- 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.
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SOURCE Avalara, Inc.