Indian edtech startups scramble to grab offline market as students gradually return to “old normal”

On March 25, 2020, when India went into a nationwide lockdown, all schools, colleges, and tuition centres had to follow suit. What followed was an unprecedented rise of online education—propelled by the need of the hour—and the sensational growth of India’s edtech sector.

In a year when funding was supposed to recede due to investors becoming cautious, edtech startups in India raised a record $2.2 billion, leading the deal volume for the first time. This momentum continued in 2021 as well, with BYJU'S alone raising $1 billion-plus in funding.

The edtech major also became India’s most valuable startup last June—at a valuation of $16 billion—and is currently valued at over $22 billion.

Unacademy, another leading edtech player in the country, also saw a meteoric rise in its valuation, up by 70 percent from $2 billion in November 2020 to $3.44 billion in August 2021.

It really did seem like online education was here to stay, forever.

But in 2022, life came full circle for the sector.

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Online to offline

If you visit Delhi’s Lajpat Nagar, it is hard to miss the large purple branding of BYJU’S Tuition Classes. Inside the centre, the freshly painted walls and plush sofa are a far cry from the usual test-prep centres crammed with benches and students milling around.

The Lajpat Nagar centre, which caters to students from Classes 4 to 10, had a handful of students attending a pre-recorded online class in the presence of a teaching assistant. In another room, a student was getting her doubts cleared by a tutor.

A senior counsellor offered us a demo of the BYJU’S tablet, priced at only Rs 30,000. And while the offline classes cost around the same, it is evident that the counsellor was keener to sell us the tablet.

Last year, the edtech major piloted 100 such centres across 37 Tier I and II cities. Himanshu Bajaj, Head of BYJU’S Tuition Centre, told YourStory that the plan is to launch 500 more across 200 cities in 2022.

“It has been designed in a way where students will get to bridge learning gaps, strengthen conceptual understanding, and reinforce learning through regular practice and tests,” he added.

But these offline touch-points also serve as customer acquisition channels for the online business, especially with students returning to offline classes.

In March, Unacademy too announced the launch of Unacademy World in the UPSC coaching hub of Rajendra Nagar in Delhi and Jaipur. This Wednesday, it launched offline classes for competitive exams for NEET-UG, IT JEE, and foundation courses for Classes 9-12 under the brand Unacademy Centre. And, according to reports, even Vedantu is considering going hybrid.

The recent spate of layoffs by BYJU’S-owned WhiteHat Jr, Unacademy, Vedantu, Lido Learning, and others also point to the sector losing its mojo from the pandemic high. These online-first edtech startups are now reinventing themselves by moving to a hybrid model, especially to cater to students from Tier II locations, as well as cities that serve as catchment areas of students appearing for competitive examinations.

To be fair, BYJU’S had made its intentions and plans of expanding to offline very clear in April last year when it acquired Delhi-based Aakash Educational Services Limited (AESL) for $950 million to leverage the brand’s offline market share.

At the time, Founder Byju Raveendran had said, "The future of learning is hybrid, and this union will bring together the best of offline and online learning as we combine our expertise to create impactful experiences for students.”

An offline presence—apart from customer acquisition—can help build brand trust among parents from low- to middle-income groups who may have seen the company’s TVCs or online ads but aren't too confident to invest in a digital-only mode of education.

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Local competition and price challenges

For online-only edtech players, offline expansion means offering a standardisation in education across the county and taking on region-specific brands such as Mahesh Tutorials in Mumbai or Rau’s IAS Coaching in Delhi.

At the launch of Unacademy Centre, Co-founder and CEO Gaurav Munjal said, “We are confident our foray into physical learning centres with the best curriculum at a competitive pricing will help learners in cracking their goals, and look forward to scaling them up across India.”

The edtech major plans on enrolling nearly 15,000 learners in the first batch across Unacademy Centres in Kota, Jaipur, Bengaluru, Chandigarh, Ahmedabad, Patna, Pune, and Delhi.

However, there are challenges to this hybrid model.

Himanshu Gautam, Co-founder of test prep and upskilling platform Safalta, said, “It is a risky proposition to go out and invest in these things because things are still not stable with new (COVID-19) waves coming in.” The bigger roadblock, he added, is the pricing challenge between online and offline, and maintaining “a different pricing on the same kind of offering.”

In this case, the dice are loaded in favour of well-funded, online-first brands that have spent enough on marketing and aggressive sales to ensure that their products are well recognised.

These startups can also price their offerings competitively, an added advantage when it comes to acquiring students from Tier III+ locations who are more likely to sign up for it.

“We try to keep our price points as low as possible so that all students can access it. Our target group are students from the lower economic strata,” said Gaurav Gularia, senior director of branding at Physics Wallah, which offers live classes for NEET and JEE preparation.

The company also added 22 centres across 20 cities based on demand from students.

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How offline brands compete

On the flip side, private equity investments in well-known offline test prep and coaching companies have helped in levelling the playing field too, giving them a push to devise an online strategy.

Earlier this month, Bodhi Tree Systems—backed by Uday Shankar and James Murdoch—reached an agreement to buy minority stakes in Kota-based Allen Career Institute for $600 million.

In 2010, IIT test preparation company FIITJEE had raised capital from Qatar-based QINvest to expand its national presence.

For Aakash+BYJU’S, it is important that it differentiates itself from BYJU’S tuition classes, focusing on providing quality education for school-going children.

“With BYJU’S, we have more resources and have become more aggressive in marketing and branding. Our offline centres were impacted by the pandemic but we are going to add 80-plus new centres this year,” CEO Abhishek Maheshwari told YourStory. Before the acquisition, it had 200 centres across the country.

“Over the last two years, we have seen people hesitate to move away from home. If we can provide high quality, credible options closer to their homes, people will prefer that. We are seeing good enrolment,” he added.

For Aakash+BYJU’S brand of test-prep, digital business contributed only a single-digit percentage to the revenues. However, the company aims to grow it to a third of its revenue in a few years, added Abhishek.

The hybrid approach to education and test-prep is also being taken by the likes of Hyderabad-headquartered Sri Chaitanya Group, which launched its test-prep platform Infinity Learn in June 2021 with online courses for competitive exams priced at around Rs 35,000.

“Traditional edutech companies across India continue to be limited to their region, i.e., a radius of 300-500 kilometres because they lack the funds for better reach. Edtech brands that have been online-first from day one might have a better course curriculum and cost structure as well,” said Pankaj Makkar, Managing Director, Bertelsmann India Investments.

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The twain shall meet

While an online model helps edtech companies manage costs of infrastructure and offer well-structured affordable courses, offline is especially helpful when it comes to peer-to-peer interactions.

Offline classes do better in group study, doubt solving, and personalised attention from teachers, point out Abhishek of Aakash+ BYJU’S, Himanshu of Safalta, and Gaurav of Physics Wallah.

Industry experts believe that the online mode of education works in the case of certain lines of study, especially certification courses, and skill training. But it might not be the best fit for all.

“The younger demographic needs more hand-holding and hence for K-12 and supplementary learning, a hybrid model works better. In the case of higher education or skilling courses, mostly online classes work better. For something like a medical certification, an offline module works better,” says Pankaj of BII.

There is no denying that going ahead, all edtech offerings will have both online and offline touchpoints. The industry will evolve to reach the right mix of audiences.