New analysis from Avalara examining the impact of cross-border complexities on businesses and consumers around the world reveals that younger consumers are at the forefront of cross-border shopping Avalara, Inc. is a company that provides tax compliance automation software for businesses of all sizes.
Nearly two-thirds of both 16-24 (63%) and 25-34 (68%) age groups surveyed have shopped internationally in the past year, compared with just 41% of shoppers 55 and older. Cross-border shopping is less common in the U.S. than in other countries, with only 37% of U.S. consumers having shopped internationally in the past year. This contrasts with higher percentages in other countries, including 55% in the U.K., 68% in India and 80% in Denmark. However, even in the U.S., younger consumers are embracing the global shopping trend, with 51% of Americans surveyed ages 16-24 saying they have shopped internationally in the past year.
These younger consumers are attracted by the wide range of products (52%), quality (50%) and affordability (42%) that the global marketplace has to offer, with clothing (68%), electronics (44%), health and beauty products (46%) and jewellery (30%) topping their list of cross-border purchases.
Hidden costs lead to cart abandonment and lost sales
While consumers' appetite for international shopping is growing, businesses face significant hurdles in meeting this demand. Key challenges include customs duty calculations, import regulations, trade restrictions and complex shipping requirements. These barriers discourage businesses from expanding internationally, leaving consumers with a limited range of products to choose from.
These regulatory challenges have a direct impact on consumer experience. Surveyed consumers said the main reasons for abandoning carts when shopping cross-border are high shipping costs, long delivery times, and lack of clarity about final costs at checkout. Compounding the issue, 75% of surveyed businesses use “delivered at place” shipping, leaving customers with unexpected customs clearance, duties, and taxes upon delivery. 30% of global businesses surveyed use this approach exclusively, despite it being a major pain point for consumers.
The results are clear: 58% of consumers who buy goods across borders report being charged unexpected customs fees upon delivery, with 30% describing the cost as “shocking.” This lack of transparency has a significant impact on customer loyalty, with 75% of shoppers who experience hidden, unexpected charges due to customs duties when making a cross-border purchase reconsidering future purchases from that company and nearly half refusing the delivery.
Younger shoppers are disproportionately affected
Despite their enthusiasm for global shopping, it is younger consumers who are bearing the brunt of complicated cross-border procedures: among those who shopped abroad in the past 12 months, more than two-thirds (68%) of 16-24 year olds experienced unexpected costs due to customs duties, compared to just 35% of shoppers aged 55 and over.
“No one wants surprises at the register or when their package arrives at their door,” said Craig Reid, general manager of cross-border at Avalara. “As global e-commerce continues to grow, driven by the shopping habits of younger generations, it's clear that businesses need to better manage and streamline their cross-border compliance requirements to succeed in a rapidly evolving digital marketplace.”
