- More than 8 in 10 (82%) business leaders surveyed say that
cross-border complexity impacts their decision to sell to new
markets
- Three quarters (75%) of consumers that have experienced
'surprise' custom duties costs, taxes and complex regulations will
reconsider shopping with that same business again
- Almost half (49%) of consumers that have faced shock fees
will 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 reveal a complex compliance landscape and a
disconnect between consumer expectations and the realities of
cross-border commerce.
Cross-border complexity impacts growth for all
businesses
Overall, 82% of businesses surveyed around the world indicated
that cross-border compliance complexity impacts their decision to
sell into new markets. Customs duty and import calculation, trade
restrictions and payments and shipping complexities are the factors
of cross-border compliance causing the biggest challenges for
businesses. High-growth, high turnover businesses are impacted more
severely by cross-border compliance: while only a 27% of businesses
with turnovers under £100,000 cite customs duty and import
calculation as a challenge, this shoots up to almost half (49%) of
businesses with turnovers of £100,000-£999,999.
Business challenges directly impact consumer
experience
The difficulties businesses face in cross-border commerce
directly translate into frustrations for consumers. The top reasons
shoppers abandon their online carts when buying internationally
include: expensive shipping, lengthy delivery times, and final
costs, including duties and taxes, not properly displayed at
checkout.
Businesses often underestimate the impact of these factors. For
example, while 55% of consumers cite shipping costs as the number
one reason, they abandon their cart, only 40% of businesses believe
this is a critical factor.
Further exacerbating the problem is the prevalent use of
Delivered at Place shipping by businesses. Almost three-quarters of
companies surveyed employ this method, which leaves customers
responsible for customs clearance, duties, and taxes. 30% of
businesses surveyed globally exclusively use this approach, despite
it being a key pain point for consumers.
The consequences of these practices are stark. Nearly 3 in 5
(58%) consumers report experiencing unexpected customs duties
charges upon delivery, with half of those who buy cross-border
products describing these costs as "shocking." This lack of
transparency has a significant impact on customer loyalty and
satisfaction. Three-quarters (75%) of surveyed shoppers say they
reconsidered future purchases from a business after this
experience, and nearly half (49%) say they refused the package
altogether upon delivery.
Businesses turning to AI to unravel complexity
Younger shoppers are much more likely to purchase cross-border.
Around two-thirds of both the 16–24-year-old (63%) and
25-34-year-old (68%) age groups surveyed have made international
purchases in the last year, compared to only 41% of shoppers over
the age of 55. Of those who made an international purchase in
the last twelve months, younger consumers are almost twice as
likely to experience surprise costs upon delivery compared to older
consumers.
Businesses are increasingly using AI-enabled technologies to
manage both an increasing consumer appetite for international
shopping and their cross-border compliance requirements.
52% of businesses surveyed globally are leveraging AI and
automation technologies, with a further 26% aiming to do so in the
next two years. The highest rates of adoption among businesses
surveyed are in India (64%),
Brazil (63%), and Denmark (60%). Businesses in the U.S. (39%),
Mexico and Australia (both 44%) have been the slowest to
adopt new technologies, according to Avalara's survey results.
"The disconnect between seller practices and shopper
expectations leading to hidden costs can damage the cross-border
commerce experience," said Craig
Reed, GM, Cross Border at Avalara. "In an era where
international e-commerce is becoming increasingly prevalent,
especially among younger consumers, businesses that fail to adapt
risk being left behind. Solutions that support international growth
and deliver a superior customer experience are key to building a
business fit for the modern, borderless digital economy."
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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