Hidden Fees Surprise E-Commerce Shoppers as Global Selling Challenges Grow

New analysis from Avalara, which examines the impact of cross-border complexity on businesses and consumers worldwide, reveals that younger consumers are at the forefront of cross-border shopping. Avalara, Inc. is a provider of tax compliance automation software for businesses of all sizes.

About two-thirds of the 16-24 age groups (63%) and 25-34 age groups (68%) surveyed have made an international purchase in the past year, compared to just 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 U.S. consumers having made an international purchase in the past year. This contrasts with higher rates in other countries: 55% in the U.K., 68% in India and 80% in Denmark. However, even in the U.S., younger consumers are embracing global shopping trends, with 51% of Americans aged 16-24 surveyed saying they had made a cross-border purchase in the past year.

Younger consumers are attracted by the wider product range (52%), quality (50%) and affordability (42%) offered by the global market, with clothing (68%), electronics (44%), health and beauty products (46%) and jewellery (30%) topping the list of cross-border purchases.

Hidden costs lead to cart abandonment and lost sales

While consumer appetite for international shopping is growing, businesses face significant barriers to meeting that demand. Key challenges include duty calculations, import regulations, trade restrictions, and complex shipping requirements. As businesses hesitate to expand internationally due to these barriers, consumers have a narrower range of products to choose from.

These regulatory challenges have a direct impact on the consumer experience. Surveyed consumers say that expensive shipping, long delivery times and unclear final costs at checkout are their top reasons for abandoning their shopping carts when shopping cross-border. The problem is compounded by the fact that 75% of surveyed businesses use Delivered at Place, leaving customers responsible for unexpected customs clearance, duties and taxes upon delivery. 30% of surveyed businesses globally use this approach exclusively, despite it being a key pain point for consumers.

The consequences are drastic: 58% of cross-border consumers report unexpected customs fees upon delivery, with 30% describing the costs as “shocking.” This lack of transparency significantly impacts customer loyalty, with 75% of shoppers reconsidering future purchases from a company after experiencing hidden, unexpected customs fees during cross-border shipments, while almost half refuse deliveries altogether.

Younger customers are disproportionately affected

Despite their enthusiasm for global shopping, younger consumers are bearing the brunt of these cross-border complexities. Of those who made an international purchase 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 over 55.

“No one wants to be spooked at the checkout—or when the package arrives at your door,” said Craig Reed, GM, Cross Border at Avalara. “As global e-commerce grows, fueled by the shopping habits of younger generations, it’s clear that companies need to better manage and streamline their cross-border compliance requirements if they are to succeed in a rapidly evolving digital marketplace.”