The landed-cost playbook for DTC brands

This report summary uses illustrative placeholder data. Duty and tax rules change often and vary by product. Check current rules before acting on any figure here.

Executive summary

Landed cost is the full price a shopper pays to receive an order from abroad: the item, shipping, insurance, import duty, import taxes and any fees. When a seller shows only part of it at checkout, the rest arrives later as a surprise.

This playbook is written for direct-to-consumer brands selling across borders. It explains how each component is calculated, compares rules in 12 markets, and sets out a four-stage plan for moving from duties-unpaid shipping to a duty-inclusive checkout.

The core argument is simple. Showing landed cost at checkout tends to cost a little conversion at the payment step and save a lot further down the funnel, in refused parcels, support contacts and disputes.

Key findings

All figures are illustrative.

1. Most of the surprise is tax, not duty. Across the 12 markets, import VAT or GST made up on average 68% of the amount due on delivery for a typical apparel order. Duty rates matter, but tax is the larger number and applies far more broadly.

2. De minimis thresholds are moving down. Several markets have lowered or removed the value below which imports are free of duty or tax. Plans built on a threshold need a review date.

3. Classification errors are the main source of cost. In a sample of 400 product listings, 17% carried an HS code that would produce the wrong duty rate in at least one market. Most errors were at the six-digit level, not the national extension.

4. Origin rules are often left on the table. Products that qualify under a trade agreement can enter at a reduced or zero rate, but only with the right origin declaration. Half of the brands we spoke to had not checked eligibility.

5. Returns are where duty is lost. Many markets allow duty to be reclaimed on returned goods. Few brands had a process to do it.

The four-stage plan

The playbook sets out a sequence that most brands can follow over two to three quarters:

1. Classify. Assign a verified HS code and country of origin to every product.
2. Calculate. Show an estimate of duty and tax at checkout, even if the shopper still pays on delivery.
3. Collect. Move your top markets to duty-paid shipping, collecting the full amount at checkout.
4. Reclaim. Set up duty drawback or refund processes for returns.

Each stage reduces surprise on its own, so you can stop at any point and still be better off.

What's in the full report

The full 32-page playbook, in four chapters, includes:

• Chapter 1: The components. How customs value is set, what goes into it, and how duty and tax stack.
• Chapter 2: Twelve markets. A table for each market with tax rate, de minimis threshold, registration options and common pitfalls, including Germany, the United Kingdom, Japan, Mexico and Brazil.
• Chapter 3: Checkout design. How to display duties and taxes, with worked examples and wording you can adapt.
• Chapter 4: Operations. Classification workflows, carrier and broker hand-offs, returns and reclaim.

Related reading

• Landed Cost and Trade Compliance
• Pricing duties at checkout: DDP or DAP
• Estimate a sample order with the pricing calculator