"Learning tyrants" capital chain is also broken online one by one deep into the high cost mire.

"Learning tyrants" capital chain is also broken online one by one deep into the high cost mire.

This reporter, Feng yingzi, Beijing reported.

Recently, online education institutions "learning one-on-one" (used to be known as "learning hegemony came") was exposed to the financial crisis of the broken capital chain, which once again triggered the outside world on the online one-on-one mode of "high cost" and "uneconomical scale".

The industry believes that the financial crisis in online education institutions is essentially due to the institutions "spending too much and earning too little" and immature competition in the industry. For example, using the "burn money" strategy for marketing, the cost of getting customers and teachers remains high; selling courses at a substantial discount can not guarantee the quality of teaching; low renewal rate, forming a vicious circle.

On the face of it, the online education industry is still in full swing against the backdrop of a chilly capital market this year. On Oct. 9, six education companies announced the completion of nearly 300 million financing within 24 hours. However, the signs constantly remind practitioners that the game of burning money can not be played, improve self-hematopoietic capacity, is the magic weapon against the downturn of the economy.

Online one to one mode has been questioned again.

"Learning hegemony one-on-one" was exposed to financial crisis, and "due to poor management, has stopped operating activities." On Oct. 18, Xueba's one-on-one founder and CEO Qu Feixue issued a statement apologizing for the company's suspension of business and offering that some of the company's employees had been bought by competitors, disclosed company core data and created rumors, resulting in a run that broke the capital chain.

According to public information, the Shanghai Fork Information Technology Co., Ltd., which belongs to the one-to-one platform of Xueba, was founded in October 2015. It won an angel round investment of 1 million yuan from Shanghai Juntai in less than one year. In July 2017, it completed the A round financing of Shenzhen Guojin Venture Capital Investment, but the amount of financing was not disclosed.

Suddenly Xueba announced a one-on-one suspension of business, leading to widespread doubts about the online one-on-one education business model. The outside world even thinks that the essence of one-to-one financial crisis is one-to-one "high cost" and "uneconomical scale".

But the industry has said that this is a misunderstanding of the online one to one economic mode. "From an economic model point of view, the offline class model is significantly better than the one-to-one model, but this logic does not necessarily hold true in the field of online education," the founder of an online education institution told reporters. Mainly because the online one-to-many class model will face the problem of low pricing, so the order can contribute to the income will decline significantly. The online one to one course has a higher price per unit, and the profit pattern is relatively clearer.

It is generally believed in the industry that online one-to-one education has opened up the market, enabling users to generally accept the form of online education, paving the way for the development of online education. Investors in the field of education have pointed out to the Huaxia Times that the online one-to-one education model can meet the three conditions of simple, effective and large market. Specifically, the biggest feature of Internet products is simple, the Internet products are in fact the transformation of existing industries, only the product application is more simple will be accepted by users, and one-to-one online education operation is the simplest, which is in line with the Internet thinking.

In an interview with the Huaxia Times reporter, He Qiang, founder and CEO of Sanhao. com, said that one-to-one teaching is an important manifestation of personalized needs and can make education more efficient. Whether online or offline, in the face of test scores, one-to-one will be much better than one-to-many effect. Online one to one courses are far cheaper than the corresponding offline courses. Therefore, He Qiang believes that online one to one mode will be a trend in the development of the industry.

High marketing costs

The industry believes that the financial crisis in online education institutions is not caused by one-to-one or one-to-many models. The main reason is that some institutions "spend too much and earn too little".

First of all, the online education industry has "burn money" marketing to seize the market. Online education "track traffic" is limited, and in recent years, there are many entries. According to incomplete statistics, 182 online education financing incidents occurred in the first half of this year, with a total of 15.273 billion yuan of funds disclosed. Under fierce competition, the market input and marketing expenses of online educational institutions remain high. Online educational institutions need to face the double pressure of high cost of obtaining customers and teachers.

Some industry insiders told reporters that the average cost of getting a single trainee in the industry is about 4000, 5000 yuan, or even tens of thousands of high. As for the cost of teachers, it has been reported in the media before that, taking Xueba as an example, its users first recharged between 7,000 and 8,000 yuan, and the average user renewal fee was 12,000 yuan, 60% of which was paid to teachers.

Secondly, there is a low price strategy in the education and training industry. Many online educational institutions use discount programs to attract users, and the revenue that orders can contribute will fall sharply. In fact, the core of the low-cost strategy is to "retain customers with good products", simply to compensate for the loss of low prices through high renewal rates, so as to achieve sustainable scale growth. "But if the fees can not support the cost of getting customers, and the quality of teaching can not keep up with the low rate of renewal, it will form a vicious circle."

He Qiang told reporters that online educational institutions that ultimately win the competition must have two characteristics: one is a unique reserve and Research on traffic, with professional Internet thinking. Secondly, the quality of teaching should be strictly controlled. Only when the educational quality is high and the user renewal rate can be raised, the cost of getting customers can be hedged by the fees. He Qiang revealed that thanks to Sanhao's new media matrix, the cost of getting a single student from Sanhao is only 1970 yuan, while the cost of teaching is lower.

In addition to marketing costs, online educational institutions need to invest heavily in early stages, such as polishing products, designing courses, establishing teaching systems, and establishing standards and methods for recruiting teachers.

He Qiang analysis, in fact, each industry development is time-consuming, the development of these online education institutions for about four years. The industry needs larger initial investment. Just as early offline training requires renting, decorating, and building teams, online education institutions need to build a system that integrates all the branches of the country that need to be laid offline into an online education building. This requires a one-time investment from online education institutions, which is undoubtedly enormous.

Take the three good nets as an example, he Qiang reveals that if the technology investment is not considered, the three good nets themselves are profitable. "In the process of system construction, in addition to the more expensive technical team, the hardware is a big hole, the amount of money required is astonishing, Sanhao net pre-technology investment totals more than 100 million. He Qiang said that the hardware construction of Sanhao has been basically completed. At present, Sanhao is in good financial condition. As of April this year, the company's balance on account reached 872 million yuan.

As a result, the industry generally believes that the criteria for judging the health of an online educational institution is not profit. He Qiang believes that the cost of acquiring passengers, the rate of continuing classes, the rate of refund, the rate of expansion and other indicators are more important. But in any case, online education institutions need to improve their self-hematopoietic ability to ensure normal cash flow is the rule of survival in the downturn cycle.

In addition, in order to adapt to tightening national policies, online education institutions will also face rising costs in the short term. Since the beginning of this year, the relevant state departments have issued a number of documents on education reform and made adjustments to the management of off-campus training institutions. Yang Renwen, chief analyst at Founder Securities Media and overseas, has said that under the rectification, the short-term supply cost of K12 training may rise. After the rectification, it is expected that a large number of such institutions will disappear, and a large number of students will flow into large and medium-sized brand-name teaching institutions, which will help accelerate the market share.

Although the supply side is restrained, in the context of the current examination system, the demand side is still just in need, industry standardization and development of long-term favorable head agencies, Yang Renwen said. Perhaps under the promotion of multiple policies, the online education industry will enter an accelerated shuffling period.

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