In a previous post, we shared our initial thoughts on the after-school K12 co-curriculars space in India. To summarize, rising incomes, large schooling population, increasing spend on education, learning for yearning, probable quality issues with hyper-local tutors, and offline style of tutoring make this market ripe for disruption. So how do we think about the challenges and key takeaways of this business model?

Tutoring model

While reaching students online and 1-on-1 is a fascinating concept, we risk this model becoming Zoom with a paywall option. Founders and investors in the industry suggest that a tutoring model that simply replicates offline learning in the online model is bound to face challenges. There is a need for differentiated offering which includes features that make the life of a tutor and student easier. These include but not limited to automated scheduling, attendance, note taking, call summary, pop quizzes, progress reports, analytics for music and dance among others. There is a distinct need to create a product-led learning experience rather than just replicating the offline model on a Zoom call.

Scale

Key challenges in scale for offline tutoring included geographic limitation of catering to students only in a particular locality or suburb, and limited intake of students due to time and space constraints. Online tutoring shed these challenges because tutors could reach out to students anywhere in the world, and cater to 1, 10, 100 students at the same time, multiple times a day. However, the challenge of 1-on-1 tutoring remained. Catering to thousands of students in a 1-on-1 model meant onboarding hundreds of tutors as well. Most companies start with 1-on-1 live classes, but this model is difficult to scale. Scale will eventually come from a managed marketplace model where the company becomes a platform. However, folks in the industry tell us that the availability of quality supply may be a question mark. This means most models will go from 1-on-1 live to 1-to-many live for a period before turning into a marketplace.

Demand

It may be counterintuitive to some that despite a large schooling population, rising incomes and wanting a holistic education, many companies struggle to attract adequate demand. Companies fishing for customers employ not only a digital marketing strategy to generate leads, but also a sales strategy either in person or over calls to convert the leads. This seems like a short-term fix. While companies will do well via the above strategy to begin with, they will have to explore new acquisition channels to scale. We are witnessing customer acquisition costs going up since the past 18 months since every business is fishing for customers online. New acquisition channels can range from tutor-led acquisitions (tutors who join the platform and bring their own students along), to school partnerships for co-curriculars for all students.

Customer life time value

In the offline model, we see students sticking to the same tutor for a couple of years or more. If we say online model is higher quality and offers a better service, we should be able to see the same if not higher life time value of customers. However, many companies we speak to mention that online tutors struggle to retain students more than a few months, and have low repeat post the initial period. To counter this, companies have started offering a wider breadth of services to ensure students at least stick to the platform, if not to the tutor. For example, a language tutoring company tries to retain a student who learned French in the past by helping the same student explore Sanskrit or German. Cross selling may help improve the LTV:CAC ratio.

We learn from the experience of others. We would like to thank Swati, and Sruthi for sharing their views which helps us plug gaps in our understanding. Special mention to Anuradha who enlightens and educates us on the first-hand challenges of this space on a continuous basis. Education is close to our heart, and we would love to explore potential partnerships in this space. Please write to Dhruv or Siddharth if you have a new perspective or opportunity that you'd like to share.