After Byju's, Unacademy goes hybrid with stores; eyes IPO in 18 months

At a time when online education is gaining traction in the country which has historically been a subscriber of traditional learning, edtech startup Unacademy is going hybrid in a bid to garner more users. The SoftBank-backed company is launching offline centres or what it is branding as "Unacademy Store". The idea, however, is not to establish these brick-and-mortar centres as offline learning hubs. Simply put, there are no plans to hold physical classes within the stores as of now. The strategy is to enable scores of new students and parents, especially those who are still not very receptive to the concept of online learning, to visit the centres and understand the kind of educational products that the startup has developed. A team of counsellors will be stationed at the stores to brief them about the firm's course offerings and the value that they could bring to the learning table.

Gaurav Munjal, co-founder & CEO at Unacademy Group, believes that the perception of edtech in India is not as good as he would want it to be. The potential the space holds, though, is promising—online is growing rapidly, Unacademy is seeing as much as 60% business growth year-on-year, claims Munjal. An omni-channel presence will address stakeholder concerns and make them more aware of the benefits of online courses. "This is just the right time. Parents need to go somewhere to talk to and understand the value of an offering. This (store) is going to change the way people perceive online education. Omni-channel is an indication that adoption of online is increasing very, very fast. We think that the stores will drive adoption of our online products a lot," Munjal said at a virtual media briefing on Friday.

Munjal's conviction is driven by his argument on pricing. Online learning is way more affordable, says the CEO. A six-month UPSC course availed in an offline coaching centre can cost as much as ₹1.5 lakh-1.75 lakh, that too barring ancillary expenses like that of transportation. However, an annual subscription of UPSC course offered by Unacademy which claims to have about 7.7 lakh active subscribers costs about ₹50,000, says Munjal. "The intention is not to compete with offline centres. We are the most affordable subscription in the country…we are cheaper than even our online alternatives," says Munjal. The first such store will be launched in New Delhi's Pusa Road on March 12. Three other stores will be set up in Kota, India's most popular offline coaching hub, Jaipur and Lucknow. Munjal did not disclose the investment details. A source said that each store will cost about a crore on an average. Munjal argues that students should not have to travel to Kota, Delhi and other parts of the country to avail offline coaching when online learning can be subscribed to from within the confines of home. Besides, they can also leverage the benefit of a centre like Unacademy Store located closer to their residential locations and which also creates room for students to interact with educators once a week. The startup's omni-channel plan is ambitious: it aims to open one store every two weeks, at least for the next six weeks. Depending on the feedback it garners from the launch of the four stores, the company will take a call on whether to open large format stores, smaller ones or take the total store count to as much as 200 over time, says Munjal. "We think that the CAC (customer acquisition cost) will come down and AOV (average order value) will go up as this can be a good distribution model," says Munjal. As far as the platform's existing learners are concerned, they can visit the stores to interact with their educators and get a better grasp on the subject. "They are already sold on the idea of online learning," says Munjal.

Currently valued at $3.44 billion, Unacademy plans to go public in the coming years. Munjal did not give a definitive timeline but a source close to the development said that the startup is eyeing an IPO in the next 12-18 months. The internal target is to make a public debut by Q4CY23, said the source. The core test-prep business is expected to turn profitable in the next 12 months while subsidiary PrepLadder's core business of providing coaching for post graduate medical entrance examinations has already turned profitable, says Munjal.

Larger rival Byju's, valued at an estimated $21 billion, has recently announced its offline foray with the launch of brick-and-mortar tuition centres and is eyeing to onboard some one million students through the service.

Online education currently accounts for a mere 2.5%-3% of the total education spends, say analysts. "Being present in the hybrid model actually enables a company to put its product out in the first place," they add.