What is an incoterm?
An incoterm is a standardised trade term published by the International Chamber of Commerce which defines the responsibilities of buyers and sellers in international transactions.
Why are incoterms important in ecommerce?
For cross border ecommerce, incoterms clarify who is responsible for shipping costs, insurance, customs clearance, and import duties. This reduces disputes and confusion.
What are common incoterms used in ecommerce?
Examples include:
• DDP, where the seller covers all costs including duties
• FOB, where responsibility transfers at the shipping point
• CIF, where the seller covers cost, insurance, and freight
How do incoterms affect pricing?
They determine whether shipping, duties, and risk are included in the product price or passed to the customer at delivery.
What risks arise from incorrect use of incoterms?
Misunderstanding incoterms can lead to unexpected costs, delivery delays, and disputes between buyer and seller.