The COVID-19 pandemic is causing significant disruption to worldwide supply chains. According to the International Trade Centre, global exports of raw materials or components are set to fall by $230 billion due to coronavirus-related supply chain disruptions.
How COVID-19 has exacerbated common operator woes
The crisis has worsened existing long-haul transportation problems in the SIM supply chain. Recent data from Tradeshift, a global platform for supply chain payments, revealed the magnitude of the impact on trade and demand. It suggested the effects of the initial shock may continue to linger for the coming months. In China, domestic and international trade transactions suffered a week-on-week drop of 56% beginning mid-February. The United States, United Kingdom, and Europe followed suit, with a combined initial drop of 26% in the beginning of April, and a continuing decline of 17% in late April.
The pandemic has also introduced some new issues:
- SIM card manufacturing factories (predominantly based in India and China) have significantly reduced production or closed altogether.
- Printing and production of related collaterals such as SIM card packaging, user guides, registration forms etc. have ceased, causing large headaches for most operators’ procurement teams.
- Pressures on commercial cargo transportation has also increased, reporting a 26% drop in capacity driving up prices by more than 60% in the instance of air freight.
- End-user fears about disease transmission and health risks are depressing consumer demand whilst retail stores have closed and are slow to reopen. In the US alone, retail sales fell by 17% in April, and manufacturers like Apple reported revenue dips of as much as 7% from a year ago.
- Social distancing has changed consumer behaviour with the need to avoid physical contact stifling store visits whilst online stores like Amazon have grown exponentially recording almost a 30% increase in revenue in Q1 over the same period last year.
How can MNOs overcome all these issues? Digitisation is the answer with one of the most promising solutions being the embedded SIM and remote SIM provisioning of eUICC profiles enabling network operators to virtualise the subscriber activation process and remotely activate and manage SIMs and subscriptions while avoiding the virus-impaired problems associated with the supply chain of physical goods.
How can MNOs continue to grow?
Most operators recognise the need for the digitisation and evolution of their mobile products and services but due to the coronavirus it’s, arguably, more important than ever. Remote eUICC SIM provisioning eliminates many of the issues associated with physical production and distribution for MNOs. It also increases speed and heavily reduces costs meaning new products can be brought to market quicker and for less.
How to digitise subscriber acquisition
As most new devices, be it phones or wearables, from leading manufactures such as Apple, Samsung, Huawei etc. include an eSIM then the opportunity for users to activate a subscription for their new device virtually is a compelling, easy and immediate option for them. Advantages of operators enabling subscribers to activate subscriptions through eSIM devices include:
- Lower supply chain and manufacturing costs for operators.
- Avoid virus-related health risks thus decreased impact on sales.
- Increased revenue as owners of high and middle-end eSIM devices tend to be high-ARPU users.
- Reduced customer churn of subscribers as they are offered more convenient subscription activation process.
- Competitive differentiation for the operator’s brand with an enhanced offering through the use of new technology.
In particular, during COVID-19:
- Supply chain pressures are essentially removed enabling operators to achieve their new subscription targets.
- Accompanying collateral printing and packaging can be simplified or converted to digital format.
- Consumers are no longer required to visit a retail store or obtain physical SIM card to activate a subscription.
- End-users can activate mobile subscriptions entirely online.
eSIMs can future-proof operators’ businesses
Although the ongoing crisis and other challenges are driving a short-term need to switch to remote eUICC SIM provisioning and management, the benefits are further reaching:
- Consumer expectations are changing, with demand for instant device usability increasing with more and more connected devices using eSIM.
- Remote SIM management allows for comprehensive provisioning, activation and updates.
- This year, with both Samsung and Huawei following Apple’s lead, eSIMs are now the new SIM standard for new mobile devices. Research firm, ABI’s March report forecasts the shipment of over 225 million smartphones this year which means operators must embrace the opportunity before their competition.