SEOUL, May 19 (Korea Bizwire) — The coronavirus pandemic is giving way to so-called ‘untact’ (no contact) services such as online shopping and delivery applications as a new alternative for the service industry.
Experts argue that policy support is in order to allow new business models to settle in the market as untact services are expected to thrive in the post-coronavirus era.
The Korea Institute for Industrial Economics and Trade said in a report released on Sunday that while the coronavirus outbreak has hurt the overall service industry, it also served as an opportunity for the service industry to innovate.
Production and consumption in certain parts of the service industry began to plunge in mid-February when the coronavirus started to spread across South Korea.
Tourism, accommodation, airlines, and duty-free stores took the brunt of the impact as the number of Chinese tourists dropped. Restaurants, theaters, and education services were also hurt by the coronavirus.
The services production index shrunk from 106.4 in February to 101.7 in March.
Three rounds of social distancing measures carried out in March also brought about social change, including a sales boost among certain businesses capable of offering untact services.
While sales among major distributors dropped by 3.3 percent in March, online distributors saw a sales boost of 16.9 percent.
The proportion of online shopping transactions in overall retail sales went from 22.9 percent in January to 28.2 percent in March, rising by 5.3 percent points.
Untact services also helped restaurants dodge major losses.
According to an industry tracker WiseApp, transactions made on Baemin and Yogiyo, the two major food-delivery service applications in South Korea, increased by approximately 44 percent between January and March.
People who used to enjoy outdoor leisure activities at movie theaters, concert halls and sports stadiums turned to over-the-top (OTT) services that allow them to watch videos at home.
Netflix, for one, saw a 22 percent increase in its subscriber base, reaching 4.63 million users in March. Overall usage time also jumped by 34 percent.
In the education sector, MegaStudy, South Korea’s largest online education service provider, reported that the number of new elementary and middle school students in Q1 jumped by 160.1 percent and 46.5 percent, respectively, compared to last year.
“As the coronavirus has prompted consumers to use untact services, the landscape of the service industry has changed,” said the report. “We expect this trend to continue in the post-coronavirus era.”
H. M. Kang (email@example.com)