[2026 Update] What are DDU and DDP on Shopify? Explaining the differences in customs handling for cross-border e-commerce and how to set it up

When building and operating a cross-border e-commerce site on Shopify, the handling of "customs duties" is an unavoidable issue.

• "Who pays the customs duties?"

• "When and how will the buyer be charged?"

• "What can be configured on Shopify?"

The key to resolving these questions lies in the concepts of "DDU" and "DDP".

This article will clearly explain, from a practical perspective, the differences between DDU and DDP, specific operational patterns on Shopify, and recommended approaches based on the growth phases of the store.

*This article is based on the specifications of Shopify as of January 2026.

Basic customs to consider when conducting cross-border e-commerce with Shopify

Customs duties are taxes imposed by the importing country when goods cross the border.

When shipping products from a Japanese Shopify store to overseas customers, the products are treated as 'imported goods', and customs duties and import taxes (such as VAT and consumption tax) may be incurred at the local customs.

The important points are the following two.

• Customs duties are incurred at the time of 'import'.

• Tax rates vary by country and product category.

Shopify does not arbitrarily decide whether or not customs duties apply; it is based on the customs rules of each country, which is a fundamental premise that must be understood.

What is the difference between DDU and DDP?

The most important point to consider regarding customs duties is **'who bears the customs duties'**.

This is where DDU and DDP come into play.

1. DDU (Delivered Duty Unpaid)

• Customs duty payer: Buyer

• Payment timing: Upon arrival of the product (or at customs clearance)

• Special settings on Shopify: Not required

• Features: Easy to operate, but can lead to complaints of 'I wasn't informed' since customs duties are charged upon receipt.

2. DDP (Delivered Duty Paid)

• Duties payer：Store (collected from the customer at the time of purchase or borne by the store)

• Payment timing：At the time of product shipment (settled through the carrier's account)

• Shopify settings：Required (Shopify Markets and shipping settings)

• Features：Customers do not need to pay upon receipt, providing a smooth purchasing experience.

Comparison table: DDU vs DDP

Which one should you choose?

• DDU (buyer burden) is suitable when

  • You are just starting cross-border e-commerce or in the testing sales stage.

  • There are many target countries, and I want to simplify operations first.

  • The profit margin is low, making it difficult to absorb customs costs.

  • The product price is low, and it is likely to fall below the duty-free threshold (de minimis).

• DDP (Delivered Duty Paid) is suitable in this case.

  • Overseas sales have already begun to grow.

  • Issues such as 'cart abandonment' and 'refusal of receipt' due to customs reasons are challenges.

  • I want to emphasize brand experience and peace of mind.

  • I am using Shopify Payments and have an environment where I can utilize its features.

The 'HS code' and 'de minimis' that influence the customs amount.

When operating under DDP (pre-collection), the following knowledge is essential for accurate customs calculation.

What is an HS code?

It is an internationally common 'item classification code (6 digits or more).' This code determines the customs duty rate.

In Shopify, it can be set up using the following steps.

1. Shopify admin screen > Product management

2. Product detail page > Shipping section

3. **Enter the 'HS Code' and 'Country of Origin'**

When operating under DDP, this setting ismandatory. Without it, accurate customs calculations cannot be made.

De Minimis (Small Value Tax Exemption)

A system where customs duties are exempted for imported goods below a certain amount.

• United States: Generally duty-free for amounts below 800 USD

• Australia: Generally duty-free for amounts below 1,000 AUD

For orders below this amount, it is often the case that there are no customs duties for the customer when shipped DDU, so it is very important to understand the de minimis of the destination country.

Three Patterns of DDU and DDP Operations on Shopify

In practice, there are broadly three patterns.

Pattern 1: DDU (Paid by the buyer upon arrival)

This is the simplest method.

• Settings: No special customs settings are required. Only standard international shipping settings.

• Flow: The store just ships → The carrier clears customs locally → Customs duties are charged to the customer upon delivery.

• Note: To prevent issues with buyers who are unaware of customs duties, it is essential to include this information on policy pages, etc.

Pattern 2: DDP① (Collect customs duties at the time of purchase)

This method uses Shopify's standard feature (Shopify Markets) to automatically calculate and collect customs duties and import taxes at checkout.

• Main conditions:

  • Using Shopify Payments

  • Turn on customs duty collection settings

  • All products have HS codes and country of origin set.

  • Use DDP-compatible shipping labels (DHL / FedEx / UPS, etc.)

• Benefits：Since the total payment amount is confirmed at the time of purchase, it enhances customer reassurance and is effective in preventing cart abandonment.

• Cost：A specified fee will be incurred based on the transaction amount (varies by plan).

Pattern 3: DDP② (Customs duties are fully absorbed by the store)

Customs duties are not collected separately from the buyer, and **the customs duties are included in the product price (or covered from profits)**.

• Settings：Customs duty collection setting is OFF.

• Appeal: You can prominently promote "All Duties Included" and "No Extra Fees".

• Caution：Since the product price may appear high, marketing ingenuity is necessary.

※Make sure to clearly state on the product page and FAQ that customs duties are included in the product price. This allows buyers to understand the total amount they will pay in advance, providing a reassuring purchasing experience.

By Store Size｜Recommended Customs Duty Handling

There is no need to aim for a perfect DDP right away. Switch according to the phase.

1. Initial Launch & Test Sales Period 👉 【DDU】

• Reason：Because it is easy to set up and does not incur system costs or labor.

• First, let's observe market reactions with DDU. However, please ensure thorough guidance in the FAQ.

2. Sales Expansion & Full-scale Development Period 👉 【DDP (Collect or Absorb)】

• Reason：Once you start spending on advertising, 'cart abandonment' becomes an opportunity loss. Consider switching to DDP to improve CVR (conversion rate).

• It is possible to flexibly apply DDP only to specific countries where sales are strong (e.g., the United States, Taiwan) with Shopify.

Important customs notes to convey before purchase (in the case of DDU)

In the case of DDU operation, if there is no prior notice, it can lead to complaints such as 'It's a scam!' or refusal to accept due to high customs duties (return costs are borne by the store).

Recommended placement

• Shipping policy page

• At the end of the product description

• At the bottom of the cart screen or checkout screen

Example (in English)

Please Note:

Import duties, taxes, and charges are not included in the item price or shipping cost. These charges are the buyer's responsibility. Please check with your country's customs office to determine what these additional costs will be prior to buying.

(English translation: Import duties, taxes, and fees are not included in the product price or shipping costs. These costs are the responsibility of the buyer. Please check with customs in your country before purchasing.)

Summary | Choose the DDU or DDP that suits your business

DDU and DDP each have clear advantages and disadvantages.

• Initial: Low-risk, low-cost operation with DDU

• After growth: Optimize customer experience (CX) with DDP and increase purchase rates

Shopify's strength lies in its ability to flexibly change this setting for each market (country). A small start like 'Let's try DDP only in the U.S. first' is also possible.

Choose the optimal customs response according to your company's growth phase and resources, and connect it to the success of cross-border e-commerce.