Comparison of Cross-Border Reverse Logistics of a Fast Fashion Brand in China

Research by: Siti Wahab, Albert Wee Kwan Tan, & Olivier Roche

EXECUTIVE SUMMARY

With the advent of “Industry 4.0” and the associated disruption caused by such rapid digital transformation, the logistics industry was able to develop cross-border delivery and increase demand for any given product. However, the risks associated with Cross-Border Reverse Logistics (CBRL) remain largely unexplored, and there is a paucity of research in this area. Hence, this study’s objective is to investigate the e-commerce delivery system and CBRL model of a major fashion brand.

The study is based on a case study approach comparing the CBRL processes of the Zara official site with one of their main channel partners, Alibaba. For a deeper analysis, data was collected through archival records, a secondary data bank and interviews with Zara representatives.

The analysis reveals that both Zara and Alibaba’s official sites currently have issues with their CBRL operations. The development of cross-border logistics represents a great opportunity to improve current Zara’s and Alibaba’s e-commerce platforms business model.

The case findings lay the foundation for a better understanding of CBRL e-commerce’s challenges and support the need to optimize these systems to improve customer service in China.

To raise the customer service level, a comprehensive cross-border logistics system must be established. There is no need to be concerned about storage and sorting procedures because Alibaba is a platform that offers shopping services. Alibaba simply needs to concentrate on improving its cross-border shipping services and customer support. If there is a better cross-border logistics integrated platform, customer satisfaction will substantially increase. In contrast, while Zara is struggling to meet the challenges triggered by the Covid-19 pandemic, renting or establishing overseas warehouses that have no official offline stores will be the best option. The products can be delivered, returned and resold much faster, and overseas warehouses can also assist in the development of new or poorly served markets. Additionally, 3PL companies with in-depth familiarity and understanding of international laws and the environment may be the best choice to rapidly develop cross-border e-commerce. Similarly, product collection is one of the most challenging parts of overseas logistics. Hence, collection points near residential and office buildings may be the solution for last-mile delivery/collection methods for customers.

The development of cross-border logistics represents a great opportunity to improve current Zara’s and Alibaba’s e-commerce platforms business model. In a very competitive market, a lack of a cross-border logistics system could represent a potential loss of revenues or additional costs. Compared to local reverse logistics, cross-border remains at a relatively primitive stage. However, local reverse logistics can provide insights to Zara and Alibaba towards developing and improving CBRL.  Alibaba is currently performing better compared to Zara. Having said that, both companies have established logistics systems that have their own limitations and shortcomings. At this point in time, Zara and Alibaba are expected to improve their current services by considering the adoption of AI and advanced technologies.

To cite this article:  Wahab, S., Tan, A., & Roche, O. P. (2023). Comparison of cross-border reverse logistics of a fast fashion brand in China. Operations and Supply Chain Management: An International Journal, 16(1), 25-35. http://doi.org/10.31387/oscm0520370

To access this article: http://doi.org/10.31387/oscm0520370

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Operations and Supply Chain Management: An International Journal (OSCM) publishes high-quality refereed articles in the field of operations and supply chain management. The journal invites original contributions that present modelling, empirical, review, and conceptual works. To enable maximum dissemination, the online version of the articles are freely accessible.

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