A local tech firm has recently launched an innovative reward point platform with the use of blockchain technology that brings customers and businesses closer together, the first step of its ambitious global business development plan
From comprehensive loyalty programmes that reward customers for frequent purchases with discounts or an allotment of points, such as Asia Miles in the aviation industry, to a simple punch card that gives one free cup of coffee for every 10 coffees, the notion of reward points, regardless of their scale and scope, has been utilised by businesses to entice customers for decades. In this digital age, a local technology firm, Pineapple Chain (Macao) Technology Company Limited, innovates this concept with a twist, using blockchain technology to create a brand new rewards point platform — PRed — offering unique experiences for both businesses and customers.
“It’s not commonplace for micro-, small- and medium-sized enterprises to set up their own reward or loyalty programmes, given the technical difficulties and high costs. What they do at most is give out punch cards,” says Chi Lao, CCO and one of the founders of Pineapple Chain. “Now they could join our platform and share [the resources].”
Through PRed, customers can be rewarded and accumulate the eponymous points — “PReds” — at their PRed e-wallet by shopping or procuring services at the merchants on the platform; points that they can later redeem and use like money. Through the collaboration between Pineapple Chain and Industrial and Commercial Bank of China (Macau) Ltd, point-of-sale (POS) terminals with the application of PRed will be provided for merchants by ICBC Macau, while customers can simply download it on their mobile app store.
Unlike the reward programmes set up by other corporations, in which points can only be redeemed and used at shops and venues within the same group, PRed can be spent across different brands as long as they have joined the platform. “In traditional loyalty programmes, customers might accumulate tens of thousands of points, which might only redeem goods or services that are worth hundreds of dollars,” says Eddy Leong, CEO and another founder of Pineapple Chain. “Our platform, on the other hand, is very clear and straightforward: one PRed always equals to MOP1.”
In general, there is a valid period for reward points, in which customers have to redeem the points within the timeframe, or the points will be wasted. “Companies usually like to give a short effective period for reward points, encouraging customers to make frequent purchases within a short time period, and making it difficult for customers to accumulate enough points for redemption,” he remarks. “It’s not the same case for our platform, as there’s no valid period for our PRed — you could always redeem one PRed for MOP1 anytime.”
Besides allotting reward points, PRed also allows merchants to carry out broad and targeted marketing practices, such as distributing coupons to users. “We’re now cooperating with Wynn Macau Ltd, where users will get a free coupon to redeem for food and drinks at Wynn Palace after making a purchase at any merchant on our platform,” Mr. Lao says. “Our platform could also cater a more specific marketing approach for businesses with the use of blockchain technology, for instance, the coupons could only be dispatched to users that have made purchases at your shop before,” the CCO continues. “This means once a user has made a purchase at a merchant via PRed, both parties are linked via our platform, allowing businesses to carry out marketing practices towards more specific targets.”
This project has been close to two years in the making, when Messrs Lao and Leong set up Pineapple Chain with the other two founders — all coming from different working and business backgrounds, from trading to technology — in 2018, betting on the business opportunities arising from blockchain technology and its applications. PRed is the first project the company devised with blockchain, or what they call one of the “blockchain+” products.
PRed was first unveiled at the Macao International Trade and Investment Fair (MIF), one of the major trade events in the city, last year. Nearly a year later, the platform was officially launched in a star-dusted ceremony this August, attracting the participation of local business heavyweights, including senior executives from major local banks and commerce chambers. Pineapple Chain also inked cooperation pacts with 22 companies in the areas of travel, hotel, dining, trading, supermarket, and retail in the ceremony, including Macau CTS Hotel Management (International) Ltd, the hotel arm of Nam Kwong (Group) Company, the Chinese state-owned conglomerate in Macau; Hotel Fortuna; and October Fifth Bakery (Macau) Ltd, linked to Mr. Lao’s father and prominent local businessman Lao Ngai Leong.
In the official operation of a few weeks only, Messrs Lao and Leong note they have negotiated with over 100 brands about cooperation and dozens of brands — each brand might have one to a couple of shops — have so far joined PRed. “We’ll focus on recruiting more and more brands and merchants to join our platform in the next few months, while we hope there will be an organic growth in the number of users,” the company’s CEO notes. “Should there be an abundance of brands and merchants on our platform offering an array of discounts and benefits customers will be intrigued to use PRed.” It is now free of charge for merchants to be listed on the platform, which just only need to offer discounts and benefits on their own for customers. For instance, they might decide to reward users one PRed for every MOP10 to MOP40 spent at their shops. “Our plan is the number of merchants on PRed will reach over 100 by year-end,” Mr. Leong adds.
The pandemic of the novel coronavirus (COVID-19) this year has been a surprise for everyone and has dealt a huge blow to the global economy and businesses, but Pineapple Chain sees this public health crisis bring both challenges and opportunities. The coronavirus outbreak has stalled the progress of PRed, which was originally supposed to be launched early this year, while it has also dampened the confidence of consumers, who are less ready and willing to spend. In view of the changes in the business environments, from large corporations to SMEs, they have exhausted their means to entice customers like reward points. For instance, Hong Kong-based multinational conglomerate, Jardine Matheson, has launched you — a reward club mobile application that could be used in Macau and the nearby SAR — in recent weeks, offering privileges and discounts for customers by rewarding them points after making purchases at shops and restaurants under the conglomerate, like supermarket chain Wellcome, convenience store 7-Eleven, restaurants KFC and Pizza Hut, homeware chain IKEA, and others. “Compared with last year, the market — both businesses and consumers — is now definitely more familiar with and aware of reward points, and it has saved us some time and costs to educate the market about our product,” Mr. Lao, the CCO, says.
Apart from the pandemic, it has not been a smooth path for Pineapple Chain to launch PRed, as technologies like blockchain — which are best known for verifying cryptocurrency transactions, but could be applied to other fields as it is resistant to data modification — are a novelty to the city. “The model of PRed now is not our first version, which was much simpler and more convenient, but we had to adjust our product to match the requirements of banks and the Monetary Authority of Macau,” says Mr. Leong.
“The ecosystem of innovative technologies and fintech [financial technology] is also almost nonexistent in Macau,” he adds. This has created hurdles for them to look for talents in developing the product, but fortunately, they could fall back on the manpower pool across the border, as Pineapple China has also established an office in nearby Hengqin, forming a team of 21 members now from both the city and Mainland China. But the duo believe with more companies like them in the city, an ecosystem could gradually be established here.
And the firm not only has its eyes on Macau. “After gaining a foothold here, we plan to bring PRed to other markets gradually; first the [Guangdong-Hong Kong-Macau] Greater Bay Area, then other Mainland Chinese cities, Southeast Asia, Asia, Europe and the Americas,” Mr. Lao pledges. “The key is we have to spend time and efforts to make adjustments and come up with a model suitable for each market.”
As blockchain is gaining traction across the globe, particularly in China after President Xi Jinping last year called for greater levels of research and investment into the applications of blockchain, while the People’s Bank of China is also now testing the new sovereign digital currency with the employment of blockchain technology — Digital Currency Electronic Payment (DCEP) — across some mainland cities, Pineapple Chain is poised to cater more blockchain products and solutions besides PRed. “Blockchain could be applied to the financial industry here, like banking and insurance, but this requires more policy support,” Mr. Leong simply says.
The company also does not have a specific goal when PRed could break even. “For fintech or technology companies like us, we don’t particularly pay attention to when we could recoup the investments, but rather the value of our assets, in terms of the number of merchants [on the platform], the number of users and the transaction volume,” the CEO remarks.
“We hope to become ‘a unicorn’ coming out from Macau,” he concludes, with unicorns generally referring to privately-held technology firms valued at over US$1 billion. “When we first started out, we didn’t position PRed as a Macau platform only but applicable to the global level — and we’re still working on this.”