Avalara Survey Finds Hidden Fees Stifle Cross-Border Consumers USA - English USA - English
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~ Avalara, Inc., a leading provider of tax compliance automation software, has released new analysis on the impact of cross-border complexity on businesses and consumers worldwide. The study highlights a growing disconnect between the global shopping aspirations of younger generations and the regulatory landscape of international trade.

According to the survey, younger consumers are driving the trend of cross-border shopping. The data shows that around two-thirds of both 16-24-year-olds (63%) and 25-34-year-olds (68%) have made international purchases in the last year, compared to only 41% of shoppers over the age of 55. While cross-border shopping is less common in the United States with only 37% of American consumers making an international purchase in the last year, other countries have higher rates such as 55% in the UK, 68% in India, and 80% in Denmark. However, even in the US, younger consumers are embracing global shopping trends with 51% of Americans aged 16-24 reporting that they have made cross-border purchases within the last year.

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The allure for these younger consumers lies in the expanded product range (52%), quality (50%), and affordability (42%) offered by the global marketplace. Clothing (68%), electronics (44%), health and beauty products (46%), and jewelry (30%) top their list of cross-border purchases.

However, businesses face significant challenges in meeting this demand due to customs duty calculations, import regulations, trade restrictions, and complex shipping requirements. As a result, many companies hesitate to expand internationally which limits consumer access to a wider range of products.

These regulatory hurdles also directly impact the consumer experience. The survey found that expensive shipping costs, long delivery times, and unclear final costs at checkout were among the top reasons for cart abandonment during cross-border shopping. Additionally, 75% of businesses surveyed use Delivered at Place shipping which leaves customers responsible for unexpected customs clearance, duties, and taxes upon delivery. This approach is used exclusively by 30% of businesses globally, despite being a major pain point for consumers.

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The consequences of these hidden costs are significant. 58% of consumers who have purchased cross-border products report surprise customs charges upon delivery, with 30% describing these costs as "shocking." This lack of transparency has a major impact on customer loyalty, with 75% of shoppers reconsidering future purchases from a business after experiencing hidden fees due to customs duties charges. In some cases, customers even refuse delivery altogether.

Interestingly, younger consumers are disproportionately affected by these cross-border complexities. Of those who have made an international purchase in the last year, more than two-thirds (68%) of 16-24-year-olds experienced surprise costs due to customs duties compared to only 35% of shoppers over the age of 55.

Craig Reed, GM of Cross-Border at Avalara, commented on the findings saying, "No one wants a jump scare at the checkout – or when your package has made it all the way to your doorstep." He emphasized the need for businesses to better manage and streamline their cross-border compliance requirements in order to thrive in today's fast-evolving digital marketplace.

Avalara offers an end-to-end platform that addresses cross-border tax compliance needs such as tariff code classifications and customs duty and import tax calculations. To learn more about how Avalara can help businesses automate their cross-border tax compliance requirements, visit avalara.com.

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