Subscription Commerce

Outschool On Tailoring Subscription To Online Children’s Education

More than 1 billion students worldwide migrated online in the wake of COVID-19. But even as schools plan to reopen their doors, parents are now looking to make online education a regular part of their children’s lives, says Amir Nathoo, co-founder of online class marketplace Outschool. In the latest Subscription Commerce Tracker, Nathoo discusses how subscription plans that balance parents’ and children’s unique needs can help meet this demand.

More than 1.2 billion children around the world have spent much of the past several months at home instead of in classrooms because of the pandemic.

The internet has consequently become an essential part of the educational experience for many young learners. Online learning is likely to become even more prevalent in the months ahead, with many summer camps canceled and questions remaining about how schools will reopen in the fall.

These circumstances have created difficulties for parents, educators and children alike; however, they have also generated considerable demand for high-quality online education and enrichment activities — with many tools developed to go well beyond the ABCs.

One online learning platform working to meet this demand is Outschool, a San Francisco-based educational subscription marketplace providing thousands of online classes on a wide variety of subjects — with a twist. Experiences offered include learning Spanish through Taylor Swift songs and architectural history through Minecraft.

“We’re enrolling thousands of new students every day at this point,” said Outschool Co-Founder Amir Nathoo in an interview with PYMNTS.

He estimated enrollment has increased tenfold since January.

Nathoo and other Outschool executives have extensive technology backgrounds, bringing a decidedly tech-oriented approach to online education, with an emphasis on secure and communication-rich video interfaces and outside-the-box course offerings. The company is also developing a novel approach to offering children’s classes through the subscription business model.

A Market Poised For Pandemic-Driven Growth

The online education market was already experiencing robust growth prior to the pandemic due to increased internet and smartphone use along with government programs promoting digital education. The global market for online learning services was projected to grow 28.6 percent by 2023, reaching $133 billion that year. The pandemic is almost certainly furthering this trend as more parents and schools turn to online platforms to supplement classroom learning — or, in some instances, to replace it altogether.

“As tragic as things have been, it seems like we’re well-positioned for all the shifts that are going on in society,” Nathoo said. “The growth in online education has been an ongoing trend because through this format of learning, you’re able to get access to topics and teachers that you could not possibly find locally.”

Outschool uses the videoconferencing platform Zoom but has also built its own specialized security and communication systems. This has allowed the company to avoid some of the problems with the platform experienced by some school districts.

“We’re able to monitor and control the meetings for safety,” Nathoo said. “We have built our own infrastructure to create the marketplace, to allow messaging between parents and teachers.”

Subscriptions And The Education Segment

Nearly every area of commerce has been transformed by subscription-based models in recent years, including vehicles, beauty and streaming content. The concept gained traction in education as well, allowing subscribers to try an array of courses rather than being locked into one class with one instructor. Fitness subscription company ClassPass, for example, enables consumers to take fitness classes from multiple providers.

The pandemic has forced the mass migration of courses to online channels, including those offered through ClassPass, which was severely impacted by mandatory closures of gyms during the height of the pandemic. It is now pegging its near-term future on online classes. Similarly, exercise equipment and media company Peloton has seen its online subscriptions nearly double during the pandemic.

Subscriptions have made relatively limited inroads into the realm of children’s classes, however. One likely reason is that parents are interested in exercising control over what their children are learning, rather than letting them have unlimited access to content. These are the types of considerations Outschool is taking into account as it devises more formal subscription programs.

The company currently offers ongoing courses or “clubs” that have no fixed start and endpoints; however, it is careful not to rebill parents whose children are not “showing up” for classes.

“We actually automatically unsubscribe parents from a class if their kid hasn’t attended in more than a certain number of sessions,” Nathoo said. “That’s because we’ve found that the … trust that creates means those parents come back, and they will re-subscribe when they’re ready. That’s a little bit of a different thing [for us]. We take a very customer-centric view of subscription rather than business-centric.”

These kinds of deliberations are informing Outschool’s plan to roll out a more formal subscription plan, which it is looking to launch this fall.

A Novel Approach To Subscriptions

Developing a subscription plan is not as simple as adding a button to a website. It requires extensive revenue calculations and the development of new customer marketing and communication channels and payment flows. Businesses must also tailor subscriptions to offer the most value for customers, while simultaneously being careful not to cannibalize existing revenue streams.

An “all-you-can-eat” approach does not fit for a company like Outschool, which offers about 30,000 classes. It is instead considering a thematic approach to subscription.

“We’re exploring bundles by topic, so math for age 8, [for example]. … You would subscribe to a certain number of hours within a particular topic,” Nathoo said. “This would still allow you to pick and choose subjects … but at the same time, it gives you the ease and simplicity of a subscription model.”

Subscription services become a compelling option when services or products are so valuable to consumers that they want to make them a consistent part of their daily lives while forgoing the frictions that come with making repeated purchases. This could very well be the point at which many parents find themselves in the months ahead as they consider how to best provide their children with interactive, reliable learning experiences that are also safe.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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