Adventure of a Lifetime
By Jayesh Gautam
How many times have you resorted to online learning resources to understand what classes couldn’t clarify?
How many times have you used digital platforms to learn new skills and gain knowledge?
If the answer to the above questions is 0, then, my friend, you are most likely to be living under a rock.
And coming to the remaining set, you have contributed to the growth of the powerhouse driving India’s next biggest export to the world, the Education Technology Industry.
Up and Up
With a market size of USD 518 Million in 2018, more than 4450 EdTech startups in India are currently disrupting the country’s education space. By April 2020, this sector had fetched massive investments amounting to USD 717 Million and this amount is expected to reach a whopping USD 2.2 Billion by the end of 2020. The COVID-19 pandemic may have shut down many businesses, but it proved to be a boon for this sector.
EdTech (a portmanteau of Education and Technology) refers to the integration of technology to enhance the process of imparting education and improving students’ education outcomes. While usually misunderstood to be limited to online apps and platforms, it also includes task structuring support such as Smart Boards and Knowledge Repositories like Coursera, Udemy etc.
A Sky Full of Stars
In May 2020, CRISIL indicated headwinds for the Indian Economy by declaring that the COVID-19 pandemic might bring it under the worst recession till date. India’s exports in April 2020 fell by -36.65%YoY, while imports in April 2020 fell by -47.36% as compared to April 2019. State Bank of India research predicts a contraction of ~40% in the GDP in Q1 FY21.
Amidst this stormy and murky situation worldwide, EdTech has emerged as the black sheep of a drowning economy. Its growth does not seem to waver. YourStory, India’s largest media tech company covering the startup ecosystem in India, even goes ahead to say that what demonetisation was to Fintech, this pandemic is to Edtech.
This Sector might just be the sole front-running industry in this pandemic and the numbers seem to reconcile as well.
In March, when Covid-19 was declared a pandemic by the World Health Organization, education app downloads worldwide surged by 90% as compared to the weekly average in the fourth quarter of 2019.
By August 2020, education-focused startups had raised twice the funds they did in all of 2019. Venture capital firms have invested about $795 million in Byju’s, Unacademy, Vedantu, InterviewBit Academy and Doubtnut.com, as per Venture Intelligence, a startup investment research platform.
The onus of this rapid growth has also been on the adaptability of EdTech Startups. Following nationwide school closures, Byju’s offered students free access to its app, causing its total registered users to jump more than 25% to 50 million.
Toppr also claimed to have a 100% growth in paid users month on month and a 50% growth in traffic during Covid-19.
While the industry environment provides ample opportunities for EdTech startups, there are certain challenges that are inherent in such startups.
A few prominent ones are as follows:
How do you price the product so that it is apt for the target users or ensure that they don’t get it for free elsewhere?
- Biased Perception:
The education market is a user of traditional brick-and-mortar structure, creating a strong perception that online education offerings are of lower quality.
This perception severely hampers the ability to charge higher prices for the same quality of a product.
Case in point: Byju’s charges around USD 300 for the whole year’s content for Grade 9, as compared to USD 80 – USD 110 per month for a home tutor.
- Trust Issues:
Due to a lack of trust in online education, people only use EdTech services over and above the traditional ones. This makes the online content priced higher making it hard to reach the masses.
- Free Free Free:
The internet offers students a plethora of academic resources that are freely accessible making it difficult to build a user-base that is willing to pay for subscriptions.
- No-Size Fits All:
Each customer (school/college/teachers/students/youth) belongs to a different demographic and economic segment, the product features they need and their bandwidth or storage requirements also vary. As such, a flat pricing structure is not feasible.
- Customer Acquisition
How do you sell studying online to students who just got free from school classes?
Unlike social media, entertainment and gaming apps and websites, youth in India spend a pretty low amount of time and money on education apps. Due to this, EdTech companies spend a large quantum of funds to penetrate into the online space of youngsters and job-seekers.
- High Advertisements Cost:
How many brick and mortar schools advertise? Traditional education providers typically spend no more than 10 percent of their revenue on acquiring customers.
In 2019, Byju’s spent a whopping 20% of their revenue on TV advertisements.
- Hello? Namaste? Khamma Ghani?
India is a diversity hub catering to a variety of ethnicities, and EdTech companies face the challenge of dubbing or re-creating their content in languages that can be understood by regional audiences.
As such, consumer acquisition becomes a problem when online content is offered in English and Hindi and the learner population prefers its own regional language as a medium of instruction.
- Student Retention
How to make students use your app more than Among Us?
The chances of leaving your school are relatively low. Can you say the same for an app? Traditional educational institutions have a stickiness factor which means that a student once enrolled, stays in the same school for a significant period of time, thus leading to high lifetime values. The same cannot be said for digital education.
The digital medium also makes switching costs low – not having to figure out the transport, the friend circle etc.
- Loyalty Issues:
Parents and students are not brand loyal when it comes to online products and services.The lifetime of typical customers in EdTech today is low, further impacting profitability.
Viva La Vida
In mid-April, coronavirus caused nationwide school closures in 190 countries, impacting 90% of total enrolled learners, or almost 1.6 billion people globally. As the COVID-19 crisis imposes strict social distancing conditions and a lockdown on physical vicinity, traditional educational institutions have been rendered ineffective.
That’s been a major learning curve for students, parents and educators moving their teaching online and relying more on EdTech.
The future of EdTech looks promising and its growth has been fast tracked by the pandemic. As such, the EdTech industry is positioned to grow rapidly and disrupt the education sector globally.