COMPARISON OF CROSS-

BORDER REVERSE
LOGISTICS OF A FAST
FASHION BRAND IN CHINA
GROUP 6
 GROUP MEMBER

LE QUYNH ANH 20223559

NGUYEN HAI ANH 20223560

LE HUONG GIANG 20223589

NGUYEN VU QUYNH ANH 20223535

 TABLE OF CONTENTS

1. INTRODUCTION 4. FINDINGS

2. LITERATURE REVIEW 5. DISCUSSION

3. RESEARCH METHOD
ABSTRACT
This study's objective is to investigate the
ecommerce 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.

The analysis reveals that both Zara and Alibaba's

official sites currently have issues with their CBRL
operations.

CBRL: Cross-Border Reverse Logistics

1. INTRODUCTION
Q1. What are the differences and resemblances between
Zara and Alibaba’s returns management?

Q2. What are the difficulties experienced by Zara and Alibaba

in developing their CBRL operations?

This paper will attempt to address the above two

questions and offer suggestions and possible
solutions for effective CBRL management in the fast fashion
industry.
 LITERATURE
2. REVIEW
 2.1. Cross-Border E-Commerce

• Compared to the brick-and-mortar store, e-commerce requires a substantial upgrade of

the information and logistics flows, a seamless transportation system as well as better
cash management (Jalil, 2017).

• Accordingly, Van Asch et al. (2020) noted that the requirements for the development
of cross-border ecommerce via air transportation include:
a. The capacity for quick pre-clearance of products,
b. The need for aircraft to fly to important locations,
c. The size of the land for the necessary storage capacity.

At the international level, speed is of the essence.

 2.3. Overseas Warehouses
• China established numerous national comprehensive pilot zones and implemented
policies to encourage a business model combining the Internet, brands, and overseas
warehouses in order to quickly grow cross-border ecommerce (Chen & Wang, 2016).

• The asymmetry of information also leads to several issues, especially with regard to the
accuracy of the forecast. Hence, it is necessary to configure overseas warehouses for
big data support (Zhang, 2021).

The main purpose of establishing overseas warehouses was to minimize risk, as these
facilities are not affected by the implementation of current international import and
export policies.
 2.2. Inventory management

• Yang and Shen (2015) discussed the just-in-time (JIT) storage mode used in cross-
border business. In this mode, inventories are perceived as having a negative impact on
cost and efficiency.

• Li et al. (2018) suggested that fast fashion brands would need to outsource certain
warehouse management and introduce more flexible human resource (HR) practices to
significantly improve overall warehouse performance.

• According to Qi et al. (2020), to achieve the objective of reducing inventories to an

optimal level, accurately predicting customers' demand remains a better solution.

• Advanced technology will help to improve inventory management. Chan et al. (2012)
and Nier et al. (2020) pointed out that radio frequency identification (RFID) and drone
technology help in tracking products and improve inventory management.
 2.4. Fast Fashion Industry

• Fast fashion companies are choosing to maintain low levels of inventory and enhance
the responsiveness of their supply chains as e-commerce grows (Jahed et al., 2022).
This is to avoid the deep discount usually associated with large excess inventories.

• All businesses in the fast fashion industry should put their primary emphasis on the
selection and application of inventory management to optimize profit. A dual channel
is an effective business model for reducing inventory expenses (Yang et al., 2016).

• Preorder online, pick-up in-store (POPU), a new business model, was developed
following the emergence of numerous e-commerce platforms. A stable collaboration
between a brick-and-mortar store and online retail platforms allows an organization to
share information and resources to reduce transportation and inventory costs.
2.5. Reverse Logistics Management
in the Fast Fashion Industry
• Optimal reverse logistics can enhance the competitive advantage of a company. Such a
system comes with charges for product repacking, restocking, and shipping (Baek et
al., 2020).

• According to Urek (2014), the most expensive link in the supply chain for ecommerce
is the reverse system idea. Gutierrez-Gutierrez et al. (2016) posited that lean six sigma
(LSS) is an appropriate process improvement methodology for the SCM. However, at
this point in time, only a few companies are fully implementing this method.

• According to Usama and Ramish (2020), reverse logistics management is all about
establishing a proper balance between speed and costs.

• The return rate in the fast fashion industry is twice as high as the other brands (Das et
al., 2020)
 3. RESEARCH METHOD
The study is based on a case study
approach comparing the CBRL
In this study, the CBRL of e-
processes of the Zara official site with
commerce in fast fashion firms will
one of their main channel partners,
thus be examined using the
Alibaba. Two different Zara channels
qualitative research approach.
were chosen for comparison. One
channel runs both online and offline
retailers, while the other just runs
online ones.
4. FINDINGS
4.1. The Reverse Logistics Framework
Alibaba and Zara, both official sites have different ways of processing customer return
requests and structuring their overseas and domestic logistics.

Alibaba Reverse Logistics Zara Reverse Logistics

4.1. The Reverse Logistics Framework
4.1.1. The Reverse Logistics Framework
In order to create a smooth cross-border platform, fast fashion companies must integrate
their systems with those of international shipping companies, which presents a greater
difficulty than managing their own systems alone (Chen & Wang, 2016).International
delivery typically costs more than domestic delivery in terms of costs.

Freight costs are an important

consideration in reverse
logistics.
 4.1. The Reverse Logistics Framework
4.1.1. The Reverse Logistics Framework

ZARA ALIBABA

Zara has official sites in many countries around the world.

Alibaba has developed its own cross-border centralized
However, the company does not have established cross-
logistics to return products. This facilitates the return
border logistics and customers who purchase their products
process for the customers and helps the company in
from the official sites have to find courier services by
tracking its products (Ling, 2015).
themselves.

Alibaba's customer support system blends automated

procedures with artificial intelligence (AI).
Zara uses an automated customer support system to attend to
its customers' needs around-the-clock.
As a result, more difficult issues can be solved,
increasing customer satisfaction.
4.2. Zara and Alibaba’s Local and CBRL
CBRL ZARA ALIBABA

Customer support Online and fully automated Online and fully automated

Centralized
Forward logistics Courier companies
(several countries)

Reverse logistics 3P logistics companies 3P logistics companies

Freight charges for

By customers By customers or companies
returns

Sorting and processing By distribution centre By distribution centre

Storage By distribution centre By distribution centre

Recycle Available Not available

4.1. The Reverse Logistics Framework
4.1.2. Sorting and Processing
• Zara employs its own ID code to rapidly and automatically identify the returned
products in order to better manage the CBRL process (Inditex, 2020).

• Zara's distribution centre is also equipped to serve as the hub for all types of
commercial transactions, including delivery and the return of products (Luo & Kong,
2021). Zara's returned products are stored in the distribution centre on a centralized
basis while waiting to be resold.

• Zara, in collaboration with the Inditex group, gives an option to customer to drop their
used clothes at the Inditex physical store to be recycled and utilized as raw materials
for new products.

Even though this service is not considered part of cross-border e-commerce, it is part of
the Zara business model to help the company win more customers who are sensitive to
that issue.
4.2. Zara and Alibaba’s Local and CBRL
4.2.1. The local reverse logistics

Figure demonstrates the local reverse logistics process:

4.2. Zara and Alibaba’s Local and CBRL
4.2.2. The CBRL

Setting up a seamless transportation platform for both the

customers and the companies involved is the main challenge of
cross-border logistics because different nations have various
policies.

The differences between the original and the present reverse

processes. Figure shows the original and enhanced reverse
logistics:
4.2. Zara and Alibaba’s Local and CBRL
4.2.2. The CBRL
Moreover, this paper compares two return models of cross-border e-commerce:

CBRL Current practice Enhanced practice

Delivered to the extra warehouses

Logistics model Delivered to the customs centre
of the customs centre
Not required. The unoccupied space of
Individual warehouse Required customs centres will be used to store the
products

Parcel sorting location Outside the customs centres Inside the customs centres

Parcel transportation
Approximately 20 days Approximately 10-15 days
time
5. DISCUSSION
5. DISCUSSION
Two main issues of CBRL development have been identified, including long lead time and an
inefficient inventory management system.

According to the information gathered, the key distinction between the official
websites of Zara and Alibaba is that each one has its own cross-border shipping system. SWOT
analysis of the official websites of Zara and Alibaba that goes into further detail about these
difficulties:

ALIBABA ZARA
5. DISCUSSION
5.1. Implications
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 happiness will increase dramatically. So, renting or establishing overseas
warehouses that have no official offline stores will be the greatest option.

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 ecommerce platforms business model. At the
current state, both companies have their own strengths and limitations in
managing CBRL.

As far as CBRL are concerned, Alibaba is currently performing better compared to Zara.
Therefore, Zara and Alibaba are expected to improve their current services by
considering the adoption of AI and advanced technologies.
5. DISCUSSION
5.2. Limitations and Scope for
Future Research

It should be noted that only two channels of the fast

fashion industry have been analyzed in this study.

With the development of AI and growth in e-

commerce, there is countless companies' fast fashion
worldwide to be analyzed such as JD.com, Lifease
and Amazon.
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