The global e-commerce landscape is facing a significant challenge. According to a survey by Avalara, 58% of consumers who purchase goods internationally have encountered unexpected customs charges upon delivery. This issue is so severe that 75% of these consumers admit that such charges would make them reconsider buying from the same vendor in the future. Furthermore, 49% of consumers refuse to accept delivery of a package that includes hidden costs.
The survey also identified the primary reasons for cart abandonment in cross-border shopping: high shipping costs, lengthy delivery times, and unclear final costs at checkout.
The Shipping Dilemma: DAP vs DDP
Interestingly, Avalara’s survey found that 75% of businesses globally use ‘Delivered at Place’ (DAP) shipping, where customers bear the responsibility for any unforeseen customs charges. In contrast, Delivery Duty Paid (DDP) shipping, which transfers these responsibilities to the business, is less commonly used. In fact, 30% of businesses exclusively use DAP shipping.
The Future of International E-Commerce
Despite these challenges, international shipping remains a growth sector, particularly among younger consumers. The survey found that 63% of 16–24-year-olds and 68% of 25-34-year-olds had made an international purchase in the past year. However, this figure drops to 41% for consumers aged 55 and above.
The most popular sectors for international purchases include clothing (68%), electronics (44%), health and beauty products (46%), and jewelry (30%). Younger consumers are drawn to international shopping due to the expanded product range (52%), quality (50%), and affordability (42%).
Craig Reed, GM, Cross-Border at Avalara, emphasized the need for businesses to streamline their cross-border compliance requirements to thrive in the rapidly evolving digital marketplace.
