Edtech -E-commerce — A comparison note
Being associated with the capacity building for a very long time, I cannot but keep an eye on how Edtech is shaping the present and intends to influence the future.
Let us first see how the global Edtech industry is expanding its wings across several customer segments:
The presence in pre K-12 to up-skilling segments shows how the industry has expanded to customer segments one would not have thought of even a few years ago. Its the early adopters of e-learning who have paved way for the followers who seek affirmation in what they acquire in the education space. Edtech is in the early growth phase and can quickly make transition into every household if right steps are taken to customize its offerings for various categories of learners and the customers who pay for the learning (not necessarily the same as learners). Anything with an e- and AI integration is here to stay and evolve at an unpredictable pace.
How are the two sectors comparable?
To speculate where Edtech will eventually lead to, we can compare it with the e-commerce fever we all suffered with, about a decade back. Those fueling ecommerce growth are also the same people who can pay for the Edtech programs, thus, our target segment remains the same. Just the offerings are different and so are the price points.
Just as e-commerce, most of the Edtech players are implementing the marketplace model — bringing together the tutor and the learner on their platforms, with AI being the icing on the cake. It is infact an extension of the e-commerce business model, just that there is no exchange of goods, rather its the knowledge and certificates on the offer. Edtech firms are the enablers and earn a good commission for the same.
There are two key segments in this sector — K-12 and the adult learners. Reasons why Edtech is seeing a widespread acceptance, besides what Covid-19 has brought us to, could be a mix of social, psychological and professional impact:
- Pricing is uniform and transparent, it gives a no-nonsense experience to the learner and parents (in case of K-12 segments).
- Growing working population with both the parents engaged in a 12 hr job boosts the K-12 segment.
- It is highly customizable, taking care of the varied learning levels of the learners
- More disposable income, fewer options to go.
- High quality can be availed vis-a-vis an earlier era where we had fewer options to subscribe to and quality was a matter of chance
- Parents are ready to spend on avenues that ensure their ward is getting the best of all the worlds
- Certifications are valued in the social circles, not just professional ones
- Quick way to be acquainted with a new techno fad
- Learning with anytime anywhere facility is catching up with the busy professionals who cannot take time off to study,
and many more can be listed. But the top most is the disposable income, fewer avenues, customization, no location constraint, and the aspirational value attached to the courses.
The business model and the frenzy around it is uncannily similar to how e-commerce took over our lives and is now a regular, unmissable part of everyday transactions (for ~40% of the 800mn internet users).
Is Edtech going to embrace CoD?
I don’t see why it cannot. But will it?
E-commerce gained tremendous success only after Cash On Delivery or COD model was introduced, something Edtech would like to try its hands on. With users in tier-II and III cities majorly preferring to pay in cash, plus their deterrence to use online banking or similar transactions, Edtech may have to enter the domain sooner than later.
Evolution of E-commerce in India
Lets first dwell on how E-commerce in India has evolved. Back in 2010 (supposed to be the defining era for Indian e-commerce coming of age), there were many upcoming startups in the domain. Most of which have been acquired or have not survived the stiff competition.
The reason for this coming of age was mostly unrelated to what the industry itself did. It was the network effects of having better internet connection, better mobiles and the smartphone penetration, and the overall improved buying behavior fueled by the high salaries in the IT which in turn was fueled by onsite postings.
E-learning in the pre-Covid era
What fueled it before Covid-19 took over the world? Besides the factors listed above, education in India will always be a key growth parameter, it may evolve into different modes of delivery but the importance will not be lost so soon. Most middle and lower middle class families take pride in the level of education one has obtained. Vocational persuasion has not taken over the Indian mindset yet and it derives from the insecurity of a future that looks certain when you have a few degrees in your account.
We can call it the aspirational factor.
The assurance of a high salary, prestigious job, the lure of high demand of specialized skills, and more such attributes are what the MOOCs’ advertisements talk about. The icing on the cake is the low pricing at which you can be a python expert (just an example) in a week or ten days.
Edtech — The Industry
Some learners really benefit. Some don’t. And so is true for the Edtech players who are in hoards as much as are the certifications. As per the report published by Inc42, Edtech has been largely ruled by a few players, and Byju’s is the only unicorn in the sector at over $10 bn valuation. There have been 35 M&As in the last 5–6 years in Edtech and over 55 M&As in e-commerce.
Differentiation is something the Edtechs have to work upon, such as focusing on a few key skills like language, numeracy, etc. Duolingo has acquired the status of global language expert- equivalent to a testing agency — because it stayed focused on teaching languages, something no other app could achieve as well. Similarly, I can speculate that the fact that Asians are rated high in numeracy skills, market will also catch up and there will be (and should be) specialized EdTechs addressing this skill. Prestige that comes with such skills can drive a huge population to take up courses to ascertain a future in quantitative streams. AI and ML have all the quantitative experts taking the industry ahead, a dedicated educator sure seems to be the need of the hour.
How are the entry barriers in the industry?
Going by the fact that we have over 4500 Edtech players, it looks like an easy entry. 14 of these raised funding during the Covid lockdown sometime in May. The sustainability of a business model, along with costs of running the programs with a focus on high quality makes or breaks a player’s journey in the long run. The same is true for any business for that matter. Typical tools required to start an edtech forum is a good educator and an audience. Both of which are in plenty in India. What can be a deterrence in moving forward? Piracy issues and quality issues that hover any media business, and Edtech is not spared. Media piracy issue (in edtech) is addressed by some innovative startups such as VdoCipher, a startup from the IIT Delhi camp.
Here is a snapshot of the Indian Edtech landscape, only two leading players in the pre-K12 segment tells us where we can see aggressive growth:
Will the wave last?
Lets examine what happened to E-commerce wave that we had caught up with in the initial paragraphs and in 2010. The fact that buyers love discount (except possibly the luxury segment), we saw a series of players with “deals” in their names, including the then reigning — Snapdeal. Then there were smaller apparel and fashion websites such as Koovs, 99labels, FashionandYou, Myntra, Jabong, and so on. Every possible sector had an e-commerce segment with intense competition oozing out of fund raising races. The glaring details of the VCs and investors of what and how much they have invested in a particular startup is unforgettable.
This not only created a frenzy among the wannabe players, but also gave a strong signaling to the consumers to take note of how this is the next big thing. Not joining the wave was somehow letting one feel left out in tea-coffee-smoke-beer conversations. Who would want that? Not the extravagant, impulsive buyers who were really the targets to begin with. Introduction of CoD made the foray much faster into the inroads of the country.
Consolidation of the industry followed as e-commerce is not an easy industry to be in, unless you have really deep pockets. One good example of consolidation is the biggest player in India, Flipkart, now Walmart. How it took under its umbrella the players such as Myntra which in turn swallowed Jabong, and then E-bay and a few more IT firms (PhonePe) to enable better technology integrations. Being acquired in the eventuality by Walmart talks a great deal about global consolidations primarily in the leading e-commerce markets.
The Indian Edtech has covered just about 3% of the potential market. But why is it growing at a slow pace, despite the hype? The market took form in 2004 when Khan Academy and a few more started offering free online trainings. Parallelly, Indian government has taken various digital education initiatives that have broken the ice but still a lot has to be done to achieve equity in education, and Edtech can be a catalyst.
What deters Edtech is also what can strengthen the segment. Its an oxymoron for sure and can be addressed if sharp analysis is done to customize solutions, with deliberate attempts to reach those who are awaiting a miracle to bridge the gaps that our education system faces.
These factors are its fixed pricing, digital landscaping in the inroads of the country, the preference for a traditional classroom learning, hesitation to use media, incapability to operate digital devices, high digital illiteracy in tier-II, III cities, followed by the rural areas. Reach lies in understanding the infrastructural gaps.
Taking initiatives as an industry and reaching the last mile will not just let Edtech come upto the success that Ecommerce has seen, it will certainly beat it by a huge margin. India is a country of dreamers, in every nook and corner, waiting to be shown the light of the day. EdTech can be that torch holder if public service is also integrated with profit making initiatives.
References:
- IBEF report on E-commerce industry in India. https://www.ibef.org/industry/ecommerce.aspx
2. Past, present and future of EdTech Startups: https://inc42.com/features/the-past-present-and-future-of-edtech-startups/
3. Nasscom India
4. Yourstory
