to stay in control. If you fall out with your forwarder, move to another. You're still in control. You are the customer this way.
THINK before you ship DDP. Is it worth it?
If you'd like to speak to one of our in-house FBA experts @ Westbound Logistics, either for prices or to discuss the above further, please email email@example.com