Avalara Survey Finds Hidden Fees Stifle Cross-Border Consumers

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09 Jul, 2024, 09:03 GMT

More than two-thirds (68%) of consumers surveyed aged 16-24 have experienced 'surprise' costs due to customs duties charges upon delivery when shopping internationally
Three quarters (75%) of consumers rethink shopping with a retailer after facing 'surprise' customs duties and taxes
Almost half (49%) refuse delivery of a package with hidden costs altogether

DURHAM, N.C., July 9, 2024 /PRNewswire/ -- Avalara, Inc., a leading provider of tax compliance automation software for businesses of all sizes, today published new analysis exploring the impact of cross-border complexity on businesses and consumers globally. The findings highlight a growing disconnect between the global shopping aspirations of younger generations and the regulatory landscape of international trade.

Young consumers drive global shopping trends

The survey reveals that younger consumers are at the forefront of cross-border shopping. Around two-thirds of both the 16–24-year-old (63%) and 25-34-year-old (68%) age groups surveyed made international purchases in the last year, compared to only 41% of shoppers over the age of 55. Cross-border shopping is less common in the U.S. compared to other countries, with only 37% of American consumers making an international purchase in the last year. This contrasts with higher rates in other nations: 55% in the UK, 68% in India, and 80% in Denmark. However, even in the U.S., younger consumers are embracing global shopping trends, with 51% of Americans surveyed aged 16-24 noting that they've made cross-border purchases within the last year.

These younger consumers are drawn to the expanded product range (52%), quality (50%), and affordability (42%) offered by the global marketplace, with clothing (68%), electronics (44%), health and beauty products (46%), and jewelry (30%) topping the list of cross-border purchases.

Hidden costs lead to cart abandonment and lost sales

While consumer appetite for international shopping grows, businesses face significant hurdles in meeting this demand. Key challenges include customs duty calculations, import regulations, trade restrictions, and complex shipping requirements. As companies hesitate to expand internationally due to these barriers, consumers find themselves with a narrower range of products available to choose from.

These regulatory challenges directly impact the consumer experience. Consumers surveyed say their top reasons for cart abandonment in cross-border shopping are expensive shipping, long delivery times, and unclear final costs at checkout. Exacerbating the issue, 75% of businesses surveyed use Delivered at Place shipping, leaving customers responsible for unexpected customs clearance, duties, and taxes upon delivery. 30% of businesses surveyed globally exclusively use this approach, despite it being a key pain point for consumers.

The consequences are stark: 58% of consumers that buy cross-border products report surprise customs charges upon delivery, with 30% describing these costs as "shocking." This lack of transparency significantly impacts customer loyalty, with 75% of shoppers reconsidering future purchases from a business after experiencing hidden, surprise fees due to customs duties charges when chopping cross-border, while nearly half refuse delivery altogether.

Younger shoppers disproportionately affected

Despite their enthusiasm for global shopping, younger consumers bear the brunt of these cross-border complexities. Of those who have made an international purchase in the last 12 months, more than two-thirds (68%) of 16–24-year-olds experienced surprise costs due to customs duties, compared to only 35% of shoppers over age 55.

"No one wants a jump scare at the checkout – or when your package has made it all the way to your doorstep," said Craig Reed, GM, Cross-Border at Avalara. "As global ecommerce continues to grow, driven by younger generations' shopping habits, it's clear that businesses need to better manage and streamline their cross-border compliance requirements if they are to thrive in a fast-evolving digital marketplace."

Avalara provides an end-to-end platform to address cross-border tax compliance — from tariff code classifications to customs duty and import tax calculations and more. To learn more about how Avalara automates cross-border tax compliance requirements for businesses, visit avalara.com.

About Avalara

Avalara makes tax compliance faster, easier, more accurate, and more reliable for 41,000+ business and government customers in over 75 countries. Tax compliance automation software solutions from Avalara leverage 1,200+ signed partner integrations across leading ecommerce, ERP, and other billing systems to power tax calculations, document management, tax return filing, and tax content access. Visit avalara.com to improve your compliance journey.

Methodology
The research was conducted by Censuswide, with 8,242 consumers (1023 in the UK, 1033 in the US, 1077 in India, 1059 in Brazil, 1003 in Australia, 1021 in Canada, 1026 in Mexico and 1,000 in Denmark between 10.05.2024 – 16.05.2024 and 4003 18+ senior business decision-makers within businesses / retailers that trade and / or sell goods cross-border per market US (500 respondents), UK (500 respondents), India (500 respondents), Brazil (502 respondents), Australia (500 respondents), Canada (500 respondents), Mexico (501 respondents), and Denmark (500 respondents) between 13.05.2024 – 24.05.2024. Censuswide abides by and employs members of the Market Research Society which is based on the ESOMAR principles. Censuswide is also a member of the British Polling Council.