Landed costs

Understand how landed costs work and how to apply them to orders.

Landed cost represents the total amount your customer must pay to purchase a product from one country and have it shipped to another country. It usually refers to the cost of international shipping, plus relevant taxes, duties, and fees.

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 both customs delays and unanticipated expenses at the time of 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 both the order-level and the item-level. These allow you to determine the total duty paid on the order as well as who remits the various taxes.

Digital River’s landed cost feature

The Digital River landed cost feature, once you have it correctly configured, automatically calculates and collects the full landed cost of every applicable order.

The landed cost feature is available to anyone who integrates with the Digital River API. This is true whether you orchestrate your own fulfillment or delegate the responsibility to Digital River.

Configuring the landed cost feature

To configure the landed cost feature, you'll need to complete the following steps:

  1. Verify your fulfiller ships packages outside their country (not all fulfillers provide this service).

  2. Verify your shipper is willing and able to prepay the landed cost on behalf of the customer and then send the invoice to you.

  3. Sign an addendum in your Digital River contract to enable the landed cost feature.

  4. For each product in your catalog that is eligible for cross-border shipping, specify the Harmonized System code when creating new SKUs or performing update or upsert operations on existing SKUs.

  5. Define your cross-border patterns (that is, the ship-to countries) where you want to enable the landed cost feature. These ship-to countries must be supported by Digital River and cannot include embargoed nations.

  6. Provide samples of completed customs forms to Digital River's compliance team for approval.

  7. 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 cost.

Triggering the landed cost feature

Once you have successfully configured the feature, landed cost is calculated on orders where 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 create or update a Checkout and all of the following conditions exist:

The landed cost feature does not support mixed cart checkouts. If some items are eligible for landed cost calculation, but others are not, your integration will need to create multiple orders.

Additionally, the price of the items you add to landed cost checkouts should be tax exclusive. As a result, when configuring taxes on the checkout you should set taxInclusive to false.

Calculating landed cost

In order to calculate landed cost on applicable orders, Digital River makes an API call to a third-party service. For each call to this service, we assess you 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 you an itemized breakdown of the duties, fees, and taxes that comprise 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 order 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 behalf of your customer. The shipper then invoices you for these costs.

Handling calculation failures

A landed cost calculation may fail for a number of 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 SKU. Additionally, in certain situations, the third-party landed cost calculation service may be unavailable.

Refunding landed cost

For orders with landed cost, if you need to reverse the charges, we only support full refunds of the importer tax.

How landed cost is represented

In versions 2020-09-30 and earlier, landed cost is represented by totalDuty and importerOfRecordTax.

When an order triggers the landed cost feature, the individual costs are represented by several attributes at both the order-level and the item-level. You can use these attributes to determine the duty paid on the order and to distinguish between taxes Digital River remits and those remitted by the shipper.

Order-level attributes

In both the Checkout and Order resources, when importerOfRecordTax returns true, it indicates that the landed cost feature was triggered and landed cost is calculated and collected. The totalImporterTax then represents how much taxes the importer of record remits to the government.

However, in these cases, totalDuty is not always greater than zero, since it depends on whether the importing country levies duties on the order.

The totalTax attribute represents taxes that Digital River remits to the government. As a result, its value does not include the totalImporterTax. Those taxes are remitted to the government by your shipper. So this means that the subtotal of an order includes totalImporterTax but does not include totalTax.

Item-level attributes

For each element in the items array, two landed cost related attributes may be returned when the landed cost feature is triggered. The first,importerTax.amount, represents how much taxes the importer of record pays on all quantities of this line item. The second, duties.amount, indicates the amount of duty levied by the importing country for the line item.