Landed cost
Understand how landed cost works and how to apply them to orders.
Landed cost represents the total amount your customer must pay to purchase a physical product from one country and have it shipped to an address in another country. It includes international shipping, taxes, and relevant taxes and duties.
A cross-border transaction often incurs additional duties that are not displayed to the customer at the time of checkout. The customer, however, is still responsible for paying these hidden costs when the order arrives at its destination.
You can use the Digital River landed cost feature to present customers with the full cost of international orders, thereby minimizing customs delays and unanticipated expenses at delivery.
Once configured, the feature is automatically triggered on applicable orders. For these orders, cross-border specific costs are calculated and built into the order total.
Landed cost is represented by several attributes at the cart or order level and the line-item level. These allow you to determine the total duty paid on the order and who remits the various taxes.
Digital River only supports landed cost mixed cart and landed cost with tax-inclusive pretty prices for the API solution. Digital River does not support landed cost mixed cart and landed cost with tax-inclusive pretty price integrating for the Global Commerce-hosted flow.
Tax-inclusive or tax-exclusive landed costs
Digital River allows you to configure tax-inclusive or tax-exclusive landed costs for the price list and shipping cost. When you set the shipping cost and price list to tax-inclusive, the shipping and product prices will be the final price for the order. The following table describes the differences between tax-inclusive and tax-exclusive landed costs.
| Tax-inclusive landed cost with pretty price | Tax-exclusive landed cost |
|---|---|
Digital River converts tax-inclusive pretty prices for products into tax-exclusive prices for landed cost calculation. | Configure the tax-exclusive product price in Global Commerce for the Landed Cost calculation. |
Digital River converts a tax-inclusive shipping price to a tax-exclusive price for Landed Cost calculation. | Configure the tax-exclusive product price in Global Commerce for the Landed Cost calculation. |
If the order is eligible for landed cost, Digital River will calculate the landed cost for the product. | Digital River uses the tax-exclusive product price and tax-exclusive shipping cost numbers to calculate the landed cost together, with no separate landed cost for shipping cost and product. |
If the order is eligible for landed cost, Digital River will calculate the landed cost for shipping. | Digital River uses the tax-exclusive product price and tax-exclusive shipping cost numbers to calculate the landed cost together, with no separate landed cost for shipping cost and product. |
European Union considerations
Shipments from one EU member state to another EU member state are not considered cross-border as EU regulations permit transportation between member states without the need for customs control and payment of duties.
Configuring landed cost
The landed cost feature is available to anyone integrating with the Commerce API. Whether you orchestrate your fulfillment or delegate the responsibility to Digital River, this is true. Once correctly configured, the Digital River landed cost feature automatically calculates and collects the total landed cost of every applicable order.
To activate this feature, contact your Customer Success Manager.
You'll need to complete the following steps before you configure landed cost:
Verify your fulfiller ships packages outside their country (not all fulfillers provide this service).
Verify your shipper is willing and able to prepay the landed cost on behalf of the customer and then send the invoice to you.
Sign an addendum in your Digital River contract to enable landed cost.
For each product in your catalog eligible for cross-border shipping, specify the correct Harmonized System code when creating or updating the product. An incorrect Harmonized System code may result in an inaccurate landed cost calculation.
Define the cross-border patterns (ship-to or ship-from countries) where you want to enable the landed cost feature. Digital River must support these ship-to countries and cannot include embargoed nations.
Provide samples of completed customs forms to Digital River's Compliance department for approval.
Provide your account manager with a list of the ship from and ship to countries for which you want to enable the collection of landed costs. Before you use the Landed Cost resource, Digital River must enable landed costs. The Landed Cost Shipment Method won't appear in Global Commerce if the landed cost is not turned on.
Enabling the landed costs in Global Commerce
You need the Account Manager role in Global Commerce to perform this task.
To enable landed costs for your site from Global Commerce:
Sign in to Global Commerce.
Select Administration, select Site, and click Configure Site Settings.
Select Enabled and then click Save.
Setting the price list to tax-inclusive or tax-exclusive
You need the Pricing Manager role to perform this task.
You must set the price list to tax inclusive (includes VAT) or tax exclusive (excludes VAT) in Global Commerce to use the landed cost feature. When you set the price list to tax exclusive or tax inclusive, the shippingAndHandling value is also tax exclusive or tax inclusive.
Select Catalog, Pricing & Plans, and click Manage Price Lists. The Price Lists page appears.
Click the link for the price list under the Name column. The Price List Details page appears.
Scroll down to Currencies and click Edit. The Edit Price List Currency page appears.
Select the currency you want to modify from the Currency drop-down list.
Choose one of the following options from the Prices Include Value Added Tax (VAT) drop-down list.
Select Yes to include VAT in the prices.
Select No to exclude VAT in the prices.
Click Save.
Setting the shipping cost to tax-inclusive or tax-exclusive
When configuring your site settings in Global Commerce, you must configure the shipping cost as tax-inclusive or tax-exclusive. When you turn on the Input Tax-Inclusive Shipping Cost toggle, it will follow the tax-inclusive/exclusive settings of the currency in the price list. For example, if you set USD as tax-exclusive and TWD as tax-inclusive, turning on Input Tax-Inclusive Shipping Cost will make the shipping cost for USD tax-exclusive and TWD tax-inclusive. Turning off the Tax-Inclusive Shipping Cost toggle will make the shipping cost for both USD and TWD tax-exclusive.
Select Administration, select Site, and then click Configure Site Settings. The Configure Site Settings page appears.
Click the Features tab and scroll down to Input Tax-Inclusive Shipping Cost.
Choose one of the following options for Tax-inclusive Shipping.
Toggle Tax-Inclusive Shipping to On to enable the tax-inclusive shipping cost.
Toggle Tax-Inclusive Shipping to Off to enable tax-exclusive shipping cost.
Click Save.
Creating a product for landed costs
When creating a product for landed costs in Global Commerce, from the Product Settings step, you must:
Select the Product Classification Type under Export Controls.
Select the appropriate product classification from the list.
When creating the product, specify the correct Harmonized System code in the Harmonized Tariff Schedule/Schedule B Number field. Note: An incorrect Harmonized System code may result in an inaccurate landed cost calculation.
Complete the physical settings under Physical.
Select the Enable Landed Cost checkbox.
Complete the fields under Product Fulfillers.
Triggering the landed cost feature
Once you have successfully configured the feature, landed cost is calculated on orders where the physical products are shipped across international borders to an approved country. The exception is the European Union, where shipments between countries are exempt from duties.
More precisely, landed cost is automatically calculated when you submit a POST/carts request, and all of the following conditions exist:
Follow the guidelines for mixed cart scenarios for a mixed cart order containing physical and digital products.
The ship-from country and the ship-to country are different.
An EU country is the ship-from country, and a non-EU country is the ship-to country. Note: Digital River does not support landed costs when shipping within the EU.
The ship-to country is on our approved list.
Product and shipping choice prices are provided in the request, and these values include any applied discounts.
Each product in the order contains a Harmonized System code registered in our system.
The landed cost feature supports mixed cart orders. If a physical product is not eligible for landed cost calculation, the entire order will not qualify for landed cost.
Calculating landed cost
Digital River makes an API call to a third-party service to calculate landed costs on applicable orders. For each call to the service, we assess a fee. This fee is in addition to the other license or transaction fees that you may incur.
Collecting landed cost
In the response, we provide an itemized breakdown of the duties and taxes comprising the landed cost and build these individual costs into the order total. Since your customers ultimately pay the full landed cost, we recommend you display this cost breakdown to them on your storefront.
Once the cart is submitted, your fulfiller relays it to your shipper, who completes the customs paperwork, ships the package to the destination country, and pays the duties and import taxes on the customer's behalf. The shipper then invoices you the shipping costs.
Handling calculation failures
A landed cost calculation may fail for several reasons. For example, a customer may attempt to ship a product to an embargoed country, or you might have improperly formatted the Harmonized System codes associated with the product. The third-party landed cost calculation service may be unavailable in certain situations.
Refunding landed cost
For orders with landed costs, if you need to reverse the charges, we support full refunds of the importer tax. If you want to offer partial refunds, contact your account representative.
How Digital River represents landed cost
The following tables list the landed cost parameters. Note that you are responsible for remitting the duty and the importer of record tax on behalf of the customer.
Cart or order-level attributes
| Attributes | Type | Description |
|---|---|---|
| The state of landed cost. | |
| object | The sum of import taxes and duties for all line items. |
| The sum of import taxes and duties in locale currency format (for example, USD 19.14). | |
| object | The shipping and handling fee is tax exclusive and applied against the product and the shipping cost. |
Line-item level attributes
| Attributes | Definition | Description |
|---|---|---|
| Object | VAT or other sales tax accessed on the transaction. |
| The VAT or other sales tax accessed on the transaction in locale currency format (for example, USD 7.56) | |
| Object | When a customer purchases products online, one or more of the products may not originate in the country the customer resides in, and therefore are subject to a customs duty when transported across international borders. When goods are not shipped domestically (within the customer’s country) or within a single customs union, such as the European Union, the customer is liable to pay any inbound duties which the customer’s local customs authority deems appropriate. |
| The sum of duties in a locale currency format (for example, USD 5.29). |
Landed cost state
A cart or an order has a landedCostState attribute that provides information about the status of landed cost.
The customer must prepay the landed cost.
Digital River automatically calculates the landed cost and includes it in the Cart or Order when the landed cost is PREPAID.
Landed cost state enumerations for the Cart API
The landedCostState of the cart is enumerated by the following values:
NOT_ELIGIBLE–The current cart is not eligible for landed cost calculation.PREPAID–The current cart is eligible for landed cost calculation, and the landed cost will be prepaid.VIEWED_NOT_ELIGIBLE–The landed cost state wasELIGIBLEorPREPAID, then became not eligible due to a change in the order that triggered the status to change toVIEWED_NOT_ELIGIBLE. For example, the customer changed their shipping address, added a line item, or removed a line item.ERROR–Failed to calculate landed cost. This occurs when the integration service is unavailable.
Landed cost state enumerations for the Order API
The landedCostState of the order is enumerated by the following values:
NOT_ELIGIBLE–The landed cost for the requisition is not prepaid.PREPAID–The landed cost for the requisition was prepaid.VIEWED_NOT_ELIGIBLE–The landed cost for the requisition is not prepaid.ERROR–The landed cost for the requisition is not prepaid.
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