Landed cost
Understand landed cost and learn how to use Digital River's landed cost feature
Digital River's landed cost feature allows you to present customers with a transaction's landed cost during checkout.
Once you set up the landed cost feature, it's triggered when the necessary preconditions are met. After the feature is activated, Digital River's landed cost service generates a calculation, which we return to the checkouts so you can display it to customers.
What is landed cost?
Landed cost represents the total amount your customer must pay to purchase a product from one country and have it shipped to another country. Landed cost consists of:
The value of goods in a customer's cart
Shipping costs
Import duties
Taxes
Landed cost payment options
Customers have two options to pay a transaction's full landed cost:
For more information, refer to the shipping terms section on the Handling shipping choice page.
Delivered duty paid (DDP)
Delivered Duty Paid (DDP) is a shipping agreement where the seller assumes responsibility for all costs and risks associated with transporting goods until they reach the buyer's location. This includes paying for shipping, import duties, taxes, and any other fees. Under DDP, customers pay the full landed cost during checkout, ensuring no additional charges upon delivery.
Delivered at place (DAP)
In this option, customers do not pay the full landed cost during checkout. Instead, they pay product and shipping costs during checkouts, and then, upon an order's delivery, they're responsible for paying duties, fees, and import taxes.
Digital River’s landed cost feature
Digital River offers a landed cost feature that helps provide your customers with an estimated total cost of their order, including all applicable duties, fees, and import taxes. This estimate helps customers better understand the full cost of their purchase upfront. However, if the actual import costs assessed by the destination country's customs agency exceed the estimate, your company is responsible for covering the difference. The feature streamlines the process, as the fulfillment logistics provider coordinates with the shipper to handle customs documentation and pay the necessary duties, fees, and import taxes on behalf of the customer, billing the seller afterward.
Setting up the landed cost feature
The landed cost feature is available to anyone who integrates with the Digital River APIs. It's not dependent on the version you're using, how you send product data in checkouts, or who acts as your fulfillment coordinator.
Prior to using this feature, you need to complete the following steps:
Step one: Verify your fulfiller ships products outside of their country (not all fulfillers provide this service).
Step two: Determine whether your shipper is willing and able to prepay landed costs on behalf of the customer and invoice you for these costs.
Step three: Define your cross-border patterns (in other words, where your products ship from and where they ship to).
The ship-to countries must be supported by Digital River and cannot include embargoed nations. For more information, refer to our Country Guide.
Step four: Provide samples of completed customs forms, such as commercial invoices, to Digital River's compliance team for approval.
Step five: Sign an addendum in your Digital River contract to enable the landed cost feature (unless already specified in the order form).
Step six: Associate a Harmonized System (HS) code with each of your physical products. To do this, you can (1) set hsCode on the SKU (2) associate a SKU group with the SKU or (3) reference a SKU group in productDetails.
For more information, refer to:
The Grouping SKUs page
In this step, we recommend that you select either option two or three. These options allow you to:
Simplify the process of assigning and managing your products' HS codes.
Use country-specific HS tariff codes tailored to each transaction, which improves the accuracy of the landed cost calculation.
Triggering the landed cost feature
Once you perform the pre-deployment configurations, the landed cost is calculated during checkout. To successfully receive a landed cost calculation at run-time, the following preconditions must exist:
The checkout contains physical products
The checkout's physical products are associated with a Harmonized System code.
The checkout's
taxInclusiveflag must befalse.The checkout contains a
shippingChoice.amountand its value is inclusive of any applied discountsThe checkout's
shippingChoice.shippingTermsmust beDDP.The checkout's
shipTo.address.countryis on the approved listThe checkout's
shipFrom.address.countryandshipTo.address.countryare specified and the values are different. Since shipments between EU countries are exempt from duties, a checkout's ship from country and ship to country can't both be EU nations.
How landed cost is calculated
To calculate landed cost in applicable checkouts, Digital River sends an API request to a third-party service. Based on the data provided in the request, this service calculates taxes, duties, fees, and import taxes.
We use the values returned by this service to build a checkout's totalAmount. When you convert a checkout to an order, this is what the customer is ultimately charged
Calculation failures
If a customer attempts to ship a product to an embargoed country, then the checkout fails:
Additionally, on rare occasions, the third-party landed cost service may be unavailable or unable to generate a calculation. In these cases, no landed cost values are returned in the checkout.
How landed cost is represented in checkouts
In versions 2020-09-30 and earlier, landed cost is represented by totalDuty and importerOfRecordTax.
In checkouts that trigger the landed cost feature, we provide you with an itemized breakdown of taxes, duties, fees, and import taxes. Since your customers ultimately pay these costs, you should display them during checkout.
Numerous attributes at both the checkout and the line item levels contain the full landed cost. You can use this data to determine import duties and distinguish between taxes Digital River remits and those remitted by the shipper.
Checkout level attributes
A checkout's totalAmount is ultimately what the customer is charged when you convert a checkout to an order.
The totalAmount however may not represent the full landed cost of a transaction. That depends on how you configure a checkout's shippingChoice.shippingTerms.
If a checkout triggers the landed cost feature, then importerOfRecordTax returns true. In these cases, totalImporterTax indicates the tax amount that the importer of record remits to the government and totalDuty are duties levied on the products by the importing country.
Sometimes products in a cross-border transaction don't incur any duties. As a result, in checkouts that trigger the landed cost feature, totalDuty is not always greater than zero.
A checkout's totalTax represents taxes that Digital River remits to the government. Its value does not include totalImporterTax. Those taxes are remitted to the government by your shipper.
This means that a checkout's subtotal includes totalImporterTax but doesn't include totalTax.
Line item level attributes
In checkouts that trigger the landed cost feature, each element in items[] contains three landed cost-related attributes:
Importer tax amount
The importerTax.amount indicates the amount of taxes that the importer of record pays on all the products in this line item.
Duties amount
The duties.amount indicates the amount of duty levied by an importing country on all the products in this line item.
Tariff code
A tariffCode represents a product's country-specific Harmonized System code. This value is only returned if you're using SKU groups.
Landed cost calculations are based on this tariffCodeConsequently, it's often useful for troubleshooting purposes. For example, if cross-border duties presented to the customer during checkouts are later determined to be inaccurate, you can verify whether the correct code was applied to the product.
European Union cross-border threshold
In the European Union, a de minimis threshold, currently set at 150 EUR, determines whether (1) duties are collected on imported goods and (2) the buyer or seller is responsible for remittances.
In checkouts where goods are being shipped cross-border into the EU, Digital River’s tax service determines whether the aggregated, intrinsic price of its physical items[], excluding shippingChoice.amount, is (A) less than or equal to or (B) greater than this threshold.
Less than or equal to the threshold
If it’s less than or equal to the 150 EUR threshold, then:
totalDutyis0, because duties aren’t collected on what the EU considers to be low-value imports.Digital River Ireland Ltd., thesellingEntity.nameassigned to the transaction, is responsible for the remittance of value-added tax.totalTaxcontains the amount that this selling entity must remit, which is added to thetotalAmountthat the buyer pays.Each
items[]is assigned asellerTaxIdentifier, which represents Digital River’s Import One-Stop Shop registration number. After the checkout is converted to an order, this value should be added to the commercial invoice to ensure that buyers aren’t assessed taxes again by customs (i.e., double-charged).
Greater than the threshold
If the aggregated value of the imported goods is greater than the 150 EUR threshold, then:
Buyers are responsible for the remittance of tax and duty.
Assuming your account has the landed cost feature enabled and you don’t set the checkout’s
shippingChoice.shippingTermstoDAP, the amount that the buyer must remit is assigned tototalImporterTaxandtotalDuty.totalImporterTaxandtotalDutyare added tototalAmount, which meansDigital River Ireland Ltd., thesellingEntity.nameassigned to the transaction is collecting these costs in advance, on behalf of the buyer, and then remitting them later.
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