The Rise of eSIM: Is Mobile Going Shopless?

April 12, 2023
In 2022 Apple made a game-changing move that could drive the mobile buying experience shopless. They launched the new iPhone 14 with NO physical SIM card. They went 100% eSIM. To say that this is significant move would be an understatement! The legacy MNOs, worried about customer churn, due to the ease of changing carriers, have been wary about going all-in on eSIM. Will that change now with the premier phone going eSIM?

The current eSIM landscape.

eSIMs is a digital SIM card embedded in a mobile device, rather than a physical card that is inserted into a tray in the phone.  With eSIM you can activate your mobile plan without having to visit a physical store to purchase the SIM card or have it mailed to you. You do not have to figure out how to install the SIM or have a tech or sales rep put it in your phone for you. Eliminating such dependencies makes purchase and activation extremely easy.

To set up an eSIM you either use your device’s settings or use the carrier’s mobile app. Setup can happen in as little as 5 minutes.

With eSIM you can have multiple numbers and plans. So, for those who want a personal line and business line on the same phone or travel to multiple countries, once it is set up, you are done. No more carrying two phones or hunting down a SIM card in a new country before you are operational.

And finally, for buyers who are environmentally conscious, going the eSIM route aligns with their values. With nearly 5 billion produced annually, the shift to eSIM will significantly reduce waste.

According to Omdia, while eSIM is beginning its rapid growth on the device side (32% of devices now have eSIM), the consumer usage has not yet aligned. Only 1% of users actually opt in for eSIM. Much of the lack of adoption is a combination of operators not marketing eSIM, device makers still making physical SIM-based phones, and lack of consumer education around eSIM. With the new iPhone 14 being eSIM only, consumer adoption will take off.

How does eSIM support a shopless experience?

While the major carriers will likely continue to leverage stores in their customer acquisition model, MVNOs will take the lead in going fully virtual and leveraging eSIM to make that happen.

MVNOs can launch digital brands built on segmented markets that their target customers value. Things like eSports, Music, Social Responsibility, are examples. They will market heavily to 20-somethings who are brands, influencers, and experience-minded buyers who are often digital natives, comfortable doing everything online.

In a recent webinar titled, “Embrace eSIM Now,” triPica’s Mathieu Horn demonstrated how quick and easy it is for a user to go from plan purchase to activation and setup in as little as 5 minutes. triPica's first on the market since 2016, cloud-native fully digital BSS helps MVNOs quickly launch digital brands and leverage eSIM technology in the process. And because it is tailored to operators who want to quickly launch or test digital brands, there is a heavy focus on a seamless user-driven experience. This is unlike the bolt-on apps created by the MNOs, where eSIM and the customer experience is more an afterthought than a critical component as it is for the MVNO trying to take market share.

With no or limited physical stores, no actual SIM card, and low-cost, cloud-based operating technology, MVNOs can offer lower plan rates than legacy major carriers and attract cost-conscious buyers.

Will physical stores selling mobile phones start to disappear with eSIM adoption?

While eSIM can make purchase, activation and onboarding an easy virtual experience, without requiring a customer to visit a physical store possible, there are still some benefits for operators and customers to having a physical storefront presence.

Device Sales. For many mobile phone buyers, they like to be able to pick up and play with a phone before purchasing. They will check out the screen sizes, how it fits in their hand, what the camera zooms look like, the quality of the photos, and many other features. Being able to compare side-by-side often helps a prospective buyer make a purchasing decision. Doing that online only is often difficult.  

Customer Support. When your phone stops working properly or you need help moving all the stuff from your old phone to your new one, having a store close by where you can take it to someone to do all that for you is still a benefit for many customers. This is especially true of X-gen and Boomer customers, where doing everything online is not intuitive enough for everyone to do it and spending hours on the phone or chat with a customer service rep is not as easy as just asking the store rep to just handle it for you.

Service Guidance. Often when changing carriers or plans the buyer has questions about how the plans work, the best one to choose for their needs, etc. Having a customer service representative who can pull up past usage history, review plan options, show updated coverage maps and expected new network upgrades, and what the modern technology does and does not due relative to a buyer’s needs, all gets better with a store-based rep.

So, while eSIM may make many purchases happen online, especially for digital natives like Gen Z buyers, physical stores will likely still be around for a while. However, a logical balance will be struck between types of services that are better done fully online or by AI enabled bot such as enabling a travel eSim at midnight vs in person service such as choosing a new device.

What does the global landscape look like in terms of eSIM adoption?

North America’s seeing rapid eSIM growth with the major carriers (AT&T, Verizon, and T-Mobile). With these carriers though, they are not focusing as much on promoting eSIM as just supporting eSIM options.

One interesting development is the rapid growth and recent acquisition announcement by T-Mobile for MVNO brand Mint Mobile. With a ‘marketing-first” approach and easy eSIM setup, T-Mobile, also a heavily marketing-focused “un-carrier” brand, used to playing catchup against AT&T and Verizon, sees the potential in a savvy startup and might start leading the eSIM revolution with the eSIM-only iPhone 14 push.

Meanwhile, European major operators like Vodafone, Orange and Deutsche Telekom, and Asian carriers like China Mobile, NTT Docomo and Singtel are moving forward with eSIM.  South America and Africa by comparison are far behind as just a few carriers begin to support eSIM.

eSIM and the supporting digital cloud technology will increase the number of operators going shopless.

triPica is helping new MVNO entrants launch market-disrupting digital mobile brands and more established operators test new markets.  Operators leverage its BSS technology to keep their attention on marketing instead of backend IT.  triPica helped many CSPs launch a very targeted offer, such as Source, the 1st eco-responsible telco brand in France and Yoodo, Malaysia’s 1st fully customisable telco with over 2 million offers, demonstrating how a digital telco with eSim can be rolled out in as little as 4-6 months, at a fraction of the cost of a traditional BSS and CRM solution.

As eSIM and online purchase and activation becomes the standard, we’ll likely see two different business models emerge.  Major carriers will evolve and scale back their physical stores to support those who require in person physical support before purchasing or for technical support, and MVNOs may choose to forego a storefront all together based on their focus on the digital native buyer who does not need or want to visit a store.

Embrace eSIM: Learn how eSIM-driven digital business transformation is already generating growth!

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