[COVID-19 Transformation] Self-Employed Collapsed by COVID-19... Losing Their Place Even in 'Online' Markets

<5>The Crisis of Self-Employment
24% of All Employed Are Self-Employed
3 to 4 Times Higher Than in Developed Countries

[Asia Economy Reporters Hye-seon Lim, Seon-ae Lee] "We will not go back to the way things were, nor can we. There must be a safer and better-prepared 'new normal'." (Tedros Adhanom Ghebreyesus, WHO Director-General)

Since the outbreak of the novel coronavirus infection (COVID-19), the self-employed ecosystem has collapsed. The mainstream of the distribution market is rapidly shifting from offline department stores and marts to online e-commerce. As the latest IT meets the contactless (untact) culture, many self-employed individuals who are not part of large franchises are unable to keep up with technological advances. Jobs are also rapidly decreasing. The World Travel & Tourism Council (WTTC) recently projected a loss of 108 million jobs worldwide in the travel and tourism industry due to COVID-19. In South Korea alone, 270,000 jobs have already disappeared. The 6.55 million self-employed people in South Korea, standing on the edge, must prepare for a long-term battle and adapt to the changing future.

Rapid Growth of E-commerce in Untact Culture

March Transaction Amount Hits Record 12.6 Trillion Won

◆ Online Taking Away the Self-employed's Place = The proportion of self-employed workers in South Korea accounts for 24% of total employment. This is more than four times higher compared to advanced countries such as the United States at 6.3%, the European Union (EU) at 15.5%, and Japan at 10.4%. When a national disaster occurs, the economic impact on the self-employed is significant. As COVID-19 prolongs and economic damage deepens, self-employed individuals are reaching their limits and choosing to close their businesses, creating a vicious cycle. According to Seoul City, 1,600 food hygiene businesses closed between March 1 and 20, an increase of 132 compared to the same period last year. Closures ranged from neighborhood restaurants to chicken shops, pubs, cafes, and convenience stores. The surge in closures caused a sharp drop in employment in March. Especially in industries with high face-to-face contact, such as wholesale and retail trade and accommodation and food services, employment decreased by 168,000 and 109,000 respectively compared to the same period last year.

On the other hand, the untact lifestyle habits over the past four months since January have accelerated the growth of the e-commerce market. According to Statistics Korea, the proportion of online shopping in total retail sales in March reached the highest level ever recorded. Online shopping transaction volume was 12.5825 trillion won, accounting for 28.2% of total merchandise sales (37.3462 trillion won). This is the highest since the statistics revision in 2017. Online shopping transaction volumes were 12.3906 trillion won in January and 11.9628 trillion won in February this year. In March, it increased by 11.8% year-on-year to 12.5825 trillion won.

This is a result of changes in consumer behavior due to COVID-19. As more people stay at home due to telecommuting, transactions for fresh food, convenience meals, delivery food, cleaning products, and clothing through online channels have increased. People buy clothes and cosmetics online and eat convenience meals and delivery food from advanced franchise companies, receiving premium fresh food at home at their desired time. If laundry is left outside the home, it is collected, washed, ironed, and delivered by midnight the next day. The world where there is no need to visit offline stores has come faster through COVID-19. The space for self-employed individuals is disappearing.

Ultimately, to revive the self-employed ecosystem, strategies that maximize the advantages of offline must be implemented. Weststone, a UK offline bookstore chain, focuses on creating a comfortable cultural space filled with creative and small items instead of selling books. From the perspective of providing customer experiences that cannot be offered online, self-employed individuals should pay attention to this.

Maximizing Offline Advantages

Competitiveness Needed to Read Trend Changes

◆ Preparing for the Fourth Industrial Revolution Era = Large franchise companies and distribution businesses are focusing on automation and systemization. The pace has accelerated after COVID-19, making it difficult for small self-employed businesses to keep up. However, experts suggest that COVID-19 has acted as a catalyst for the Fourth Industrial Revolution, and if trends are well understood, it can become an opportunity.

Baek Jong-won, CEO of The Born Korea, the nation's top dining franchise company, said, "Although COVID-19 created a special situation, self-employed people have faced difficulties before and will face various situations in the future, so they must develop their competitiveness and make efforts for self-improvement."

He emphasized that self-employed individuals need to be able to read rapidly changing trends to build competitiveness. Baek said, "Trends change frequently, so you need to develop the ability to read them. For example, actively use internet searches and YouTube to watch videos with many views and articles with many comments, think about why, and reflect deeply."

Just as the delivery franchise 'Baedal Minjok' made Chinese restaurant delivery motorcycles disappear in just a few years, various services combined with the Fourth Industrial Revolution present new opportunities for self-employed individuals. Jung Seong-hwi, CEO of Hongdudang, which operates Daegu Modern Alley Red Bean Bread, also said, "In the post-COVID-19 era, untact O2O (online-to-offline) and delivery services are expected to develop further," emphasizing, "Self-employed individuals must continuously study untact services, which have become a trend, and make ongoing efforts to adapt to change."

There is also criticism that self-employed individuals should not remain only in traditional areas such as restaurants, laundries, and beauty salons. Lee Kyung-hee, Director of the Korea Startup Strategy Institute (CEO of BujaBiz), said, "One impact of COVID-19 is that it acted as a catalyst for the Fourth Industrial Revolution," adding, "Discussions on virtual reality (VR) performance businesses, strengthening mobile and untact services have begun in earnest, and self-employed individuals should find business items in new occupations based on these points."

This content was produced with the assistance of AI translation services.