Two ecommerce brands sell the same products and pay the same duty rates. One grows profitably with strong cash flow. The other struggles with capital constraints and inconsistent international conversions.
The difference is not what they pay in duties. It is when they pay them.
Most brands obsess over duty rates. They spend months reviewing HS codes and chasing trade agreement savings. Meanwhile, they ignore a far bigger driver of cost and growth. Duty timing. When duties are paid in the transaction lifecycle determines cash flow, conversion rate, and customer experience.
In cross-border ecommerce, timing often matters more than rate. Yet almost no one talks about it.
Duty rates are the percentages governments charge on imported goods. They are based on Harmonized System codes, country of origin, material composition, and trade agreements.
Tariffs are not the same as duty rates. Tariffs are temporary surcharges created by trade actions like Section 301. Both apply on top of each other and both increase cost. Neither changes frequently enough to meaningfully improve margin for most brands.
There are advanced strategies that reduce landed cost. First Sale methodology and multi-tier valuation can lower the dutiable value for brands with large, stable sourcing volumes. Better product classification can also save a few points.
These strategies require legal review, operational stability, and significant volume. They usually deliver small, incremental improvements.
For most brands, optimizing duty rates is not the lever that changes the business.
Duty timing refers to when duties are paid relative to production and sales. This timing model directly shapes working capital, checkout experience, and replenishment speed.
There are three common timing models.
1. Delivery Duties Paid (DDP)
DDP calculates and collects duties at checkout. The customer pays the full landed cost upfront. The brand pays the duties before the shipment moves.
DDP offers clear benefits.
Its challenge is cash flow. Under traditional imports, DDP often requires paying duties sixty to ninety days before products sell. For high-AOV or high-duty categories, the early payment becomes a major capital drain.
Many brands love the conversion lift but struggle with the cash flow burden.
2. Delivery Duties Unpaid (DDU or DAP)
DDU collects duties at delivery. Customers do not know the true cost until the doorstep.
Brands choose DDU to avoid paying duties early, but the trade-offs are significant.
The apparent savings rarely outweigh the friction.
3. Deferred payment (Direct fulfillment)
Duties are paid only when a unit sells. Inventory stays overseas and shipments move directly from factory to customer.
This model keeps the conversion benefits of DDP while removing early duty payment. It requires three elements working together.
This is the model Portless enables, and the model that produces the best balance of cash flow, conversion, and operational simplicity for most DTC brands.
1. Cart Abandonment from Cost Uncertainty
Extra fees like shipping, taxes, and duties create the second-highest cart abandonment rate at 39%. When brands use DDU, customers see a low price at checkout but have no idea what they will owe at delivery.
That uncertainty destroys conversions.
A brand with 1,000 monthly international visitors and a 30 percent abandonment rate tied to unclear duties loses about 300 orders at a 100 dollar AOV. That is 30,000 dollars per month or 360,000 dollars per year.
DDP fixes this immediately by showing the full landed cost upfront.
Suggested reading: How to calculate landed cost
Traditional import models require duties to be paid long before a unit sells. A $100,000 shipment at a 25% duty rate requires wiring $25,000 months before revenue arrives.
That money sits idle as inventory moves from factory to warehouse to carrier to customer. During this period, brands cannot reorder bestsellers or invest in growth.
Direct fulfillment flips the cash cycle. Duties are paid per order. Cash returns in days, not months.
This shift helped &Collar move from 5% in stock to nearly 100% on hero SKUs during peak season, driving a 35% year-over-year lift during Father’s Day.
Unexpected duty invoices at the door instantly erode trust. Premium brands suffer most because customers expect a seamless experience.
DDP eliminates surprise fees and replaces frustration with predictability.
ShipperHQ notes that surprise fees significantly reduce repeat purchases.
DDU creates preventable operational chaos. Customer service teams must explain charges, handle refusals, and troubleshoot customs holds.
DDP shipments clear customs faster because duties are already paid. Refunds, reships, and international returns become far easier to manage.
The administrative burden alone often outweighs any apparent savings from DDU.
Choose duty timing over rate optimization when:
Choose rate optimization when:
Most sophisticated operators eventually optimize both timing and rates. Timing simply delivers faster and more universal gains for most DTC brands.
Improving duty timing starts with a clear audit.
Why this matters: It reveals how much money your current duty model is losing before you even ship a unit.
Why this matters: If duties are paid more than 30 days ahead of sales, timing is hurting your working capital.
Why this matters: Customers will tell you exactly where the duty process creates friction.
Run a controlled experiment.
Why this matters: Even a small test often produces double digit conversion gains.
Partners like Portless make DDP and direct fulfillment integration simple.
Traditional models force a painful trade-off. Pay all duties upfront and strangle your cash flow, or push duties to delivery and damage customer experience.
Direct fulfillment removes that tradeoff.
By storing inventory in an overseas facility and shipping directly to customers after each purchase, brands can offer DDP pricing without capital lockup. Duties are calculated and collected at checkout, but paid only when individual shipments clear customs.
Portless enables exactly this model. Brands gain:
This model helped &Collar onboard in less than 30 days and recover an entire peak season that would have otherwise been lost.
Research from Hurricane Commerce also shows that landed cost transparency reduces service tickets, increases repeat orders, and improves delivery reliability.
Ecommerce has entered a new era. With tariff volatility and rising cross-border complexity, brands can no longer afford to ignore duty timing.
Sometimes paying duties earlier saves money. But paying duties only when units sell almost always does.
Most brands focus on shaving a few points off duty rates while losing far more from cart abandonment, tied-up capital, and poor customer experience.
Do not be most brands. Run the timing audit. Quantify the real cost. Move to the payment model that protects both margin and cash flow.
The brands winning in global ecommerce are not paying lower duty rates. They are paying at the right moment.
Ready to fix your duty timing strategy?
Talk to our team and see how Portless optimizes timing for speed, margin, and cash flow.
