What EXW, FOB, and DDP mean for a dog bed order, who pays for what at each step, and which term suits a small or growing US seller.
A price quote without a trade term is incomplete. The term states where the supplier's responsibility ends and yours begins, including who pays for transport, export clearance, and insurance, and who carries the risk if goods are damaged. Two quotes at the same price on different terms are not the same price.
The terms come from the Incoterms rules published by the International Chamber of Commerce. We summarize the common ones here. For binding advice, consult a freight forwarder or a lawyer, and read the current rules.
Under EXW the supplier makes the goods available at its own premises. The buyer arranges everything from there: loading, inland transport, export clearance, main carriage, and import steps. EXW gives the buyer maximum control and maximum responsibility.
It is useful for buyers who have their own forwarder in China and who want to compare freight costs. It is a heavy lift for a small seller who has not shipped before, since the buyer has to coordinate export formalities from abroad.
Under FOB the supplier delivers the goods onto the vessel at a named port of shipment, and clears them for export. The buyer pays for the main carriage and for everything after that, and takes on the risk once the goods are loaded.
FOB is a common term for sea freight in the dog bed trade. It divides the work in a way many small and medium buyers find manageable: the supplier handles the domestic leg and export clearance, and the buyer's forwarder handles the ocean leg. The named port should be specific, such as a named port of shipment, not just a country.
Note that the formal rules for FOB apply to sea and inland waterway transport. For goods sent in containers, some practitioners use a different term. Ask your forwarder which term suits your shipment.
Under DDP the seller delivers the goods to the named destination, clears them for import, and pays the duty and taxes. The buyer receives the goods at the door with no customs work. This is convenient, and the price is higher because it includes the seller's costs and risk.
DDP also depends on the seller's ability to act as the importer of record in the destination country. If the supplier cannot do this properly, delays and unexpected charges can follow. Ask who is the importer of record and who is responsible for the customs filing.
CIF and CFR are sea freight terms in which the seller books the main carriage to the destination port, and, under CIF, also provides insurance. DAP is delivery to a named place without import clearance. Air shipments often use terms such as FCA. Use the term your forwarder recommends for the mode of transport.
A seller with a first order may prefer DDP or a delivered quote from a forwarder, for simplicity. A seller with repeat volume often moves to FOB, to control freight and compare forwarders. A seller with a strong forwarder relationship and in-house logistics skills may choose EXW to optimize cost.
There is no single best term. Choose the one that matches your experience and the risks you can manage, and revisit it as your volume grows.
When you compare quotes, convert them to a single term. If one is FOB and another is EXW, add the cost of inland transport and export clearance to the EXW price. If one is DDP, subtract your estimate of freight and duty to see the product price. See the guide on comparing quotes for a grid.
State the term, the named place, and the version of the rules in the order. For example, name the port and the year of the rules. Include who books the transport, who insures the shipment, and what documents the supplier provides, such as the commercial invoice and the packing list. These details are small, and they prevent expensive disagreements.
Transfer of risk is the point at which damage or loss becomes the buyer's problem. It differs by term. Under FOB the risk passes when the goods are on the vessel. Under DDP it stays with the seller until delivery. Insurance is a separate matter, and the buyer should check whether the policy covers goods from the point where risk passes.
Ask your forwarder about cargo insurance. For goods of moderate value, the cost is often small compared with the risk. If you receive damaged goods, you need evidence and a policy that applies.
Whatever the term, expect to need a commercial invoice, a packing list, and a bill of lading or air waybill. Under some terms, the supplier provides more of them. The invoice should state the product description, the quantity, the unit price, the total, the terms, and the origin. Inconsistent documents cause delays at customs.
Ask for drafts of the documents before shipment and review them against the order. Check that the product description is consistent across documents and that the fiber content matches what you plan to declare.
A freight forwarder arranges transport and often customs clearance. Choose one with experience in textiles and pet goods. Ask for quotes by the cubic meter and for a list of all charges at origin and at destination. Agree on who contacts the supplier for pickup and on who pays for storage if the goods arrive early.
A good forwarder will also advise on terms. Treat the forwarder as a source of practical information, and keep their contact details in the order file.
In short, with EXW the buyer does the most work and has the most control, with FOB the work is shared at the port, and with DDP the seller does nearly everything. Price tends to rise as you move from EXW to DDP, because the seller takes on more cost and risk. Pick the term that fits your experience, and state it on every quote and order.
Related product line: Cat and dog beds. Quotes and specifications are confirmed in writing for each order.