Retailer growth post-BFCM is being negatively impacted – not by lack of sales, but by unexpected tax compliance costs (71%), according to a new report from merchant of record company Reach.
The survey of 1,000 retail and SaaS decision-makers in the United States and United Kingdom reveals a major disconnect between peak season revenue and the unexpected tax compliance costs that follow, as businesses sell into new markets, cross tax thresholds and trigger new jurisdictional requirements within a short trading window. These obligations can include VAT, sales tax thresholds, customs duties and other cross-border tax requirements.
Unexpected tax compliance costs are hitting retailers hard
Nearly three-quarters (73%) of retailers say unexpected compliance costs have had a negative financial impact on their business, while 43% say they’ve increased operational workload for internal teams.
As a result, 54% of retailers who faced unexpected compliance costs have already limited, or plan to limit market expansion, and over a quarter (27%) have paused or scaled back international sales. Even among those who have never experienced these costs before, a third (33%) say they would deliberately limit expansion if they began to face them.
The overall sentiment points to a wider industry issue yet to be addressed: 68% agree the BFCM trading period is creating significant operational and compliance challenges, and 40% say it doesn’t deliver strong profitability despite high sales volumes.
Retailers are taking proactive steps, but gaps remain
While hidden costs are impacting retailers, they are still being proactive. 96% of retailers were confident they were fully compliant before heading into BFCM 2025. Nearly half (48%) have taken steps to protect against unexpected cross-border costs — but say they still need additional safeguards. This suggests that many organisations aren’t using lessons from last year’s compliance costs to plan for this year.
The data also shows that the compliance problem is not simply down to a lack of preparation, but to obligations that often become visible only after the event. More than half (57%) of those costs surfaced in Q1 the following year, while 10% did not appear until Q2.
BFCM remains a major growth moment
Despite the challenges, retailers are still committed to BFCM. Ninety-one percent agree it helps them attract new customers and enter new markets, plus 93% are planning to run BFCM activities this year..
But the findings also suggest retailers could be getting more value from the trading period than they currently are. With 40% saying BFCM does not deliver strong profitability despite high sales volumes, the opportunity is not simply to sell more, but to make peak-season growth more profitable. That means addressing the hidden compliance costs that can appear after the event and reduce the margin retailers expected to gain.
Sam Ranieri, CEO, Reach, comments: “Every year, the BFCM conversation is about the topline. The retailers who do it well know there’s a second number; one that arrives quietly in Q1, months after the revenue was celebrated.”
“BFCM creates enormous opportunity for retailers, but every new market entered and every threshold crossed can create compliance obligations that many teams only see after the fact. Retailers planning for BFCM 2026 need the infrastructure to manage that liability before it becomes a cost. Without it, peak-season growth can quickly become a compliance problem for the following year.”
