Harpy Glossary

Incoterms

Amazon & D2C glossary · Harpy Media

Incoterms (International Commercial Terms) are the International Chamber of Commerce’s standard shorthand for splitting responsibility in a shipment: who arranges and pays freight, who insures, who clears customs, and exactly where risk transfers from seller to buyer. Eleven terms, three letters each, globally understood.

What is Incoterms?

For importers, Incoterms are the grammar of landed-cost arithmetic: every quote, contract, and freight arrangement hangs off a term, and the term determines which costs and risks you own. Get the term right and the journey is priced accurately; leave it vague and you discover the gaps at the wrong moment — when something’s damaged, delayed, or stuck at a border with a bill attached.

The terms you’ll actually meet

The working set for Amazon-bound imports: EXW (Ex Works — you own everything from the factory gate, maximum control and maximum responsibility), FCA (Free Carrier — seller delivers to your nominated carrier; the modern fit for containerised freight), FOB (Free on Board — seller loads at origin port; the traditional sea-freight anchor), CFR/CIF (seller pays freight — and with CIF, insurance — to destination port, but risk moves earlier), and DDP (Delivered Duty Paid — the seller handles everything including import duties, delivering to a named place; the most turnkey and usually the most expensive). DAP and DPU round out the destination-side family where the buyer clears customs. The practical rule: the earlier the seller’s responsibility ends, the more journey you own — and each of those miles has a cost line and a failure mode.

Choosing terms deliberately (not by supplier habit)

The decision inputs: whose freight rates are better (at volume, yours; at small scale, maybe theirs), who can clear customs competently (complexity argues for control — you want visibility when classification or valuation questions arise), how the term interacts with your cash flow (DDP prices the whole journey into the product cost, converting logistics into payment terms), and insurance posture (risk transfer point determines when coverage must begin). The disciplines: compare supplier quotes on a common term (mixed-term quotes aren’t comparable), write the term and named place on every PO, and re-check the term against reality before each shipment — because routes, carriers, and customs arrangements change, and the Incoterm that fit last year may now misprice or mis-risk your goods.

Landed cost = product price at the chosen term + every cost after the transfer point (freight, insurance, duty, clearance, delivery)The three letters decide where your cost stack begins — and where your risk ends.

In practice

A brand’s supplier quotes FOB port while their forwarder collects containers at the factory’s inland depot — a mismatch that becomes expensive when two containers are damaged before reaching the port. The rebuilt arrangement: quotes standardised on FCA (seller’s premises), insurance beginning at the handover, and the term written on every PO. The paperwork and the journey finally describe the same reality, and the next dispute-ready question never arises.

⚠️ Watch out. A buyer accepts whatever term the supplier’s template prints — usually FOB, sometimes EXW — without matching it to how the freight actually moves, then discovers in a loss or a duty query that the documents assigned the risk somewhere they never examined. The term was the contract’s most consequential paragraph, read by nobody.

💡 Harpy tip. Write the full term (e.g., “FCA Shenzhen, seller’s premises”) on every purchase order and confirm it matches your forwarder’s setup and insurance. Three letters, ten seconds, fewer disputes forever.

How Harpy Media helps

Incoterm strategy and landed-cost modelling — matching terms to real freight flows and import arrangements — is part of our cross-border sourcing work.

Incoterms FAQ

What are Incoterms?

International Commercial Terms — ICC standard trade rules defining who pays and carries risk for freight, insurance, and customs at each stage of a shipment.

Which Incoterms matter most for Amazon imports?

EXW, FCA, FOB, CFR/CIF, DAP, and DDP cover most flows — FCA/FOB for container freight, DDP for turnkey delivered arrangements.

Which Incoterm should I use?

Match the term to the actual journey and who executes freight/customs best: terms decide your cost stack’s starting point and your risk transfer — compare quotes on one basis.

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