EXW vs FOB vs DDP for Amazon Sellers (with Landed Cost Math)

Posted by

Eric

August 17, 2025

On August 17, 2025

Choosing the wrong Incoterm can cost Amazon sellers thousands in unexpected fees and delays. We’ll break down EXW, FOB, and DDP terms with real landed cost calculations to help you choose the most profitable option for your FBA shipments from China. We reply within one business day to help you optimize your shipping terms and avoid costly surprises.

What Are Incoterms and Why They Matter for Amazon FBA

Incoterms® are internationally recognized terms that clarify the tasks, costs, and risks for buyers and sellers in transactions. For Amazon sellers, the wrong choice can mean surprise customs bills, delayed shipments, or paying double for services you thought were included.

Current Incoterms Rules: The current standard is Incoterms® 2020, though trading partners can still use Incoterms® 2010 if they specify this in their contracts. Always clarify which version applies to avoid misunderstandings.

The three most common terms for China-to-FBA shipping are:

EXW (Ex Works): You handle everything from the factory door
FOB (Free on Board): Supplier handles export, you handle import
DDP (Delivered Duty Paid): Supplier handles everything to your door

We help Amazon sellers navigate these terms and coordinate with reliable logistics partners to ensure smooth, cost-effective shipping.

EXW (Ex Works): Maximum Control, Maximum Responsibility

What EXW Means

Under EXW terms, your supplier’s responsibility ends when they make goods available at their factory. You arrange and pay for everything: domestic transport in China, export clearance, ocean freight, customs clearance, and delivery to Amazon warehouses.

Who Pays What Under EXW

Supplier pays: Manufacturing costs only
You pay: Factory pickup, export clearance, freight, customs duties, taxes, delivery to FBA

EXW Pros for Amazon Sellers

Lowest quoted product price from suppliers
Full control over logistics and service quality
Direct relationships with freight forwarders
Better visibility into actual shipping costs
Ability to consolidate multiple suppliers’ goods

EXW Cons for Amazon Sellers

Requires logistics expertise or reliable partners
More moving parts mean more potential delays
You assume all shipping risks from factory gate
Need export license capabilities in China
Responsibility for Chinese domestic transport and export procedures

When EXW Makes Sense

Choose EXW when you have reliable logistics partners in China, ship regular volumes (typically 500+ units monthly), and want maximum control over your supply chain costs. We coordinate EXW shipments with trusted partners and provide real-time tracking throughout the process.

Practical note for China: If your supplier must handle export clearance, consider FCA (Factory) instead of EXW. With FCA, you still control main carriage, but export clearance is handled properly by the party with the export license.

FOB (Free on Board): Balanced Risk and Responsibility

What FOB Means

FOB terms mean the supplier delivers goods to a named port and loads them onto the vessel. Risk transfers to the buyer once goods are loaded on board the ship. Your supplier handles everything in China including export clearance, while you manage ocean freight, customs, and final delivery.

Who Pays What Under FOB

Supplier pays: Manufacturing, domestic transport to port, export clearance, loading charges
You pay: Ocean freight, marine insurance, customs duties, taxes, delivery to FBA warehouses

FOB Pros for Amazon Sellers

Supplier handles complex Chinese export procedures
Clear risk transfer point reduces disputes
You control ocean freight selection and timing
Standard term most suppliers understand well
Good balance of cost and convenience

FOB Cons for Amazon Sellers

Still requires customs clearance expertise
Ocean freight costs can fluctuate significantly
Risk transfers once goods are loaded on ship
May need separate relationships with US customs brokers
Less control over loading quality and timing

When FOB Makes Sense

FOB works well for sellers with moderate volumes (200-1,000 units monthly) who want suppliers to handle Chinese logistics but maintain control over international shipping and customs clearance. We help verify FOB terms and coordinate with established customs brokers for smooth clearance.

DDP (Delivered Duty Paid): Maximum Convenience, Highest Cost

What DDP Means

Under DDP terms, your supplier delivers goods to your specified destination with all costs and risks covered. The seller is responsible for clearing goods through customs in the buyer’s country, including paying duties and taxes and obtaining necessary authorizations.

Who Pays What Under DDP

Supplier pays: Manufacturing, all transport costs, export clearance, ocean freight, customs duties, taxes, delivery to FBA
You pay: Only the agreed DDP unit price

DDP Pros for Amazon Sellers

Simplest option with single point of responsibility
Predictable landed costs for budgeting
Supplier assumes all shipping risks and delays
No need for logistics partners or customs expertise
Single invoice simplifies accounting

DDP Cons for Amazon Sellers

Highest per-unit cost structure
Less control over shipping methods and timing
Hidden markup on freight and duties (typically 15-25%)
Supplier may use cheaper, slower shipping options
Can involve significant risks if suppliers don’t understand destination country regulations

When DDP Makes Sense

Choose DDP for smaller volumes (under 200 units monthly), new sellers without logistics experience, or when cash flow predictability outweighs cost optimization. We audit DDP quotes to ensure reasonable pricing and verify suppliers’ capabilities. DDP insurance coverage is usually included by the seller—verify coverage levels and claims procedures.

DDP reality check: True DDP requires the seller to act (or appoint) the Importer of Record, use valid tax IDs/EIN, and engage a licensed customs broker. Many quotes labeled “DDP” are actually DAP (duties/taxes excluded) or omit Amazon delivery appointments. Courier-style “DDP” relying on Section 321 (<$800 de minimis) has value/volume limits and compliance risks. We verify IOR, brokerage, duties/taxes inclusion, and FBA appointment coverage before you sign.

Landed Cost Calculation: Real Numbers Comparison

Let’s calculate the true landed cost for a 1,000-unit shipment of wireless headphones from Shenzhen to Amazon FBA in Los Angeles.

Illustrative only: Rates, surcharges, MPF/HMF thresholds, and Section 301 tariffs change. We model your current lane with up-to-date broker data.

Base Assumptions

Product FOB price: $12.00 per unit
Total weight: 500kg
Total volume: 2 cubic meters
HS code: 8518.30 (illustrative duty rate: 6.5%)
Import value: $12,000

EXW Calculation

Product cost (EXW): $11.50 × 1,000 = $11,500
Factory to port transport: $200
Export clearance & documentation: $250
Origin THC/doc fees: $120
Ocean freight (LCL): $900
Marine insurance (0.2% of value): $25
ISF filing: $35
Customs bond (single-entry): $75
Customs clearance: $400
Import duties (6.5% of $12,000): $780
MPF (0.3464% of $12,000; CBP min/max apply): $42
HMF (0.125% of $12,000): $15
Section 301 (if applicable): $0
Destination drayage/chassis: $260
FBA delivery appointment/handling: $95
Total landed cost: $14,697
Cost per unit: $14.70

FOB Calculation

Product cost (FOB): $12.00 × 1,000 = $12,000
Ocean freight (LCL): $900
Marine insurance (0.2% of value): $25
ISF filing: $35
Customs bond (single-entry): $75
Customs clearance: $400
Import duties (6.5% of $12,000): $780
MPF (0.3464% of $12,000; CBP min/max apply): $42
HMF (0.125% of $12,000): $15
Section 301 (if applicable): $0
Destination drayage/chassis: $260
FBA delivery appointment/handling: $95
Total landed cost: $14,627
Cost per unit: $14.63

DDP Calculation

Product cost (DDP): $15.40 × 1,000 = $15,400
Total landed cost: $15,400
Cost per unit: $15.40

Cost Comparison Summary

Incoterm	Cost per Unit	Total for 1,000 Units	Difference vs EXW
EXW	$14.70	$14,697	Baseline
FOB	$14.63	$14,627	-$70 (-0.5%)
DDP	$15.40	$15,400	+$703 (+4.8%)

Section 301 sensitivity: If Section 301 tariffs apply at 7.5%, add ~$0.90/unit; at 25%, add ~$3.00/unit (illustrative).

Note: These calculations use current average rates. Actual costs vary based on specific products, routes, and market conditions. We provide customized cost analyses based on your specific products and volumes.

Incoterm Responsibilities Matrix

Cost/Risk Element	EXW (Buyer/Seller)	FOB (Buyer/Seller)	DDP (Buyer/Seller)
Factory pickup (China)	Buyer / –	– / Seller	– / Seller
Export customs & documents (China)	Buyer / –	– / Seller	– / Seller
Origin THC / terminal & doc fees	Buyer / –	– / Seller	– / Seller
Main carriage (ocean/air)	Buyer / –	Buyer / –	– / Seller
Cargo insurance	Buyer / –	Buyer / –	(Usually Seller—verify)
ISF/AMS filing (US ocean)	Buyer / –	Buyer / –	– / Seller
Customs bond (US)	Buyer / –	Buyer / –	– / Seller
Duties / Section 301 (if applicable)	Buyer / –	Buyer / –	– / Seller
MPF / HMF (US ocean imports)	Buyer / –	Buyer / –	– / Seller
Drayage/LTL to FBA + appointments	Buyer / –	Buyer / –	– / Seller
Importer of Record	Buyer / –	Buyer / –	– / Seller

Contract terms prevail; we verify inclusions line-by-line before booking.

Risk Profile and Insurance Considerations

Risk Transfer Points

EXW: Risk transfers at factory gate
FOB: Risk transfers when goods are on board the vessel at the port of shipment (Incoterms® 2020)
DDP: Risk remains with supplier until delivery to you

Insurance Requirements

Under EXW and FOB, you should arrange cargo insurance. Typical costs run 0.1-0.3% of shipment value. DDP shipments may include insurance, but verify coverage levels and claim procedures with your supplier.

Compliance and Filing Requirements

Late or incorrect ISF filings may incur penalties; we coordinate on-time submissions with your customs broker.

Liability for Delays

EXW/FOB: You bear costs of shipping delays affecting FBA delivery appointments
DDP: Supplier typically responsible for delay costs, but verify contract terms

We coordinate appropriate insurance coverage and help establish clear liability terms regardless of your chosen Incoterm.

Decision Framework: Which Incoterm to Choose

Choose EXW When:

Monthly order volume exceeds 500 units
You have established logistics partners in China
Cost optimization is priority over convenience
You want maximum supply chain visibility
You’re consolidating from multiple suppliers

Choose FOB When:

Monthly volume is 200-1,000 units
You prefer suppliers handle Chinese export procedures
You have US customs clearance capabilities
You want balanced cost and control
Standard shipping routes and products

Choose DDP When:

Monthly volume is under 200 units
You’re new to importing or lack logistics experience
Cash flow predictability outweighs cost savings
You want single-vendor simplicity
Complex products requiring specialized handling

Negotiation Strategies by Incoterm

EXW Negotiations

Request detailed breakdown of what’s included in the EXW price. Ensure the price truly reflects factory-gate pickup and doesn’t include hidden domestic transport costs. Verify loading procedures and packaging standards.

FOB Negotiations

Clarify the exact FOB port (Shanghai, Shenzhen, etc.) and what loading services are included. Some suppliers quote “FOB” but exclude port handling charges or container loading fees. Specify loading supervision requirements.

DDP Negotiations

Ask for separate quotes showing freight, duty, and delivery components. This helps you understand the markup and negotiate more effectively on future orders. Verify customs clearance capabilities and delivery coordination.

We provide detailed cost breakdowns and negotiate transparent pricing regardless of your chosen Incoterm.

Must vs. Nice-to-Have: Requirements by Incoterm

Requirement	EXW	FOB	DDP
Chinese logistics partner	Must	Nice	Optional
Export license capability	Must	Optional	Optional
US customs broker	Must	Must	Optional
Freight forwarder	Must	Must	Optional
Marine insurance	Must	Must	Usually seller—verify coverage & claims
FBA delivery coordination	Must	Must	Verify

Common Pitfalls and How We Help You Avoid Them

Hidden Costs and Markup

Many suppliers quote attractive prices but exclude essential services. We provide detailed cost breakdowns and identify hidden fees before you commit.

Customs Classification Issues

Incorrect HS codes can result in higher duties or customs delays. Verify product classification independently, especially for DDP shipments where suppliers may use incorrect codes. We validate classifications and coordinate with experienced customs brokers.

Delivery Appointment Challenges

Amazon FBA has strict delivery appointment requirements. Ensure your chosen Incoterm includes coordination of delivery appointments, or arrange this separately. We coordinate FBA delivery appointments and ensure compliance with Amazon’s requirements.

Currency and Payment Terms

Different Incoterms affect payment timing and currency exposure. EXW typically requires faster payment, while DDP may offer more flexible terms. We help structure payment terms that optimize your cash flow while maintaining supplier relationships.

Quality Control Integration

Consider how your chosen Incoterm affects quality control and inspection standards timing and coordination. We integrate QC checkpoints regardless of shipping terms.

Cost Transparency

Understanding sourcing agent fees helps you evaluate true DDP markups versus managing logistics independently. We provide transparent fee structures for all services.

Downloadable Landed Cost Calculator

We provide customized spreadsheet calculators that help you compare landed costs across different Incoterms based on your specific product and volume parameters. Our calculators include:

Current freight rates and duty calculations
Risk adjustment factors
Break-even analysis for switching between terms
Volume discount thresholds
Cash flow impact analysis

Frequently Asked Questions.

What is the most cost-effective Incoterm for Amazon FBA sellers?

The most cost-effective Incoterm for Amazon sellers depends on shipment size:
EXW (Ex Works): Lowest landed cost but requires strong logistics knowledge
FOB (Free On Board): Best balance of cost and convenience for sellers shipping 200+ units monthly
DDP (Delivered Duty Paid): More expensive, but ideal for small volumes where simplicity is more important than savings
For most Amazon FBA sellers, FOB provides the best long-term value.

Can I change Incoterms mid-relationship with a supplier?

Yes, you can change Incoterms with your supplier, but the new terms must be clearly documented in writing. Expect price adjustments if suppliers add or remove services from their quotes. We help sellers negotiate Incoterm changes and ensure smooth transitions without shipment delays.

Do DDP shipping prices include Amazon FBA delivery appointments?

Not automatically. Some suppliers include Amazon delivery appointments in their DDP quotes, while others require sellers to arrange this separately. Always confirm whether delivery appointments are covered before finalizing a DDP agreement. We ensure this is clearly outlined in all DDP arrangements.

How do Incoterms affect Amazon import taxes and duties?

Incoterms don’t change duty rates, but they define who pays them:
EXW & FOB: Buyer pays duties directly
DDP: Supplier pays duties, often with a 15–25% markup on actual costs
We provide transparent duty calculations and help minimize unnecessary tax costs for Amazon FBA sellers.

What happens if goods are damaged during shipping under different Incoterms?

Responsibility for damaged goods depends on risk transfer:
EXW: Buyer is responsible once goods leave the factory
FOB: Risk transfers when goods are loaded onto the vessel
DDP: Supplier is responsible until delivery to the Amazon warehouse
We always recommend appropriate shipping insurance to protect Amazon inventory.

Should I use the same Incoterm for all my Amazon products?

Not always. The best Incoterm depends on product type and volume:
EXW: Works well for high-volume, standardized products
DDP: Better for low-volume, specialty products where convenience is key
We analyze each product category and recommend the optimal shipping terms for Amazon sellers.

How do I verify a supplier’s ability to handle DDP for Amazon FBA?

To confirm DDP capabilities, ask suppliers for:
References from Amazon sellers they’ve served under DDP
Proof of customs broker and freight forwarder relationships
We audit supplier capabilities and connect sellers with qualified DDP partners.

Can suppliers refuse certain Incoterms like DDP?

Yes. Smaller suppliers often cannot handle DDP due to limited logistics networks or customs expertise. Always confirm a supplier’s capabilities early in sourcing discussions. We maintain a vetted supplier network capable of managing all Incoterm options.

How We Optimize Your Incoterm Strategy

We analyze your specific situation: product types → shipping volumes → current logistics capabilities → cost optimization targets → risk tolerance → cash flow requirements. Then we recommend the optimal Incoterm mix and coordinate with vetted logistics partners to execute seamlessly.

Our comprehensive approach ensures you get the best combination of cost, control, and convenience for your Amazon FBA business.

Ready to optimize your China-to-FBA shipping costs and eliminate surprises?

Get a Quote | Talk on WhatsApp

We reply within one business day.

Additional Resources:

Complete FBA sourcing from China guide covering supplier selection and logistics optimization
Compare logistics providers vs. freight forwarders for your shipping needs
Learn about FBA prep requirements from China to ensure smooth delivery
US Customs basics (CBP) for import regulations and procedures

This guide is informational only and does not constitute legal or tax advice. Always confirm classifications, duties, and filings with a licensed customs broker.