Price terms, trade terms, or shipping terms, and such other terms are being used in modern commercial trading. What these terminologies are basically, the question that arises in the mind of a common buyer. Why one should care and deal with them while purchasing goods or products internationally. And whether this pricing technical system helps or not? Now the simple answer to such questions is that there’s nothing to worry about.
Dealing with clients regarding shipping and pricing is comparatively easy when you are getting quotes. Sellers provide quotes in which they mention three-letter based acronyms simply known as incoterms. Price terms, trade terms, and shipping prices are conjoined in “incoterms“.
Alibaba Price Terms are also based on quote terms and prices on their websites in various conditions to facilitate their buyers. You can hop on to a suitable price-based quote while buying any product from Alibaba suppliers. Commonly used International Commercial Terms ( incoterms) are EXW, FOB, DDP, and DOP which are convenient to buyers and sellers at the same time to have a trading contract in hand.
Alibaba trade terms are arranged with their own specialties when providing quotes to their customers. These incoterms include the following details to make it easy for both buyers and sellers:
- Sellers’ terms and conditions regarding the product supply.
- Buyer’s information of when and how he will receive the item.
- What arrival location has been decided to pick the parcel.
- Freight forwarder information who deals with shipping arrangements.
- Export permission with terms and conditions.
- Risk bearer: when a buyer is free of loss, or when he is responsible.
- Means of trade: from which source, product is going to supplied.
- Other instructions related to product’s use.
Ex Works – EXW
Incoterms have a wide variety, among which Ex Works abbreviated as EXW are reliable and easy agreements for buyers and sellers. These incoterms have a reachable way to deal with purchasing products as they provide less economic burden on both buyer and seller.
Ex Works have some pros and as well as cons when selected as a trading agreement. EXW offers a variety of facilities for buyers as one can get the item safely and at low shipping costs from the selected warehouse. Ex Works Incoterms do have an easy way for sellers to sell their products internationally, as sellers don’t have to worry regarding any risk or damage while the product is on the way.
The buyer is responsible for any kind of loss or damage. As well as shipping costs, insurance money, or any sort of paperwork is for the buyer to deal with. Moreover, receiving and carrying the product from port or warehouse to home/selected place is the responsibility of the buyer, to take care of.
So one can get the idea that EXW is more suitable for those buyers who have good communication skills to talk to their sellers.
Free On Board – FOB
FOB is incoterms to make up the agreement on any product when a buyer is purchasing from a foreign country. FOB provides an easy resource for picking up your product without any hassle or complexities if you are a buyer.
Likewise, FOB does have some merits and demerits for its use. Free On Board services provide buyers the facility to purchase any product without concern about packaging preparation. There’s no responsibility of buyers to take care of risks or damages when the product is being loaded from the seller’s side. Without contacting the seller, your item will be shipped on a certain selected career, if you are a lazy buyer. Still, you have to take some responsibility when the product is shipped from the seller’s side.
Moreover, sellers do enjoy selling goods, as when done with all the shipping procedures like labeling, and packaging, then there’s no responsibility of the seller. Buyers have to make sure whether all the documentation attached to the item is perfectly fine or not.
Additionally, foreign trading does require proper procedures to supply and buy goods, therefore buyer and seller both are responsible for verifying the information provided in documents. New buyers can enjoy FOB agreement services while buying products as these incoterms offer less responsibility for a buyer.
Delivered At Place – DAP
DAP service of trading and pricing is comparatively easy for buyers than EXW and FOB. Delivered At Place agreement while placing a trading order in a foreign state or the same place you are living, provides you with a lot of facilities if you are a buyer.
Further DAP services are also facilitating selling companies, factories, or any commercial seller in the market.
They don’t have to worry about any payment while shipping the goods. Sellers also do have many responsibilities when providing their services through DAP. Sellers have to cope with all the trading risks while shipping their products. They have to send the item to the selected place/home of the buyer.
Buyer enjoys receiving the product, without any hurdle of dealing with risks when the product is being shipped from the seller. Buyers have are concerned with shipping payments, and other expenses. They have the responsibility to pick the product when it is delivered to their own selected place.
Delivered Duty Paid – DDP
Definitely, the most convenient incoterm agreement is DDP while getting quotes from your seller if you are a buyer. Delivered Duty Paid provides a lot of benefits for their user, as most of the responsibility is on a trusted shipping company chosen by buyer or seller.
DDP is an easy way if you want to have your product delivered on a commercial level, without any sort of care for things. It is best if the buyer wants to be freehand and doesn’t want to tackle any risks regarding shipping, and packaging. There’s no dealing and negotiating with freight forwarder and seller if the buyer chooses DDP as the quote from the seller. The buyer doesn’t have to do any hassle regarding receiving and picking up the item as there’s an easy solution. One just has to trust on certain suitable shipping company which can hold all of the matters.
Seller’s responsibility in case of DDP servicing is to carry all the risks and losses while the product is being traded until it arrives at the selected destination by a buyer. The seller has to pay all charges when the product is traded through any freight forwarder, company, or agency.
As DDP has too many advantages, so why does not everyone use this as a quote? Definitely, there’s is some price for it and as compared to other incoterms, DDP is expensive. That’s the reason; one will choose the incoterm that is according to one’s style and budget.