Incoterms Explained: FOB vs EXW, DAP vs DDP for K-Beauty Wholesale Buyers

Incoterms Explained: FOB vs EXW, DAP vs DDP for K-Beauty Wholesale Buyers

When importing cosmetics from Korea, most issues don’t come from the products themselves.
They usually come from unclear responsibility across shipping, customs steps, and risk transfer.

Many buyers search:

• What is the difference between DAP and DDP?
• FOB vs EXW — what’s the real cost difference?
• What do Incoterms DAP and Incoterms DDP mean?

What Are Incoterms?

Incoterms (International Commercial Terms) are international trade rules published by the International Chamber of Commerce (ICC).

They clarify:

• Who pays which logistics costs
• Who manages customs steps
• When shipping risk transfers
• Who is responsible if loss or damage occurs

At SEOUL4PM, the most commonly used terms are:

• EXW (Ex Works)
• FOB (Free On Board)
• DAP (Delivered At Place)
• DDP (Delivered Duty Paid)

How SEOUL4PM Uses Incoterms

Your shipping setup determines the applicable Incoterm.

If you use your own forwarder:
→ EXW or FOB

If shipping is arranged through SEOUL4PM:
→ DAP or DDP

This structure keeps responsibilities aligned with who controls each step of the shipment.

FOB vs EXW: Cost and Risk Differences

Many buyers ask: FOB vs EXW — which is better?

In practice, the answer depends on logistics capability and where you prefer the handoff point to be.

EXW (Ex Works)

Under EXW, the seller prepares the goods at the warehouse.

From pickup onward, the buyer is responsible for:

• Domestic transportation
• International freight
• Import customs
• Duties and taxes

Risk transfers when the goods are collected.

EXW offers the highest level of flexibility for the buyer, but also comes with a significant management burden.

FOB (Free On Board)

Under FOB, the seller:

• Handles export clearance
• Delivers goods to the port
• Loads goods onto the vessel

Risk transfers after loading onto the vessel.

From that point, the buyer manages ocean freight and import procedures.

FOB can reduce export-side coordination compared to EXW.

FOB vs EXW Summary

In practice at SEOUL4PM, the cost gap between FOB and EXW is often limited to domestic transportation and handover handling within Korea.

Another key difference is risk timing.

• Under EXW, risk transfers at warehouse pickup.
• Under FOB, while Incoterms define risk transfer at vessel loading, SEOUL4PM operationally considers risk to begin when the buyer’s nominated forwarder takes custody of the cargo.

For most buyers, the decision is less about overall price differences and more about where operational responsibility begins.

DAP vs DDP: Cost Transparency vs Import Handling

Another frequent question is: What is the difference between DAP and DDP?

Both are commonly used in courier shipping.

DAP (Delivered At Place)

Under DAP:

• Seller pays international freight
• Buyer pays duties and taxes
• Buyer manages clearance steps

Risk transfers upon arrival at destination.

If customs requests payment or additional information, the buyer handles it locally (directly or through a broker).

DDP (Delivered Duty Paid — Standard Definition)

Under standard DDP:

• Seller pays freight
• Seller handles import clearance
• Seller pays duties and taxes

The buyer receives goods without paying duties at delivery.

DAP vs DDP Summary

Many buyers assume DDP always means the seller fully absorbs import duties and taxes.
In real-world wholesale shipping, the practical difference is often how duties and taxes are processed and when they are paid.

How DDP Works on SEOUL4PM

At SEOUL4PM, “DDP” commonly refers to a duty-prepaid shipping program.

Under this structure:

• Duties and taxes are estimated in advance
• The buyer prepays them to SEOUL4PM before dispatch
• SEOUL4PM arranges duty/tax payment using the prepaid amount
• This helps reduce delivery delays and unexpected charges at arrival

Customs authorities may still conduct standard reviews depending on local regulations.

In other words, the focus is not only who pays, but how duties and taxes are prepaid and coordinated:

• Prepaid via SEOUL4PM + coordinated duty/tax handling (DDP program)
• Paid locally + buyer-managed clearance steps (DAP)

Final Thoughts

Understanding Incoterms DAP, Incoterms DDP, FOB, and EXW helps avoid preventable issues around shipping costs, customs steps, and risk transfer.

At SEOUL4PM, shipments are structured based on each buyer’s logistics setup so responsibilities are clear from the start.