Alibaba’s two-pronged approach to reverse fortunes

In The Checkout this week, we focus on Alibaba’s battles at home and abroad, and whether the ecommerce titan can revive past glories? [Read from your browser]( The Checkout 🛒 Welcome to The Checkout! Delivered every Thursday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in ecommerce. If you’re not a subscriber, get access by [registering here](. Written by Thu Huong Le Ecommerce Journalist Hello {NAME} During his visit to Vietnam in 2017, Jack Ma [urged]( local young students to learn from their mistakes. “I heard there are some books about me in Vietnam that are very popular,” he said. “In the future, I want to write a book about myself; something like Alibaba’s 1001 Mistakes.” This, of course, was years before Ma’s October 2020 speech in Shanghai, where he publicly criticized Chinese regulators for hindering financial innovation. Ma’s mistake was as costly as it could get. It ignited the [collapse]( of Ant Group’s listing and eventually China’s long-drawn-out crackdown on its tech darlings. In late February, Alibaba [reported]( its worst quarterly revenue growth since the firm's market debut in 2014. Alibaba’s stock is currently trading at its lowest level since [2016](. The Chinese tech giant has been walking a tightrope - managing the tech climate and heightened competition amid an economic slowdown at home, while scouting for new growth opportunities abroad. This week, we have two big stories that dive deep into its recovery efforts on both fronts. Our contributing writer from China, Ben Jiang, analyzes why Alibaba has had to dip its toes in direct retailing - a business model that Ma once reportedly ridiculed. Meanwhile, my colleague, Melissa Goh, writes about how Alibaba is plotting its big international push: taking its Southeast Asian ecommerce arm Lazada to Europe. Our Hot Take examines how ecommerce players and brands can tap into blockchain to better reward their loyal customers. Finally, our May 1 holiday has arrived. Have a good break and happy shopping! – Huong THE BIG STORIES  credit: Timmy Loen 1️⃣ [Alibaba U-turns on Jack Ma’s prophecy]( Alibaba ramps up its direct retailing initiative in competition with JD as its marketplace business becomes saturated and market competition intensifies. 2️⃣ [Lazada eyes Europe in first expansion beyond SEA]( The potential move will come amid the Ukraine war, heightened competition in Southeast Asia, and Shopee’s recent retreat from France.  THE HOT TAKE The way forward for rewards programs Photo credit: [123rf.com]( Here’s what happened: - Tiki, one of the largest B2C ecommerce platforms in Vietnam, has [launched]( Shop2Earn, a new blockchain-based rewards program. The feature allows customers to trade Astra points on [Tiki Exchange](. The value of Astra fluctuates, enabling customers to potentially earn more financial benefits from their loyalty points. - Blockchain-based loyalty programs are becoming more mainstream. In February 2021, Japan’s Rakuten Group [allowed]( its customers to convert their loyalty points to crypto assets like BTC or ETH. - Last November, Vietnam-based ShopNEXT [announced]( a partnership with Binance Pay that let consumers earnNEXT tokens on transacting with its merchant partners. Users could sell NEXT tokens to make money. Here’s our take: In some instances, we have to scramble to use our rewards points, only for them to turn out to be practically useless. They either expire too soon or are not enough to claim anything worthwhile. Companies and brands have long been using points to reward loyal customers. However, it’s often cumbersome, for example, to transfer points to another customer or manage your rewards and use them at a partner brand. According to [this Deloitte's analysis]( traditional rewards programs often suffer from “low redemption rates” and “low client retention.” To simplify, by turning traditional loyalty points into exchangeable tokens, the blockchain can iron out some of these issues. With the blockchain, customers can gain higher financial benefits as the value of their loyalty tokens could go up. These tokens also don’t expire. As pointed out in [this Forbes article]( the blockchain can bridge the gap across loyalty programs, which often are operated in silos. A [2019 survey]( by KPMG found that blockchain-based tokens could significantly boost consumer engagement and loyalty. But where can you exchange these loyalty tokens? It depends. Tiki, for instance, has emphasized that Astra, its new loyalty token, is not a form of cryptocurrency. Tiki has created an internal market for customers to convert Astra to Tiki Coin or vice versa. Tiki Exchange is not involved in the mainstream crypto market in any form. Tiki Coin, however, can be topped up with real money. On the other hand, [Rakuten allows]( its users to “store, trade, and even exchange Rakuten Points for Bitcoin, Bitcoin Cash and Ethereum.” Photo credit: 123rf.com Brands can either invest directly in blockchain-based rewards programs or use a third-party provider that helps [run loyalty programs]( on the blockchain. Of course, there are challenges to overcome. For example, how can companies optimize the benefits not just for end users but also merchants or partner brands? What’s a sustainable business model to cover blockchain transaction fees? How can firms educate consumers? Amid rising competition, brands and retailers can’t ignore the application of blockchain tech to engage and retain customers. The global loyalty management market is estimated to be [worth]( US$10.9 billion by 2024 and, like many other sectors, is ripe for further disruption by the blockchain. – Huong  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of the ecommerce scene [here](. 1️⃣ Amazon has [acquired]( Indian social commerce firm GlowRoad in an all-cash deal, according to TechCrunch. Founded in 2017, GlowRoad recently announced plans to expand to Southeast Asia. 2️⃣ Arrow, a Singapore-based provider of ecommerce checkout solutions, has [raised]( a US$4.8 million seed round led by Sequoia Capital India. 3️⃣ Zilingo co-founder and CEO Ankiti Bose has been [in talks]( with new investors to buy a majority stake in the Singapore-based fashion company, according to India’s Financial Express. 4️⃣ Tata-backed BigBasket will [expand]( its market coverage in the quick-commerce segment, joining the fierce 10-to-20-minute grocery delivery war in India 5️⃣ Direct-to-consumer startup Believe has [raised]( US$55 million in a series C funding round led by Venturi Partners. Singapore-based Believe caters to the Muslim communities in Asia and the Middle East.  FYI [Meta’s first physical store to advance its metaverse bet]( Image credit: Meta Set to open on May 9, the tech giant’s first physical retail space, the Meta Store, will be located at its campus in Burlingame, California. “At the Meta Store, we want you to interact with everything,” the company said. “We want you to pick stuff up. We want you to feel it.” --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you next week! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. 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