Header image

Offshore software development services: Common terms you should know

26/07/2023

1.13k

Are you facing difficulties in seeking for IT talents for your business? Well, you are not alone! According to THE 2022 GLOBAL TALENT SHORTAGE report by ManpowerGroup, 21 countries are recorded higher talent shortages than global average. IT & Technology ranks #1 top industries with the highest talent shortages. Though tech giants are announcing to discharge hundred thousands of employees worldwide, causing the global lay-off wave, IT talents are forecasted to still in high demand, especially those who obtain AI, machine learning, cybersecurity, cloud computing skills.

Talent shortages around the world

In order to stay ahead of the competition, businesses need to ensure its human resource stability. While seeking for the optimal solutions, business owners consider offshore software development an old-school, yet effective, lifesaving package. The allure of accessing top-notch talent, reducing costs, and scaling operations has made offshore development an enticing option. But beware! Successfully navigating this realm comes with its fair share of challenges.

Enter the world of offshore development, where managing performance can be as exhilarating as sailing through rough waters. We have just the knowledge buoy you need to stay afloat. In our latest educational blog post, we dive deep into the common terms every business owner should know to harness the true potential of offshore software development services.

common terms every business owner should know
What you should know about offshore software development services?

Understanding Offshore Software Development Services

Definition of offshore software development services

Offshore software development services refer to the practice of outsourcing software development tasks or projects to external teams located in a different country or region. Instead of relying solely on in-house resources, businesses collaborate with offshore development teams to leverage their expertise, cost advantages, and scalability. By partnering with offshore service providers, companies gain access to a global talent pool, enabling them to accelerate development cycles and bring innovative solutions to market faster.

Benefits of offshore software development services

  • Cost-effectiveness: One of the most significant advantages of offshore software development services is cost reduction. By choosing offshore providers, businesses can tap into regions with lower labor costs, allowing them to allocate their budget more efficiently. This cost advantage enables companies to invest in other areas of their business or allocate resources to additional development projects.
  • Access to skilled talent: Offshore software development services offer businesses access to a diverse and highly skilled talent pool. These offshore teams often possess specialized expertise and experience in specific technologies or industries. By collaborating with offshore professionals, businesses can leverage their knowledge and skills to build cutting-edge software solutions that meet their unique requirements.
  • Scalability and flexibility: Offshore software development services provide businesses with the flexibility to scale their development efforts quickly. As projects evolve or new opportunities arise, offshore teams can quickly ramp up resources or adjust the team size accordingly. This scalability allows companies to respond rapidly to market demands, ensuring efficient project execution and timely product delivery.

Addressing challenges in offshore software development services

  • Performance management: Managing the performance of offshore development teams can be a challenge due to geographical distance, cultural differences, and variations in work practices. To overcome this challenge, it is crucial to establish clear communication channels, set expectations, and implement effective project management methodologies. Regular monitoring, progress tracking, and performance evaluation help ensure that projects stay on track and meet quality standards.
  • Communication and language barriers: Effective communication is vital for successful offshore development. Language barriers, different time zones, and cultural nuances can hinder communication and collaboration. To address this challenge, it is essential to establish clear communication protocols, leverage collaboration tools, and foster a culture of open and transparent communication. Regular video conferences, documentation, and the use of project management tools can help bridge communication gaps and ensure effective collaboration.
  • Time zone differences: Offshore often involves teams located in different time zones. While this can be advantageous for round-the-clock productivity, it also presents coordination challenges. To mitigate the impact of time zone differences, it is important to establish overlapping working hours, define clear expectations for response times, and leverage asynchronous communication methods such as email or project management tools. Effective time management and coordination are key to maximizing productivity and minimizing delays.

Importance of knowledge and preparation

To navigate the landscape of offshore software development successfully, knowledge and preparation are paramount. Business owners, product owners, and IT specialists must invest time and effort to understand the common terms and concepts associated with offshore development. This knowledge empowers them to make informed decisions, communicate effectively with offshore teams, and proactively address challenges. By preparing their teams and acquiring the necessary knowledge, businesses can lay a strong foundation for successful offshore collaborations, unlocking the full potential of offshore software development services.

Common Terms in Offshore Software Development

Common terms of offshore development services
Common terms of offshore development services

Agile development

Agile development is an iterative and collaborative approach to software development that emphasizes flexibility, adaptability, and customer collaboration. It involves breaking down the development process into small, incremental tasks called sprints, allowing for frequent feedback and continuous improvement. Agile development principles include valuing individuals and interactions, working software over comprehensive documentation, customer collaboration, and responding to change.

In the context of offshore development, Agile methodologies provide several benefits. They facilitate effective communication and collaboration between onshore and offshore teams, ensuring a shared understanding of project goals and requirements. Agile practices enable rapid iteration and quick feedback loops, allowing offshore teams to adapt to changing requirements and deliver valuable software increments consistently.

Scrum

Scrum is a specific Agile framework widely used in software development. It provides a structured approach to project management, enabling teams to organize their work, prioritize tasks, and optimize productivity. In Scrum, development work is divided into short time-boxed iterations called sprints, usually lasting two to four weeks. Each sprint involves planning, daily stand-up meetings, development, testing, and a review of the completed work.

Within the Scrum framework, several key terms and roles are important to understand. These include the product owner, responsible for defining and prioritizing the product backlog; the Scrum master, who facilitates the Scrum process and ensures the team adheres to Agile principles; and the development team, responsible for delivering the software increment during each sprint. Scrum provides a transparent and iterative approach to software development, making it well-suited for offshore teams collaborating with onshore counterparts.

DevOps

DevOps is a set of practices that integrates software development (Dev) and IT operations (Ops) to enhance collaboration and improve the software delivery process. It aims to streamline workflows, automate processes, and foster a culture of collaboration and continuous improvement. DevOps encompasses areas such as infrastructure automation, continuous integration/continuous delivery (CI/CD), and monitoring and feedback loops.

In the context of offshore software development, implementing DevOps practices can bring significant benefits. It enables smoother collaboration between onshore and offshore teams, ensures faster and more reliable software deployments, and enhances overall project visibility and transparency. DevOps principles promote efficient communication, standardized processes, and rapid feedback cycles, leading to improved productivity, quality, and time-to-market for offshore development projects.

Dedicated development team

A dedicated development team refers to a group of specialized software developers and professionals who work exclusively on a specific project for a client. Unlike traditional outsourcing models, where tasks are assigned to different teams or individuals, a dedicated development team remains focused on a single project, providing continuity, consistency, and a deep understanding of the project requirements.

The advantages of a dedicated development team in offshore software development are numerous. It allows for greater control and flexibility over the development process, as the client can directly manage and communicate with the dedicated team. The team members become intimately familiar with the project, its goals, and the client’s expectations, resulting in higher productivity and better alignment. Additionally, a dedicated team offers scalability options, allowing the client to adjust the team size based on project requirements easily.

Within a dedicated development team, roles and responsibilities are clearly defined. They typically include software developers, quality assurance specialists, project managers, and other roles specific to the project’s requirements. This dedicated team structure fosters collaboration, accountability, and a shared sense of ownership, leading to efficient and successful offshore software development projects.

Best Practices for Managing Offshore Software Development Services

Preparing your team for offshore collaboration

To ensure a smooth offshore collaboration, preparing your team for the unique dynamics of working with an offshore software development service is essential. First, familiarize your team with common offshore software development terms and concepts. This will promote a shared understanding and effective communication with the offshore team. Additionally, establish clear communication channels, both synchronous and asynchronous, to facilitate seamless collaboration and timely information exchange.

Utilize offshore software development to achieve greater success
Utilize offshore software development to achieve greater success

Setting expectations and goals

Clearly defining project requirements and milestones is crucial for successful offshore software development. Ensure that your team and the offshore service provider understand the project’s scope, deliverables, and timelines. Communicate your expectations and goals to align everyone towards a shared vision. Regularly monitor progress and performance metrics to ensure the project stays on track and meets the desired outcomes.

Building strong relationships with offshore teams

Building strong relationships with offshore teams is a key factor in the success of your collaboration. Cultivate trust and cooperation by fostering open and transparent communication channels. Encourage regular interactions and establish a culture of inclusivity and respect. Regularly evaluate the progress and provide constructive feedback to address issues and foster continuous improvement promptly. Building a strong relationship with the offshore team promotes effective collaboration, enhances productivity, and improves overall project outcomes.

Leveraging project management tools and technologies

Project management tools and technologies play a vital role in managing offshore software development services. Leverage appropriate project management tools to facilitate efficient task tracking, document sharing, and communication. These tools can streamline project workflows, enhance visibility, and promote transparency. Collaborative platforms, version control systems, and task management software can also contribute to effective project management and streamline the coordination between your team and the offshore service provider.

Conclusion

It is important to reiterate the significant advantages that offshore software development services offer to businesses. By opting for offshore development, companies can unlock cost savings, tap into a global talent pool, and achieve scalability and flexibility in their development projects. Offshore software development services provide opportunities to accelerate innovation, increase productivity, and gain a competitive edge in the market.

To navigate the complexities of offshore software development successfully, we emphasized the importance of acquiring knowledge and preparing your team. Understanding the common terms and concepts in offshore development allows you to effectively communicate with offshore teams, manage expectations, and overcome challenges. Educating yourself and your team will set the stage for fruitful and successful offshore collaborations.

Dig deeper into SupremeTech’s offshore development services

SupremeTech delivers multiple service lines to serve client’s individual needs flexibly. Explore our service lines and our expertise to find your best fit!

Book a free consultation with us now!

Related Blog

Gensync top 2 Hackathon AI SupremeTech 2025

AI

AI-assisted development

+0

    How Human Intelligence and AI Capabilities Can Redefine Software Development | Featuring The 1st Runner-Up of SupremeTech AI Hackathon 2025

    After 2 weeks of thorough assessment, our judges have officially announced the top threes of SupremeTech AI Hackathon 2025. In a final scoreboard where the results were incredibly close, GenSync impressively secured the first runner-up position, missing the crown by just half a point. Their success didn’t come by chance. It was the product of sharp preparation, savvy use of AI, and teamwork that ran like clockwork. GenSync perfectly embodies how human intelligence and strategic thinking, when combined with effective AI application, can create exceptional outcomes.  That’s the same winning formula SupremeTech is bringing to life: Building AI-assisted solutions that elevate performance and cut costs without cutting corners. Let’s take a look back at what made GenSync stand out, and how about trying to apply AI the way they did to build a truly working MVP in just 22 hours. For details about the solutions, tech stack and highlighted prompts, scroll down to the Appendix section. Prepare a Strong Foundation Before the Starting Line  Right after registering for the Hackathon, this crew was already architecting the workflow and put into practice the whole process. GenSyncs is no doubt the most well-prepared team in this hackathon.  They treated preparation like a mini hackathon of its own, consolidating in just two intensive planning sessions: Session one: Roles were assigned to make sure that each member knew exactly which hat to wear: Backend, Frontend, Mobile, BA, QC, Scrum Master. The smart move was to utilize the Agile Development Project Life Cycle and craft it into a mini version that runs smoothly in 22 hours. We will dive deeper into this point in the next section. Session two: The team dove into the fun part: prompt experimentation. They exchanged prompt-crafting know-how like secret recipes and tested which AI models played best with their ideas. Trial runs with mock challenges helped them fine-tune the prompts to generate the satisfied output. By the end, they’d not only aligned as a team but had built what can be called “a structured prompt playbook”. “We treated AI as part of the team, not just a tool. For the “master” prompt that generates system design, I tested the prompt myself based on past experiences to come up with the most efficient prompt. If you took the prompt from somewhere on the Internet without curating it, it may never work the way you want”Tuan Mai - Technical Leader of the team AI-Assisted, 22-hour Mini Version of the Agile Development Project Life Cycle As said, one of the smart moves of GenSync is to utilize Agile Development Project Life Cycle as a skeleton of their hackathon strategy. By applying selectively the framework, GenSync achieved harmonized, well-managed project management. Members collaborated smoothly with each other like a rhythm because everyone is already familiar with Agile in their daily work.  They simply empower Agile with several AI co-pilots, namely GPT-5, Claude 4.0 and Github Copilot.   The team broke the challenge into sprints just like any other project. But instead of endless spreadsheets, they let prompts do the heavy lifting: Sprint 1: Ideation. GPT-5 and Deep Search acted as their research department, scanning the latest tourism tech trends and helping the team shape their concept in record time. Then came the human touch: the team weighed every AI suggestion against their own experience across backend, frontend, and mobile development to come up with the final concept file. It acts as the North Star of their project.Sprint 2: Design. Claude 4.0 turned those ideas into tangible structures. From architecture diagrams to data flow logic, every detail was auto-documented and formatted with machine precision. The team even used prompts to list and prioritize screens according to business objectives.  Sprint 3: Implementation. Using GPT-5, Copilot, and Claude Sonnet, they created a complete work lifecycle. GPT-5 helped write guidance files for Copilot, defining logic structures, and coding styles.Copilot followed screen flows in the master design to code while developers focused on creative logic.Claude Sonnet handled documentation and integration.Sprint 4: Review & Testing. Code was co-reviewed by robots and humans. Copilot and GPT-4 took the first pass, while Claude Sonnet and the QC member ran automated API testing, BA handled UI tests to ensure the demo ran beautifully.  In short, they built a collaboration model with AI. Humans provided direction, AI delivered results, then humans curated the results and instructed AI to improve. Most importantly, the system design and master concept serve as the guiding compass for aligning every feature’s design, ensuring that all functionalities stay true to the product’s overall goal. A Hackathon Experience that Changes the Perspectives of Development Team For Good When asked about what they bring home after the hackathon, Quỳnh Anh, the Business Analyst, shared: “We aim for the trophy, but 1st runner-up place is not bad (haha). Most importantly, this Hackathon completely altered my perspectives towards using AI at work. Now I can use AI as an agent to help analyze and process business requirements”. Quỳnh Anh - Business Analyst Vũ Nguyễn looked back at the journey from a different angle: “Joining the hackathon helped me gain a deeper understanding of the roles of other specialized teams in a project and how to leverage AI to build a product from scratch. After the competition, I even built my own website to support QC certification exams with AI. I used the very same prompts our team created during the hackathon. The journey was truly a blast. The leftovers are memories and invaluable experiences.”Vũ Nguyễn - Scrum Master, QC and Team Leader GenSync currently holds the record as the team with the most code written in the hackathon, boasting over 100,000 lines of code. Final Words We are glad that our first AI hackathon turns out to be exactly what it’s designed to be, a laboratory for the future of teamwork, creativity, and intelligent development.  At the end of the day, is AI stealing jobs from software developers? After hosting an internal AI hackathon and witnessing the performance of our engineers, we SupremeTech seem to have an answer for ourselves. Artificial intelligence definitely cannot replace the creativity and sophistication in human minds. And those are among the driving forces of a product’s success. If well managed, however, AI will create an unprecedented advantage in terms of speed and implementation capabilities for those who act first. Follow us to get more insights about how to utilize AI-assisted development to build products faster and more cost-efficiently. Or simply book a free consultation if you have an idea that you want to make it happen fast.  >>> Read more related articles: SupremeTech’s AI Hackathon 2025: A blend of Product-Focused Spirit and AI-assisted DevelopmentA to Z about SupremeTech’s AI Hackathon 2025: Why We Do It and What to Expect Appendix: Overview of the Product The challenge: Destination and Experience Management System for Tourism In this statement, teams are required to develop a platform that streamlines group trip management. The solution should enable organizers to coordinate transportation, schedules, and interactions in one place, instead of relying on scattered tools like messenger apps.  The solution: MVP mobile apps that allow users to view tour details and interact with other tour members. Admin apps that allow companies in the tourism industry to manage destination and customer experience.  The apps is optimized for group tour management with 6 main features: Tour creation Scan QR code to view tour schedules holistically Realtime chatbot to stay connected with other members in the tourAI chatbot to support search and customer servicePush notifications to keep users updated with new changes in tour scheduleRecommendation engine for tourist attraction suggestions Highlighted Prompts Sprint 1: Ideation: Sprint 2: Design Sprint 4: Review & Testing Team Vu Nguyen Q - Scrum Master, QC and Team LeaderTuan Mai A - Technical LeaderHan Le T S - AI EngineerLong Ngo D Q - FE EngineerAnh Nguyen T Q - Business Analyst Tech Stack Frontend: Next JSBackend: Nest.JS, Open AIMobile: Flutter Infrastructure: AWS, Render Recommendation engine: GorseChatbot & Memorizer: RAG 📩 Read more articles about us here: SupremeTech's Blog

    17/10/2025

    26

    AI

    +1

    • AI-assisted development

    How Human Intelligence and AI Capabilities Can Redefine Software Development | Featuring The 1st Runner-Up of SupremeTech AI Hackathon 2025

    17/10/2025

    26

    1 [BA Series] The story of a BA – My journey into the field

    Our culture

    +0

      The Story of a Business Analyst – My Journey into The Field

       "You don’t need an IT background to become a Business Analyst — as long as you have passion, perseverance, and a willingness to learn." Hi, I’m Quỳnh Anh, currently working as a Business Analyst (BA) at SupremeTech. If someone had told me a few years ago that “you might end up working in the tech industry,” I probably would’ve laughed and shaken my head — because I studied at the University of Foreign Language Studies – University of Danang, which has nothing to do with IT. And yet, somehow, fate led me to the BA role — something I had never even heard of before, but have now come to truly enjoy and feel connected to every single day. Here’s my “beginner’s journey” — from having zero knowledge to finding my path in the fascinating world of technology. First steps into the IT world Back then, I had no idea what a BA was. I only vaguely knew it was something “related to IT.” Through a friend’s recommendation, I joined a basic training course at a software company to explore the field. That course introduced me to my very first concepts of business processes, programming, databases, and MySQL. Everything felt new — sometimes even overwhelming — but incredibly exciting. Still, when the course ended, one question lingered in my mind: “What does a BA actually do every day? And how are these lessons applied in real projects?” That question stayed with me — until I got the chance to intern at SupremeTech. Internship – Where my Business Analyst journey became clearer Thanks to a collaboration program between SupremeTech and my university, I was accepted as a BA Intern. That became the first turning point that allowed me to truly “touch” the profession. Although I wasn’t directly involved in client projects, every day during my internship opened new doors for me: Learning how to listen and communicate with clients to truly understand their needs.Getting familiar with common Japanese IT terms used in the workplace.Writing clear and concise business documents.And most importantly, understanding how a non-IT person can effectively communicate and collaborate with technical teams. The seniors in my team were always patient, sharing not just knowledge but real project experiences. Thanks to their support, I no longer felt intimidated — instead, I grew more curious and passionate about becoming a BA. Read more articles: When Technology Meets a Pioneering SpiritSparking the Fire, Spreading the Passion From intern to Full-time Business Analyst My internship eventually ended, but my journey with SupremeTech didn’t stop there. With a proactive mindset and eagerness to learn, I was offered a full-time position — and that’s when my real BA journey began. This time, it wasn’t about lessons or training sessions anymore, but about real work: Analyzing business requirements with clients.Writing detailed documentation for developers.Reviewing and validating requirements to ensure the product meets business goals.Communicating constantly in an Agile environment — where things move faster than you expect. Of course, it wasn’t always smooth. There were days I felt overwhelmed, confused by technical discussions, or unsure how to convey ideas clearly to the dev team. But thanks to the solid foundation from my internship and the support of my teammates, I learned to stand firm and keep moving forward. What being a Business Analyst means to me For me, being a Business Analyst is a journey without a finish line — there’s always something new to learn, new people to connect with, and new problems to solve. If you’re curious about this career, my advice is: “Don’t be afraid to start, no matter what background you come from. Keep your curiosity alive and never stop learning — you’ll eventually find your own path.” I’m deeply grateful to SupremeTech for giving me the chance to begin, to make mistakes, to grow, and to become who I am today. And if you’re curious about the BA world, stay tuned for our ‘The Story of a BA’ series — because who knows, you might just see a bit of yourself in the stories to come.

      10/10/2025

      114

      Our culture

      +0

        The Story of a Business Analyst – My Journey into The Field

        10/10/2025

        114

        point-based loyalty program in Japan

        Retail

        +0

          Inside Japan’s Point-Based Loyalty Culture: The Power of Point Networks and the Rise of Custom Programs

          In our article The History of Point Culture in Japan and What Businesses Can Learn From It, we got a chance to explore how loyalty programs in Japan evolved from humble stamp cards to mobile-first systems, and how the habit of collecting points became a part of everyday life. This follow-up takes the story further. Today, Japan’s loyalty economy is powered by two major forces. On one side, nationwide networks such as Rakuten, d POINT, and the newly merged T-Point/V-Point dominate at massive scale, influencing where people shop, how they pay, and even how they invest.  On the other, retail giants and luxury brands are increasingly building their own custom loyalty programs to secure financial control, protect their brand identity, and design experiences tailored to their customers. Together, these trends reveal why loyalty in Japan is not just a marketing tactic, but a strategy to shape the future of retail. The Dominance of Major Point Networks When it comes to loyalty points in Japan, the scale is impressive. Some programs have grown so large that they function almost like economies of their own, shaping where people shop, how they pay, and even how they invest. This success is deeply tied to Japanese consumer culture. According to the World Bank, households in Japan collectively hold savings worth more than USD 1.3 trillion. With this cautious mindset, loyalty programs resonate strongly because they speak to the instinct to save, while still delivering the little thrill of getting something “extra” from everyday spending. The numbers highlight just how powerful this model has become. In 2023 alone, Japanese companies issued more than ¥2.65 trillion worth of reward points, a figure that continues to rise. For payment providers and retailers, these points are far more than giveaways. They are strategic tools to lock customers into ecosystems: once you start collecting Rakuten Points or d POINTs, you are more likely to keep shopping, paying, and even investing within that network. In fact, points are even crossing into finance. Rakuten Securities now allows members to use Super Points to buy stocks. For many younger consumers, this lowers the barrier to investing turning spare points from online shopping into their very first financial assets. It’s a clever way to both reward loyalty and build new habits for the future. By 2024, a handful of nationwide programs dominate the loyalty landscape: Rakuten Points (59.3% of consumers), T-Point (48.3%), Ponta (40.5%), d POINT (38.9%), and PayPay Points (38.1%).  One of the most significant shifts came in 2022, when T-Point and V-Point announced a merger, creating one of the largest loyalty networks in Japan. This consolidation was more than just two brands joining forces, it was a sign of how competitive the loyalty market has become. By combining their strengths, the new program ranked among the country’s top five ecosystems, with the scale to challenge even Rakuten and d POINT. For consumers, it meant broader usability of points across more merchants; for businesses, it highlighted the reality that loyalty is no longer optional, but a key battleground for customer engagement. For consumers, this makes everyday life easier. For businesses, it creates pressure: join one of the big networks or risk being left out. Together, these point economies demonstrate how loyalty has evolved from a simple perk into one of the most powerful forces in Japanese retail. Custom Point-Based Loyalty Programs Trend Led by Japan’s Giant Retailers and Luxury Brands Alongside these giant loyalty networks, another trend is emerging: the rise of custom loyalty programs. Retail groups, department stores, and lifestyle brands are increasingly building their own systems instead of joining national coalitions. AEON has expanded WAON Points across its malls and supermarkets, Don Quijote uses its own Majica card, and FamilyMart now pushes FamiPay rather than relying on T-Point. In the department store sector, Isetan Mitsukoshi runs MI Points with VIP tiers, while Daimaru Matsuzakaya offers an app-based membership program that doubles customer spending compared to non-members. Even lifestyle brands are using loyalty to reinforce their identity. MUJI, for example, runs its MUJI Passport app, which rewards shoppers with points for purchases, grants birthday perks, and offers early access to events or new collections. The app integrates seamlessly across MUJI’s online and physical stores, while its clean design reflects MUJI’s minimalist brand philosophy. It shows how custom programs can be more than just a tool for discounts, they can strengthen the relationship between brand and customer by staying true to the company’s values. >>> Read more related articles:  Restaurant Mobile Ordering App: Transform or Lag behind the CompetitionHow Loyalty Apps Can Improve Customer Lifetime Value (CLV) Why Luxury Brands Are Creating Their Own Loyalty Financial Control & Profitability One of the biggest reasons luxury brands and retailers choose to run their own point systems is financial. Large national networks charge brands based on user activity, meaning the more customers use points, the more the brand pays out in fees. On top of that, when points issued by third-party systems expire, the unclaimed value is recognized as profit for the operator of that network, not for the brand. By creating their own loyalty system, brands can keep this financial upside in-house, turning expired points into pure profit and avoiding ongoing external charges. Ownership of Customer Data & Identity When a retailer runs its own loyalty program, it gets direct access to data: what customers buy, when, where, how often. More than that, it can design the “feel” of the loyalty experience, how it looks in the app, what kinds of rewards are offered, and how membership levels are structured. For many brands, preserving this identity is crucial. Customers don’t just want generic points; they want rewards and interactions that feel part of that specific brand’s atmosphere. Customizable Rewards & Campaign Flexibility This is perhaps the most important reason why brands want to have a private system. This gives brands the ability to customize how points are earned and redeemed in line with their marketing strategy. They can run x2 or x3 point multipliers during exclusive campaigns, convert points into vouchers for specific products, or target promotions to selected customer segments. This kind of precision is nearly impossible with third-party networks, where point accrual and redemption rules are standardized. For luxury brands, that flexibility is key, which allows them to design campaigns that not only drive sales but also strengthen their brand story and exclusivity. Financial Comparison: Networks (Coalition) vs. Custom (Own) Loyalty Programs TopicGiant Loyalty NetworksCustom Loyalty AppExpired PointsWhen points expire, the value usually stays with the coalition operator, not the brand.The brand keeps all the value from expired points as pure profit.Market ScaleCoalitions dominate because of large networks (e.g. T-Point, Rakuten). Brands may feel forced to join for reach.Own programs are smaller but allow full value capture and closer customer ties.Customer Data OwnershipLimited: coalition networks keep most customer data, and brands only see summary reports.Full: brand knows exactly who buys, what, when, and where, enabling stronger personalization.Profit ImpactSome profits are lost to fees and expired points that go to the coalition.All upside stays with the brand, improving long-term profit. Challenges of Building Custom Loyalty App Of course, building a custom loyalty program is not without trade-offs. Unlike joining a nationwide network, brands must shoulder the responsibility themselves. That means investing in the right technology, maintaining a seamless user experience across online and offline channels, ensuring data security, managing the costs of rewards, and keeping members engaged through ongoing campaigns. This is where the right technology partner makes all the difference. At SupremeTech, we’ve worked with Japanese retailers and service providers to design loyalty ecosystems that are both scalable and brand-authentic. From integrating mobile wallets and e-commerce platforms to building real-time data pipelines that unify customer behavior, our teams help brands modernize without losing their unique identity. A good example is where we developed a custom Shopify app to streamline our client loyalty data pipeline across offline POS, e-commerce, and mobile. By connecting these touchpoints, the client could finally unlock a “single source of truth” about customer engagement enabling smarter campaigns, cleaner data, and ultimately stronger loyalty outcomes. (You can read the full case study here: Shopify Custom App to Streamline Loyalty Data Pipeline) The lesson is clear: technology should amplify tradition, not replace it. With the right architecture and an experienced partner, brands can turn the century-old Japanese habit of point collecting into a modern, data-driven loyalty engine that is ready for the future. What Businesses Can Learn from Japan’s Loyalty Culture The first lesson is to make the process effortless. In surveys, over 87% of Japanese point collectors said their ideal is to earn loyalty points rewards without realizing it. The best programs don’t force customers to jump through hoops. Instead, they tie points automatically to common actions like mobile payments, train rides, or even buying lunch at a convenience store. The second lesson is to build ecosystems, not stand-alone programs. Rakuten, Docomo, and PayPay succeed because they integrate points across multiple industries shopping, banking, telecom, travel. Each service feeds into the same pool of rewards, creating a closed loop where leaving the ecosystem means losing value. This is what keeps customers engaged long-term. For businesses abroad, the takeaway is clear: don’t treat loyalty points as just another promotion. Treat them as part of your customer’s lifestyle. When loyalty points rewards are seamless, practical, and connected, they stop being an incentive and start becoming a habit. Conclusion: More than Just Points The story of Japan’s point based loyalty programs shows that loyalty is built transaction by transaction, habit by habit, until it becomes part of daily life. For businesses, it’s a reminder that the strongest rewards programs are not those that simply give discounts, but those that create ecosystems, engage emotions, and embed themselves into routines. At SupremeTech, we help businesses take on that challenge building custom apps, integrating e-commerce and designing real-time data pipelines that make loyalty seamless and scalable. Just as Japan has shown, loyalty done right is more than just a promotion. It’s a tradition transformed into a digital advantage. 📩 Read more articles about us here: https://www.supremetech.vn/blog/  ☎️Contact us to see how we can support your loyalty app strategy.

          03/10/2025

          219

          Retail

          +0

            Inside Japan’s Point-Based Loyalty Culture: The Power of Point Networks and the Rise of Custom Programs

            03/10/2025

            219

            The History of Point Culture in Japan and What Businesses Can Learn From It

            Retail

            +0

              The History of Loyalty Point Culture in Japan and What Businesses Can Learn From It

              In Japan, loyalty point culture has become second nature. From everyday shopping to train rides and online payments, points are deeply rooted into daily life in a way that few other countries can match. What started with simple paper stamps more than a century ago has evolved into mobile-first ecosystems that shape how people shop, save, and even invest. This article takes you through the fascinating history of loyalty point culture in Japan, how the digital era is reshaping the habit, the many ways consumers now earn and use points, and the vibrant poikatsu subculture that has turned point collecting into a lifestyle. The Roots of Japanese Loyalty Point Culture Obsession Japan’s passion for loyalty points has a surprisingly long history. The very first known program dates back to 1916, when a clothier in Kita Kyushu City, Kuga Gofukuten, rewarded repeat customers with paper stamps that could later be exchanged for goods. In 1928, confectionery maker Ezaki Glico, the company behind the world-famous snack Pocky, took the idea to a national scale. Glico placed coupons inside candy boxes, and children who collected 20 coupons could trade them in for a toy or gift. This strategy turned candy into a fun challenge and built emotional loyalty to the brand. The loyalty culture grew slowly at first. It wasn’t until the late 1950s that American-style trading stamps arrived in Japan. Trading stamps were small coupons given out by stores for each purchase. Shoppers could paste them into booklets, and when the booklet was full, redeem it for merchandise from a catalog. By the 1980s, loyalty took a leap forward with the spread of cash cards and credit cards. Card issuers began attaching rewards to encourage spending. In 1984, airline ANA launched its first mileage card, letting travelers turn flights into redeemable points. A year later, in 1985, electronics retailer Yodobashi Camera introduced one of the country’s earliest retail point cards, giving customers a discount on purchases. For shoppers, it felt like free money but for retailers, it was a clever way to keep customers coming back instead of going to another shop. The movement accelerated quickly. By the late 1990s, loyalty cards were everywhere not only in retail, but also in department stores, hotels, and banks. From this point onward, Japan entered the modern era of nationwide point networks, many of which still dominate daily life today. In 2002, Rakuten launched its Super Points program, first as a simple cashback on its e-commerce site, but soon expanding into a vast ecosystem that covers credit cards, travel bookings, banking, and even mobile services.  Just a year later in 2003, Culture Convenience Club (the company behind Tsutaya video rentals) introduced T-Point, Japan’s first large-scale coalition loyalty program. Suddenly, customers could earn and spend points not just in one store, but across convenience stores, gas stations, restaurants, and online platforms.  In 2007, Seven & i Holdings, operator of 7-Eleven, rolled out Nanaco, a prepaid e-money card that also rewarded shoppers with points for everyday purchases. Ponta, launched in 2010 by Lawson and GEO, later deepened its reach through a tie-up with telecom giant. Meanwhile, NTT Docomo brought its massive subscriber base into the loyalty world with d POINT in 2015, quickly extending the program beyond telecom to retail, dining, and even Amazon Japan. The latest wave came from the mobile payment boom: in 2018, SoftBank-backed PayPay launched aggressive cashback campaigns that made QR code payments mainstream, later rebranding its system as PayPay Points in 2022. How Digital Eras is Changing Collecting Loyalty Points Habit of Japanese Looking back, it’s clear that the tools have changed, but the habit itself has not. From paper stamps in a clothes shop to QR-code payments at a convenience store, Japanese consumers have always loved the small reward that comes with everyday spending. Whether traditional or modern, the joy of earning points remains the same. A survey by NTT Docomo revealed just how deep point based loyalty program culture runs: over 80% of Japanese people between 15 and 79 years old actively look for ways on how to get loyalty points in their daily shopping. Imagine buying the same bottle of green tea at two different stores. Most people will choose the one that gives them points. For brands, this shift is both an opportunity and a challenge. On the one hand, digital platforms make it possible to connect loyalty across physical stores, e-commerce sites, and mobile apps, creating powerful ecosystems. On the other hand, companies must be careful: how to apply digital transformation to your business without losing the identity and trust that your brand has built over decades? The lesson from Japan’s loyalty story is that technology should not erase tradition but it should amplify it. The habit of collecting points has lasted more than 100 years and will continue to last for a long time. Brands that adapt loyalty to new digital platforms while preserving the sense of authenticity will succeed. Many Interesting Ways Japanese Earn Points In Japan, how to get loyalty points is no longer just about swiping cards at the cashier. Today, most point based loyalty programs are tied directly to mobile apps, making it possible to collect loyalty points rewards almost everywhere and in surprisingly fun ways. 1. Online Shopping & Mobile payment apps This is the most common way to get loyalty points, for platforms like Rakuten Ichiba give Rakuten Super Points when you buy anything online, you will often get 1% back, sometimes much more during special “bonus point” events. Mobile payment apps like PayPay or Rakuten Pay automatically give you points when you pay with your phone. Many Japanese consumers now choose cashless payments not just for convenience, but because every tap of their phone means a few extra points earned. 2. Commuting & Public Transport The JRE (Japan Rail East) provides a loyalty points program via their Suica card (e-money transport). When using Suica, especially its mobile version, you can earn points with bonus rewards on off-peak hours or repeating use the same train line over ten times a month. These points aren’t just for travel. They can be earned or redeemed at JRE Mall, convenience stores, food stalls, and vending machines in stations. Travellers can even use them for Suica top-ups or seat upgrades on bullet trains. Since Japanese train stations are filled with shops and vendors, the program feels both convenient and rewarding in everyday life. 3. Streaming, Subscriptions and Digital Content Even your entertainment choices can earn you point based loyalty rewards. For example, Rakuten integrates its Super Points into its digital ecosystem: buying an eBook, subscribing to a movie streaming service, or even booking an online concert can all add points to your balance. What makes this powerful is that the points you earn for leisure can later be spent on essentials like groceries or utility bills. This blurs the line between fun spending and serious savings making loyalty points a subtle but effective part of household budgeting. 4. Special Promotions and Bonus Campaigns One of the reasons point based loyalty programs remain exciting in Japan is the constant stream of promotions. Japanese consumers often treat these events like mini holidays, planning big purchases to match promotion days. The campaigns are usually gamified like “stamp rallies” where collecting digital stamps across partner stores unlocks extra points. It’s not just about saving, it’s about the thrill of chasing the deal. This playful approach keeps loyalty systems fresh and prevents customers getting bored of them. 5. Cross-Industry Ecosystems What sets Japan apart is how connected loyalty programs have become. Instead of being limited to one store or chain, many systems now span across industries. This ecosystem model makes loyalty programs much more sticky. For businesses, this strategy doesn’t just keep customers coming back, it ties them into a long-term relationship where loyalty points are the “glue” holding everything together. 6. Mobile Apps and Gamification Japanese loyalty programs have taken full advantage of gamification. For example, PayPay adds lottery-style raffles where every transaction is a chance to win bonus points. Some apps even push eco-friendly missions like bringing your own bag to a store that grants loyalty points rewards for sustainable behavior. This playful style has turned point collection into something closer to a hobby than a financial tool. >>> Read more related articles:  Restaurant Mobile Ordering App: Transform or Lag behind the CompetitionHow Loyalty Apps Can Improve Customer Lifetime Value (CLV) Interesting Stories from the Poikatsu Subculture In Japan, collecting points is not just a financial habit but it’s a hobby, and for some, even a lifestyle. This has given rise to a colorful online subculture, where people swap tips, track campaigns, and share their point-hunting adventures. There is a huge Japanese influencer called Chuken. On Twitter, he shares strategies on how to maximize loyalty points and proudly calls himself a “point star” He claims to earn over 1 million yen (around $10,000) worth of points a year enough to cover bills, vacations, and even beauty treatments. For him, points are not pocket change, they are a second income stream. Then there’s Sekko, a single mother who has turned poikatsu into both a money-saving tool and an online persona. Her audience, mainly parents, follows her for hacks like redeeming enough points to get a year-long Disneyland pass for her child. She’s even appeared on national TV shows, proving that loyalty programs in Japan are big enough to push ordinary people into the spotlight. On YouTube, Ryogakucho has built a following of more than 600,000 subscribers by teaching point-hacking in step-by-step videos. His tutorials cover everything from Rakuten’s Super Point Up system to time-limited campaigns, often delivered with a cartoon mascot cheering along. For many viewers, his channel turns what could be dry financial advice into something closer to entertainment. While others poikatsu youtubers post daily point-tracking charts, mapping which payment apps or cards are offering the best deals. Fans treat this like checking stock market updates except the currency is loyalty points instead of shares. Conclusion The history of loyalty point culture in Japan reveals more than just how rewards have changed over time, it shows how deeply poikasu culture is in consumers' minds. From stamps and coupons to digital wallets and online platforms, the tools may look different, but the love for points has never faded. For many Japanese consumers, collecting points is not only about saving money, it’s about the fun, creativity, and community that come with it. And the story doesn’t end here. In the next article, we’ll look at the power of Japan’s major point networks and the rise of custom programs led by retailers and luxury brands, exploring how these systems are shaping the future of loyalty and what businesses worldwide can learn from them. 📩 Read more articles about us here: https://www.supremetech.vn/blog/  ☎️Contact us to see how we can support your loyalty app strategy.

              01/10/2025

              205

              Quy Huynh

              Retail

              +0

                The History of Loyalty Point Culture in Japan and What Businesses Can Learn From It

                01/10/2025

                205

                Quy Huynh

                Customize software background

                Want to customize a software for your business?

                Meet with us! Schedule a meeting with us!