Mobile Carriers' Delivery and Unmanned Stores Hit Sudden Brake... Due to COVID-19 Resurgence

[Asia Economy Reporter Seulgi Na Cho] The telecommunications industry's "contactless (untact) distribution innovation," which had been rapidly accelerating due to the outbreak of the novel coronavirus disease (COVID-19), is now ironically coming to a sudden halt amid the resurgence of COVID-19. As cluster infections have intensified recently, especially in the metropolitan area, not only the O2O (online-to-offline) service where store employees personally visit customers who order phones online but also the industry's first unmanned store opening plans are facing consecutive setbacks. These services were all newly proposed by the three major telecom companies, which were hit hard by COVID-19 in the first half of the year, as their "untact strategies for the post-COVID era."

◆ COVID-19 Strikes Again... O2O Services and Unmanned Store Openings Also Disrupted

According to industry sources on the 3rd, SK Telecom initially planned to launch an unmanned store near Hongik University in September but is now considering postponing it to next month. An SK Telecom official explained, "The goal was to open at the end of September, but it seems it will be delayed a bit due to the current situation," adding, "As COVID-19 resurges mainly in the metropolitan area, preparations have also been disrupted."

Unmanned stores are a representative untact distribution experiment promoted by telecom companies. After the unexpected spread of COVID-19 early this year, the telecom industry quickly began transitioning distribution channels to contactless methods faster than other industries. Under the slogan of "three major distribution innovations," SK Telecom was the first in the industry to propose the unmanned store opening plan. LG Uplus also strengthened this movement by deciding to open contactless and experiential stores in Jongno, Seoul.

However, with the resurgence of COVID-19 triggered by cluster infections in the metropolitan area last month and the strengthening of social distancing measures, these untact innovations have also been affected. SK Telecom resumed company-wide remote work on the 18th of last month, and currently, KT and LG Uplus have also expanded remote work. An industry insider said, "Although the telecom industry has systems in place to enable normal work during remote work, some face-to-face tasks inevitably face partial disruptions," describing the atmosphere.

The ambitious phone O2O services launched by the three major telecom companies as new marketing strategies for the untact era are also facing difficulties. These services involve store managers visiting customers at their desired locations to assist with activation, initial setup, and data transfer, catering to customers reluctant to visit dealerships due to COVID-19. However, since last month, as the infection spread worsened, the atmosphere of avoiding face-to-face contact has intensified. SK Telecom has scaled down its "Today Arrival" service following the metropolitan cluster infections. LG Uplus also planned to expand its "Premium Delivery Service" nationwide by the end of this month but is currently considering postponing it.

◆ Untact Marketing by Telecom Companies Stalled

The heads of the three major telecom companies have consistently emphasized "innovation in the untact era." They judged that it was time to present new strategies based on 5G mobile communications and artificial intelligence (AI) suitable for the post-COVID era. However, as COVID-19 prolongs and cycles between calming and spreading, the telecom companies' concerns are deepening.

Marketing plans aimed at activating untact distribution channels to respond to the COVID-19 spread, replacing the frozen offline distribution networks, have been hampered. There are also concerns about further setbacks to management plans, which were to accelerate from the second half of the year, including 5G investments and mergers and acquisitions (M&A). Major pending issues related to 5G network construction this year’s second half include building in-building infrastructure to deliver 5G signals indoors, commercializing 5G standalone (SA) mode, and selecting equipment vendors for base station construction in the 28 GHz frequency band.

Another concern is the possibility of a nationwide pandemic crisis striking again at any time. Although the recent COVID-19 spread due to metropolitan cluster infections is expected to gradually subside after next week, until vaccine development and other measures are completed, the cycle of COVID-19 spread and containment will continue, inevitably increasing management uncertainty.

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