Incoterms B2B Transport Guide
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Stress-Free B2B Shipping: A Retailer's Simple Guide to Incoterms (EXW vs. DDP)
In the world of international B2B trade, the excitement of sourcing the perfect stock can quickly fade when faced with complex terms like "EXW" or "DDP." These acronyms, known as Incoterms, define a critical point in any transaction: who is responsible for the merchandise, who pays for shipping, and most importantly, who bears the risk.
Understanding these terms isn't just a technicality—it's essential for accurately calculating your profit margins and avoiding hidden costs that can turn a great deal into a loss. In this guide, we'll translate the most important Incoterms into simple language so you can make informed and secure business decisions.
What Are Incoterms and Why Should You Care?
In short, Incoterms are a set of globally recognized, standard rules that define the responsibilities of sellers and buyers in international trade. They clarify the exact moment that the risk for the merchandise transfers from one party to the other. For a retailer, ignoring these terms is like signing a contract without reading it.
EXW (Ex Works) – "At the Factory Gate"
This is by far the most common term you will encounter in the B2B off-price stock market.
What it means: The seller's (supplier's) responsibility ends the moment they make the goods available to you at their warehouse or factory gate.
Who arranges and pays for shipping: You, the buyer. You must arrange and pay for the courier to pick up the merchandise.
Who bears the risk: You, the buyer, from the second your courier has picked up the packages. If the shipment is lost or damaged in transit, it is your responsibility (and that of your shipping insurance).
Why is it used so often? Because it allows suppliers to offer the lowest possible price for the product itself, completely removing the cost and complexity of logistics from their calculation.
DDP (Delivered Duty Paid) – "Delivered with All Taxes Paid"
This is the opposite of EXW. It's the most comfortable, but also the rarest, term for a buyer.
What it means: The seller's (supplier's) responsibility only ends when the merchandise arrives at your final address, with all taxes (including customs duties, if applicable) already paid.
Who arranges and pays for shipping: The seller. They handle absolutely everything.
Who bears the risk: The seller, throughout the entire shipping process, right to your door.
Why is it rare in B2B off-price? Because it involves much higher costs and risks for the supplier, which they would typically include in the product price, making the offer less competitive.
The Strategic Conclusion for a Smart Buyer
Understanding the difference between EXW and DDP is essential. Most "bombshell" offers with very low prices will most likely come with the EXW term. You shouldn't be afraid of this. On the contrary, it gives you flexibility and control—you can choose your preferred courier and negotiate better rates.
The key is to never forget to add the estimated cost of shipping and insurance to the purchase price of the merchandise to accurately calculate your final profit margin.
"Managing international logistics can be complex. At Bridge Int. Trade, our role doesn't end once you've found the perfect stock. We offer consulting and support to our partners to ensure the entire process, from the factory gate in Italy to your store's door, is as smooth and efficient as possible."