Industrial Research Institute "Non-face-to-face industries like Coupang rise due to COVID-19... Regulation improvement needed"

Increase in contactless online shopping, delivery-based on-demand services, and OTT due to 'social distancing'
"Post-COVID-19, acceleration of new contactless business model development... Active promotion of regulatory improvements"

[Asia Economy Reporter Moon Chaeseok] The Korea Institute for Industrial Economics and Trade, a government-funded research institute, suggested that regulatory improvements should be actively pursued to foster new non-face-to-face industries emerging after the end of the COVID-19 pandemic. It predicted that new business models will emerge across various sectors such as online shopping platforms like Coupang and Market Kurly, drone delivery, and autonomous vehicles.

On the 17th, the Korea Institute for Industrial Economics and Trade argued in its report "Non-Face-to-Face Service Models and Policy Tasks in the Post-COVID Era" that the spread of COVID-19 accelerated innovation in the service industry. It analyzed that new non-face-to-face business models, which had been growing even before COVID-19, have become mainstream.

According to the institute, in the early stages of the COVID-19 outbreak, industries such as travel, accommodation, transportation, and retail were hit hard. Subsequently, due to the implementation of "social distancing," negative effects spread to restaurants, exhibitions and international conferences (MICE), performing arts, and educational services.

After "social distancing," online shopping, represented by Coupang and Market Kurly, established itself as the most common form of non-face-to-face service. As of last year, the sales share of online shopping accounted for 21.4% of total retail sales. In the food service industry, business models that avoid face-to-face contact played a buffering role against the sharp decline in restaurant sales.

OTT service providers experienced rapid growth in the media content sector as the number of "homebodies" who avoid movie theaters, concert halls, and stadiums increased. The online education market has expanded due to aligned interests among elementary, middle, and high schools and universities that cannot indefinitely postpone reopening, academies facing difficulties due to closures, and students.

Source: Korea Institute for Industrial Economics and Trade

New markets are emerging. According to the Statistics Korea Online Shopping Trend Survey, the scale of internet and mobile transaction goods and services reached 135 trillion won last year, a 19.4% increase from the previous year. As telecommuting increased, the market for remote work support tools expanded, sparking serious discussions about the "office-less era."

Non-face-to-face business models that meet changing consumer demands such as an aging population and the spread of single-person households had been on the rise even before COVID-19. There were many cases applying robots or systems such as unmanned stores, unmanned motels, and unmanned parking lots. Recently, business models utilizing the internet or mobile platforms have spread.

New business models expected to be created after COVID-19 include ▲online shopping and unmanned stores (wholesale and retail) ▲logistics (drone delivery) and autonomous vehicles (transportation) ▲accommodation reservations, food delivery, ready meals, touchscreen ordering (accommodation and food service) ▲OTT, internet gaming (content industry) ▲internet-only banks (finance and insurance) ▲platform-based video conferencing (professional, scientific, and technical services) ▲travel reservations, digital exhibition halls (business facility management and business support services) ▲internet education (education services) ▲remote medical care, remote visitation (health and social welfare services) ▲content video production, hobbies (arts, sports, and related services) ▲platform-based (repair and other personal services).

Senior Research Fellow Park Jungsoo of the Korea Institute for Industrial Economics and Trade said, "We need to systematically support service research and development (R&D) to incentivize the development, utilization, and diffusion of technologies applicable to non-face-to-face business models." He added, "We must actively pursue the improvement of related laws and regulations to ensure that new business models take root in the market and also resolve social conflicts that may arise across the socio-economic spectrum."

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