Yuanfudao Product Analysis

Yuanfudao , as the unicorn company with the highest valuation in the global education technology field, is also the online education company with the largest number of online course users in China. Last year, the Beijing Winter Olympics Organizing Committee announced that Yuanfudao Online Education became the official sponsor of the Beijing 2022 Winter Olympics. This is also the first time that the Olympics has cooperated with online education. Yuanfudao, how did this giant with a valuation of US$15.5 billion rise?

On October 22, 2020, Yuanfudao online education company announced that it had recently completed a total of US$2.2 billion in financing in rounds G1 and G2. After the financing was completed, the company's valuation reached US$15.5 billion, ranking first among the global education technology unicorn companies.

According to public reports: Yuanfudao is also on the annual "50 Smart Companies" (TR50) list released by MIT Technology Review. The reason for the list is: "As China's largest online tutoring platform, Yuanfudao's online education has been welcomed by more users during the epidemic.

Yuanfudao completes the teaching process through live broadcast + interaction, integrates AI technology, provides timely feedback on students' reactions, and launches personalized tutoring programs, becoming one of the most highly valued unicorns in the global education technology field. ”

Why has Yuanfudao been so favored by capital in just five years from its inception to now, and has become the unicorn company with the highest valuation among global education technology companies? This article will analyze Yuanfudao’s perspective and give you a deeper understanding of the operating logic of this company and the industry it is in.

This article will analyze from the following aspects:

• Industry Analysis
• Analysis of the competition landscape of K12 online education
• Competitive product analysis
• User Value Analysis
• Business value analysis
• Product Iteration Analysis
• Product structure analysis
• Operational Analysis
• Summarize
• Future Outlook

1. Industry Analysis

Yuanfudao belongs to the K12 online education industry. K-12 refers to the overall education framework from kindergarten (usually 5-6 years old) to grade 12 (usually 17-18 years old). It is the abbreviation of preschool education to high school education and is now generally used to refer to basic education.

In recent years, the domestic K12 online education industry has ushered in great development. For example, many online education brands such as Zuoyebang, Xueersi, and GSX have risen rapidly, and the capital market has also been optimistic and supported them.

At the same time, the high renewal rate has also driven adult education companies to switch to the K12 field, such as New Oriental and Hujiang Online School. The competition is extremely fierce. Since the education industry is usually greatly affected by macro factors, I will use the PEST model to analyze the reasons behind this phenomenon.

1.1 Politics

The K12 education industry has a huge market, which is difficult to satisfy with government power alone. Currently, the country encourages market forces to enter, especially the emerging online education industry. Policies such as "National Key High-tech Fields" and "National Education Development 13th Five-Year Plan" have expressed clear support for it.

In February 2016, Internet education was included in the new version of the list of "National Key High-tech Fields", and Internet education companies have the opportunity to be recognized as high-tech enterprises and enjoy tax benefits;

In January 2017, the "13th Five-Year Plan for National Education Development" encouraged social forces and private capital to enter the education sector in various ways and promote the development of new "Internet + Education" formats.

On July 8, 2020, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Deepening Education and Teaching Reform and Comprehensively Improving the Quality of Compulsory Education". The policy still proposes that "the homework and examination model may be reconstructed, and "education + Internet" is still encouraged."

1.2 Economy

At present, there are about 100 million primary school students, 43 million junior high school students, and 23 million high school students in K12 public schools across the country. These 160 million students constitute potential users of the K12 education industry, which means that they theoretically have a user life cycle of up to 12 years from primary school to high school. In addition, the number of new 6-year-olds added each year from 2017 to 2022 is also continuing to increase steadily, which means that the K12 education market has great potential.

At the same time, the per capita disposable income of Chinese residents has shown a trend of continuous growth, with an annual compound growth rate of 7.48%. In 2018, the per capita disposable income was 28,200 yuan; the increasing proportion of education, culture and entertainment consumption expenditures reflects the increasing importance families attach to education and their willingness to pay.

It can be seen that the increase in my country's per capita disposable income has promoted the continuous increase in family investment in education.

1.3 Society and Culture

There is a large gap between the rich and the poor in our country, and parents' anxiety about social class mobility has spread to their children's education. From 2012 to 2016, my country's admission rate from junior high school to high school was 56.4%, and the gross admission rate from high school to undergraduate was 49.5%, which means that only one-quarter of the educated population can successfully enter undergraduate studies.

Compared with developed countries such as the United States, Japan and Germany, the proportion of undergraduate students in my country is obviously low. Therefore, extracurricular tutoring has become a "good tool" to improve grades, and many parents are becoming long-term consumers in the K12 education market.

According to data from the Ministry of Education, as of May 31, 2017, there were a total of 2,914 higher education institutions in the country, including 1,243 undergraduate colleges, only 112 key undergraduate colleges among the "211" programs, and only 39 top-tier "985" programs. In 2017, the admission rate of 985 universities in various provinces was only 1-6%.

The vast majority of parents hope that their children can be admitted to "key schools", but buying school district housing, attending private schools, studying abroad, etc. are beyond the affordability of ordinary families, so participating in extracurricular tutoring becomes the most cost-effective option.

According to iResearch data, among the users of online education apps in Q3 2019, users from fifth-tier and below cities accounted for the highest proportion, reaching 21.5%; followed by second-tier and new first-tier cities, accounting for 21% and 19.6% respectively; users from first- and second-tier cities (including new first-tier cities) accounted for a total of 50%, which is equivalent to the number of users in third-tier cities.

On the one hand, this shows that there is a relative imbalance in resource allocation between small and medium-sized cities and first- and second-tier cities, and that it is difficult for high-quality teachers to move to small and medium-sized cities where there is a shortage of talent. On the other hand, it also shows that there is still great demand potential in the market size of small and medium-sized cities, which has also promoted the development of the online education industry.

In addition, the outbreak of the epidemic in 2020 restricted the development of many offline learning activities, which undoubtedly played a huge role in promoting the rapid development of Internet online education.

1.4 Technology

In recent years, my country's network infrastructure has been continuously optimized, optical network cities have been basically built, and urban areas generally have 100-megabit access capabilities; the total number of 4G base stations has reached 2.63 million, and the scale of 4G network is the largest in the world; the capacity of backbone broadband network has been greatly improved, and the broadband network speed-up effect has been significant, laying a solid foundation for the development of the video cloud service industry.

The development of the video cloud service industry can provide low-cost and high-efficiency video services for online teaching, especially the development of interactive live cloud services paves the way for live teaching.

As of June 2019, the number of Internet users in my country reached 854 million, the Internet penetration rate reached 61.2%, the number of mobile Internet users reached 847 million, and the proportion of Internet users using mobile phones to access the Internet reached 99.1%.

At the same time, "speeding up and reducing fees" has also driven a significant increase in mobile Internet traffic. The average monthly mobile traffic usage of users is about 7.2GB, which is 1.2 times the global average; mobile Internet traffic consumption has reached 55.39 billion GB, a year-on-year increase of 107.3%. The rapid popularization of mobile Internet has provided a social cognitive basis for K12 in the online model and stimulated the market demand for online education.

It can be seen that with the optimization of network infrastructure, the popularization of mobile Internet, the construction of online platforms, the development of online tools, the research and development of online content, the supply of marketing/management SAAS, the implementation of artificial intelligence technology, teacher recruitment and training, etc., the rise and maturity of these technologies have provided market opportunities for the development and growth of the K12 education market.

From the perspective of market potential, comprehensive iResearch data shows that the scale of China's K12 online education market will continue to rise rapidly from 2012 to 2022, and the growth rate will basically remain stable at more than 20%. By 2022, the market size is expected to reach 150.3 billion yuan. It can be seen that the scale of the K12 online education market still has a lot of room for development and growth.

2. Competition landscape of K12 online education

There are many market participants in the K12 online education field. Since 2018, institutions with a certain degree of brand awareness and market influence have been classified according to their native characteristics. They can be roughly divided into three categories: incubation of tool products, incubation of Internet giants, and incubation of offline teaching and training institutions.

2.1 Incubation of tool products

Initially, the business focused on learning tools, such as brands such as Yuanfudao and Zuoyebang. As the business developed, they directly introduced the user traffic of learning tools to their respective online live courses, reducing customer acquisition costs and improving customer acquisition efficiency. They perfectly combined learning tools and online live business, opened up the business model, and realized a closed learning loop for users.

At the same time, strong capital support has promoted the rise of the brand. From another perspective, the optimism of the capital market to a certain extent represents high potential and rapid development. In the short term, "marketing campaigns" can be used to occupy the market. If you really want to go long-term, it depends on maximizing user value and making the course content mature enough.

2.2 Offline education and training institutions

The initial business positioning was aimed at traditional offline education, and the profit model was relatively stable.

With the popularity of online education, businesses have also shifted to online. For example, institutions such as Xueersi Online School and New Oriental Online have mature and complete course products, which directly divert offline high-stickiness users to online, directly promoting business model transformation. However, due to the relatively late transformation time, the development speed is slower than online brands such as Yuanfudao and Zuoyebang.

2.3 Incubation of Internet Giants

With the popularity of K12 online education, other Internet industry giants have also decided to join the market competition in order to "get a piece of the pie."

For example, Tencent Penguin Tutoring, Tsinghua University and Peking University Online School, etc., they use the advantages of their social traffic to selectively screen target users and introduce traffic into their new business areas. This maximizes the use of their resource advantages and reduces the risks of cross-industry entrepreneurship. However, due to a certain degree of lack of industry accumulation, there may be problems such as lack of high-quality content and technical support. In order to gain a foothold, it may take time to consolidate core advantages.

To sum up, different native characteristic competitors are active in the field of K12 online education. They all make good use of their own resources and traffic advantages to improve customer acquisition efficiency and reduce customer acquisition costs. The difference is that each brand has a different business background and will face different challenges. Whether it is the "lucky ones" favored by capital or the strong background support of cross-field giants, the ultimate "king" must be the brand that can persist in optimizing products and maximize user needs.

3. Competitive product analysis

In the period when the K12 online education market is surging and emerging, many new shining stars have emerged, and many traditional education brands have crossed over to enter this market, such as Yuanfudao, Xueersi, Zuoyebang, New Oriental Online Education, Hujiang Online School and other companies.

According to iResearch data, the TOP 10 online education apps in Q1 2020 show that products such as Zuoyebang, Yuanfudao, and Xueersi Online School occupy a dominant position. Zuoyebang ranks first with 94.237 million independent devices. From the perspective of user growth rate, apps such as Yuanfudao, Renrentong Space (Home-School Helper), and Xueersi Online School have grown rapidly, with year-on-year growth rates exceeding 150%.

Since Zuoyebang and Yuanfudao are direct competitors with similar user scales, the following analysis will focus on the two products, Zuoyebang and Yuanfudao, with a focus on understanding their growth paths and business models.

3.1 Yuanfudao

3.1.1 Growth Path

Yuanfudao Online Education was founded in 2012 and successfully completed financing led by well-known funds and giant companies such as IDG Capital, Warburg Pincus, and Tencent. Its current valuation exceeds US$15.5 billion, making it the first unicorn company in K12 online education.

• In August 2012, it received RMB 10 million in Series A funding from IDG;
• In August 2013, it received $7 million in Series B funding from Matrix Partners China and IDG;
• In July 2014, it received US$15 million in Series C funding from Matrix Partners China and IDG;
• In March 2015, it received USD 60 million in Series D funding from China Media Capital, New Horizon Capital, IDG Capital, and Matrix Partners China;
• In May 2016, Yuanfudao received USD 40 million in D+ round financing from Tencent, which was a major strategic investment by Tencent in the field of K-12 online education.
• In May 2017, Yuanfudao received a round E financing of US$120 million from PE firm Warburg Pincus and Tencent.
• In December 2018, Yuanfudao received a round F financing of US$300 million, led by Tencent, with participation from Warburg Pincus, Matrix Partners China and IDG’s original shareholders.
• In March 2020, Yuanfudao received US$1 billion in financing. This round of financing was led by Hillhouse Capital, with participation from Tencent, Boyu Capital and IDG Capital;
• In October 2020, Yuanfudao announced that it had completed a total of US$2.2 billion in financing in rounds G1 and G2. The G1 round was led by Tencent, followed by Hillhouse Capital, Boyu Capital and IDG Capital. The G2 round was led by DST Global, with participation from CITIC Industry Fund, Singapore Government Investment Corporation (GIC), Temasek, Trustbridge Partners, DCP, Ocean Link, Jinglin Investment, Danhe Capital and other funds.

After the financing was completed, the valuation of Yuanfudao online education company reached US$15.5 billion, exceeding that of Indian education technology company BYJU'S, and ranked first among global education technology unicorn companies.

3.1.2 Business Model

Yuanfudao Online Education owns several learning products including Yuanfudao, Xiaoyuan Search Questions, Yuan Question Bank, Xiaoyuan Kousuan, and Zebra AI. It currently focuses on the online live broadcast "dual teacher model" business.

• Target users: students of all subjects in kindergarten, primary school, junior high school and high school;
• Traffic source: It was originally incubated from two products, Yuantiku and Xiaoyuansouti. Relying on the data accumulation of Yuantiku and the traffic accumulation of Xiaoyuansouti, Yuanfudao has a lower customer acquisition cost and improved data-based teaching and research and recommendation capabilities. At the same time, part of the traffic also comes from advertising investment, such as the display of advertisements in public areas such as subways and elevators.

• Teacher sources: Most of them are lecturers with high academic backgrounds from Tsinghua University and Peking University, with an average teaching experience of more than 4 years and an acceptance rate of less than 1%;
• Tutor: Each class is equipped with a tutor who will work with the lecturer to provide students with knowledge Q&A, after-class tutoring, study reports, renewal conversion and other services;
• Course price: The average course price ranges from 600 to 2,000 yuan;
• Curriculum system: From the middle class of kindergarten to the sixth grade, the curriculum is mainly based on Chinese, mathematics, and English; the junior high school curriculum has added physics, chemistry and other subjects; the high school curriculum system covers all subjects.

3.2 Homework Helper

3.2.1 Growth Path

• In September 2015, Zuoyebang was established and received a US$25 million Series A investment from Sequoia Capital China and Legend Capital;
• In August 2016, it received a $60 million Series B investment from GGV Capital, Xianghe Capital, Sequoia Capital and Legend Capital;
• In August 2017, it received a US$150 million Series C investment from H Capital, Tiger Fund, Sequoia Capital, Legend Capital, GGV Capital, and Xianghe Capital;
• In July 2018, it received a $350 million Series D investment from Coatue, Goldman Sachs, Primavera Capital, etc.;
• In October 2018, it received a $500 million investment from SoftBank China Capital;
• In June 2020, it received $750 million in Series E and subsequent investments from FountainVest Partners, Tiger Fund, Sequoia Capital, etc.;
• In December 2020, it received US$1.6 billion in Series E and subsequent investments from Alibaba, Tiger Fund, Sequoia Capital China Softbank, FountainVest Partners, etc.

3.2.2 Business Model

Zuoyebang currently has learning products such as Zuoyebang live classes, Zuoyebang oral calculation, question search tutoring, Zuoyebang VIP, etc., and currently focuses on promoting the online live "dual teacher model" service.

• Target users: students of all subjects in kindergarten, primary school, junior high school and high school;
• Traffic sources: Initially, traffic was mainly obtained by developing a number of learning tools, including photo search, oral arithmetic correction and other search tools. Traffic also came from advertising investment, such as the display of advertisements in public areas such as subways and elevators.
• Teachers’ sources: 90% of them are graduates from 985/211 prestigious universities. After 6 rounds of rigorous selection, the admission rate is less than 3%. The average teaching experience is more than 5 years.
• Tutors: Cooperate with the main teacher to communicate online in real time and provide one-on-one tutoring after class to promote the transformation of students' course effects, such as new learning plans, after-class follow-up, learning check-in, report interpretation, telephone home visits and other services;
• Course price: The average course price ranges from 40 to 800 yuan;
• Curriculum system: From the middle class of kindergarten to the sixth grade, the curriculum is mainly Chinese, mathematics, and English; physics, chemistry, and biology have been added to the junior high school curriculum; all subjects can be covered in the high school curriculum system.

3.3 Summary

Zuoyebang and Yuanfudao both started out as question-searching tools, then moved on to content and finally platform products; their development timelines, growth paths and business models are very similar, and they are direct competitors.

The average price range of Yuanfudao's entire course system is relatively high; at the same time, Yuanfudao attaches relatively great importance to brand promotion and has a strong ability to attract money, such as in-depth cooperation with CCTV's "Let's Talk" and Jiangsu Satellite TV's "The Brain"; it has become the official sponsor of the 2022 Beijing Winter Olympics and Paralympics; overall, Yuanfudao has completed two consecutive rounds of financing in 2020, has reserved a lot of cash, has an aggressive approach, and has diversified products, but its customer acquisition cost is the highest.

The average price of Zuoyebang's overall course pricing system is relatively low; in terms of search and data, the four founders all have technical backgrounds, and the core team comes from well-known Internet companies at home and abroad, and they have more advantageous conditions with technical accumulation; overall, Zuoyebang has the greatest advantages in user scale and traffic, and the lowest comprehensive customer acquisition cost.

Currently, both brands are in a leading position in the industry, and both are highly concerned and supported by the capital market. It remains to be seen which one will come out on top next.

4. User value analysis

In the K12 online education market, there are three main participants: parents, students, and platforms. If the platform wants to achieve rapid development, it must create value for users and meet the needs of all parties involved. Next, let’s focus on analyzing how Yuanfudao meets the needs of both parents and students.

4.1 Parents

The new generation of parents born in the 1980s and 1990s are characterized by being highly educated and paying close attention to their children’s education. As mentioned in 1.3 above, they have high expectations for their children’s admission to key universities in the future. So, what are the main ways that most parents currently use to solve their children’s tutoring problems?

4.1.1 Relying on the school teaching system

The school teaching system is generally highly systematic and is able to design the curriculum system in line with national education policies and training goals, which is conducive to the unified management of students' learning progress and learning outcomes.

However, due to the large number of students in a class, teachers usually use the mastery of the majority of students as the standard, lack personalized training content for students, and pay relatively little attention to students. Moreover, different levels of teachers are assigned according to the comprehensive performance of students in different classes, which cannot guarantee the fairness of teaching resources to a certain extent.

4.1.2 Offline tutoring classes

In the traditional offline education resource environment, since teachers and students are fixed in the classroom, face-to-face teaching and interaction, in-class question answering, and not easy to leave the scene, it is a method that parents are very keen on.

However, the high costs of teacher salaries and venues in traditional offline institutions may also lead to unreasonable course fees to a certain extent, and the location and time arrangements of the institutions may not be convenient and flexible for different parents.

4.1.3 Hire a tutor to provide on-site tutoring

Home tutoring has the advantage of one-on-one targeted teaching and guidance. It can provide customized content teaching according to the child's situation, improve the child's attention, play a role in supervising and promoting the child, and the time appointment is also relatively flexible.

However, most tutors are college students, and their teaching levels vary widely. At the same time, there are frequent news reports of serious incidents such as children being bullied by tutors when their parents are not at home, which also poses certain safety risks.

4.2 Students

According to iResearch data, in 2018, all student users in the K12 online education industry have become those born in the 2000s. Compared with those born in the 1980s and 1990s, they have a stronger willingness to consume online, more unique consumption preferences, and pay more attention to personal experience. This means that they have higher requirements for the fun, interactivity, and participation of online course experiences.

On the contrary, if the online products fail to meet these requirements, it will lead to students becoming bored and having low interest in learning. Of course, students of different school ages have different requirements and attention to course content and format. According to the stage of education, we can roughly divide students into three stages: kindergarten-primary school, primary school-junior high school, and junior high school-high school.

4.2.2 Kindergarten-primary school

During this stage, students have relatively less pressure on studying and further studies, and they may pay more attention to the fun and diversity of learning resources in their learning methods.

At the same time, parents’ expectations for their children may be mainly to lay a solid foundation and cultivate interest in learning. Therefore, what kind of course can be both full of practical content and attract children’s attention through interesting design is the key to measuring a good product.

4.2.3 Primary School-Junior High School

At this stage, students face the pressure of going from junior high school to high school, and the types of subjects increase. It is inevitable that problems such as inefficient use of time and improper learning methods will arise. Parents also begin to put pressure on children at this stage.

Therefore, the course design at this stage should pay more attention to the precise extraction of key knowledge points, and give students incisive guidance on key and difficult points, so as to solve core problems in a shorter period of time and master key methods. The requirements of this stage gradually tend to the value research and development of course content.

4.2.4 Junior high school to senior high school

The college entrance examination can greatly affect the future development of children, so parents and children are facing unprecedented pressure and the goals are very clear; at this stage, the number of subjects continues to increase, and it is difficult to digest and absorb a large amount of knowledge in a short period of time.

Therefore, this stage focuses more on whether the courses are systematic, refined and personalized, so that students can not only build a systematic core knowledge structure, but also receive personalized training suggestions based on each student's situation. The requirements of this stage gradually tend to take into account both course content and on-site services.

To sum up, we can see that as students grow and their education stages change, parents and children's requirements for the fun of the courses are gradually decreasing, their attention and requirements for the course content are gradually increasing, and they also have personalized needs.

4.3 Platform

To sum up, from the perspective of parents and students, the common needs of parents and students for course products are summarized as follows:

1. Are teaching resources easy to manage and fair?
2. Are the place and time for studying flexible and convenient enough?
3. Are the teacher’s qualifications and teaching level good enough?
4. Is the learning format interesting and effective enough?
5. Can the learning effect be guaranteed?

So, from the perspective of Yuanfudao's products, how did it quickly capture the market and grow into a unicorn company with a valuation of US$15.5 billion? How did it meet the needs of both parties?

4.3.1 Systematization of curriculum design

Yuanfudao has a professional original teaching and research team. The average teaching experience of team members is more than 10 years, which ensures the quality of the courses. It designs curriculum systems for elementary, junior high and high school students by subject and grade, making the curriculum system complete and targeted.

At the same time, students can also choose classes and knowledge of appropriate difficulty based on their in-school performance, achieving personalized difficulty stratification design to make the learning content more in line with the students' current situation.

In addition, Yuanfudao also has a domestic K-12 learning behavior database of tens of billions of times, with 7.4 billion times of student answering behavior data and 28.4 billion times of question search data. The precise analysis of big data ensures the pertinence and focus of course design.

Based on the above analysis, the curriculum system is systematic and can keep up with the reform direction of the Ministry of Education, improve the capabilities of core modules, and enable different classes to teach students in accordance with their aptitude.

4.3.2 Strict control of teaching staff

The "dual-teacher model" is used for online live teaching. Most of the lecturers are lecturers with highly educated backgrounds from Tsinghua University and Peking University. The average teaching experience is more than 4 years and the acceptance rate is less than 1%. They have all undergone strict screening to ensure the lecturers' background qualifications and teaching delivery level.

The class teacher will provide one-on-one supervision throughout the entire process, provide guidance and answer questions, and follow up on learning progress in real time.

Strong guidance before class, reminding students, guiding them to prepare for class, and reviewing what they have learned; strong interaction during class, inspiring students to think, and summarizing the key points; strong feedback after class, targeted and personalized classroom reports, and summary and analysis of the learning situation; strong communication outside of class, 1V1 answering of questions, and full broadcast of exclusive information.

It fully realizes the characteristics of good content in class and strong after-class service, ensuring students' learning conversion and continuous order renewal.

To sum up the above analysis, the "dual-teacher model" can achieve that famous frontline teachers give lectures + tutors follow up the entire process, and the key points can be replayed at any time to transform the learning effect.

From the perspective of teaching fairness, high-quality teachers and 1V1 tutoring by class teachers can serve every student. At the same time, students can complete their learning tasks at home in this way, the time arrangement is relatively flexible, and parents can be more assured about safety.

4.3.3 The course format is interesting

Yuanfudao’s teaching style is an immersive learning design, and real-time interaction allows students to be more focused.

The course content will be presented in a combination of animations, video demonstrations and other means. Small incentives will also be designed during the process to motivate students, such as getting coins for answering questions quickly and exchanging them for learning tools. The diverse and interesting course interaction design makes students more willing to participate and gain better fun and experience.

4.3.4 Learning reports allow parents to witness their children’s growth

Yuanfudao's head teacher will promptly report the child's learning process and situation throughout the entire process:

On the one hand, teachers can use report analysis to promptly discover what children are doing well and what needs improvement, and help children solve problems in a targeted manner; on the other hand, parents cannot always participate in the entire process of their children's learning after they enroll in classes. The learning report can allow parents to clearly see their children's learning situation and growth status, so that the course effect has a basis for evaluation and is more quantifiable, which becomes the basis for decision-making on whether to renew the order.

4.3.5 Rich and diverse learning tools promote efficiency improvement

Yuanfudao now has a variety of learning tools that can promote the improvement of learning and tutoring efficiency for parents and students, such as Xiaoyuan Search Question, Xiaoyuan Oral Arithmetic, Yuan Question Library, Zebra AI and other online education products, providing users with diversified intelligent education services such as online classes, intelligent exercises, and problem analysis, helping students complete the learning loop systematically and efficiently.

Comprehensive analysis of the above five services on the Yuanfudao platform can fully guarantee the systematic nature of the curriculum, the quality of the teachers, the practicality of the tutoring, the interestingness of the format and the flexibility of the services, which fully meet the needs of parents and students. Therefore, this has also formed the core competitiveness that enables Yuanfudao to gain a foothold in the market.

5. Commercial value analysis

Whether an enterprise can develop rapidly depends on whether its products can realize user value first and have sustainable and profitable business value second. Yuanfudao’s current core business is the dual-teacher class business, namely “online live teaching + on-site tutoring”. An important indicator for judging whether a business is healthy or not is business revenue. Below I will analyze Yuanfudao’s core business through the GMV model.

GMV=number of users*conversion rate*average order value. The improvement of any one of the indicators, namely number of users, conversion rate and average order value, will promote the increase of business revenue. Next, let us focus on analyzing the ways Yuanfudao uses to improve these three key indicators?

5.1 Increase the number of platform users

In order to increase business revenue, the first thing to do is to make the market recognize the value of the product. New users need to continuously register and use the product. This requires the company to work hard on market promotion and publicity, so as to promote the increase in the number of users. So how does Yuanfudao promote the acquisition of new users? There are two main ways: paid channels and free channels

5.1.1 Strong advertising efforts (paid channels)

Sponsor TV programs and cooperate with famous masters to vigorously promote the brand:

• In 2019, Yuanfudao's online course APP became the exclusive contestant registration and selection channel for "The Brain: Burning Brain";
• In January 2020, Yuanfudao announced a partnership with CCTV's "Chinese Poetry Conference" (Season 5);
• In July 2020, Yuanfudao announced that it had become the exclusive title sponsor of CCTV's "Let's Talk";
• On July 13, 2020, Yuanfudao Online Education became the official sponsor of the Beijing 2022 Winter Olympics and Paralympics. This is the first time in Olympic history that the Olympics has joined hands with online education.
• Yuanfudao has placed a large number of advertisements in public places such as subways and elevators, which subtly builds a brand impression;
• Cooperate with heavyweight masters such as Yu Qiuyu and Zhou Guoping to direct traffic to the platform and expand brand influence.

Social welfare expands visibility:

• In January 2020, Yuanfudao donated RMB 10 million to Wuhan to fight the novel coronavirus epidemic;
• In January 2020, Yuanfudao announced that it would provide free pre-study classes and the company's high-quality educational resources to primary and secondary school students across the country;
• In April 2020, facing the postponement of the college entrance examination, Yuanfudao provided free 90-day sprint preparation services to senior high school students across the country;
• To ease the employment pressure, Yuanfudao has issued offers to more than 3,000 fresh graduates in Wuhan, and is expected to provide more than 10,000 jobs for Wuhan by the end of the year.

5.1.2 Brand word-of-mouth effect (free channels)

Yuanfudao's service design can well meet the needs of parents:

On the one hand, it provides parents with data and reports on their children's learning process. For example, the background data shows the children's microphone status, the accuracy of their answers, whether their children have jumped out of the page to browse other web pages, etc., which allows parents to understand their children's learning situation in real time.

On the other hand, class teaching combined with other supporting learning tools, such as Xiaoyuan oral calculation and Xiaoyuan question search, have greatly improved the efficiency of parents' tutoring and homework grading. These technological and efficient perfect experiences are easy for parents to spread word of mouth among each other.

5.2 Improve conversion rate

After users are attracted to the platform through a large number of promotion channels, only paid conversion can increase the conversion rate. However, due to the particularity of educational products, it is directly related to the children’s subsequent experience and learning effects. Many parents are also very cautious in making decisions. So what actions has Yuanfudao taken to accelerate users’ paid conversion?

5.2.1 Trial/Preferential Policy Support

Yuanfudao has designed many new user experience classes and limited-time vouchers and other activities. The prices range from only 1 to 3 yuan, which is very favorable. Click the registration link to see the course introduction details. The extensive course services, such as "10 major classes, simultaneous study of various subjects, one week of tutoring and answering questions, and three years of unlimited replay", are in sharp contrast to the feature description that the current price is only 3 yuan.

The classroom is accompanied by high-quality course experiences such as live lectures by lecturers, real-time interactions among students, and gold coin incentives, which fully demonstrates the "super value" of the course. This allows many hesitant parents the opportunity to experience the service through low-priced trial classes first, reducing the cost of trial and error.

In addition, some limited-time voucher activities use consumer psychology to create a tense atmosphere, making interested parents feel that they will not be able to enjoy price discounts if they don’t buy now. This firmly grasps the target users’ “bargain-seeking” mentality and accelerates the process of parents making purchasing decisions.

5.2.2 The course price is reasonable

The average price of most of Yuanfudao's courses is between 700 and 1,000 yuan. Generally, the class time is 12 hours in total, which is delivered in 3 sessions. This means that each session costs only a few hundred yuan on average. Without leaving home, you can enjoy lectures from high-quality teachers, hands-on tutoring from the head teacher, comprehensive learning reports and other value-added services. This is much more cost-effective than offline tutoring classes that cost tens of thousands of yuan.

5.2.3 Shift adjustment/refund to dispel purchase concerns

The class adjustment system allows users to flexibly adjust class times, or adjust the class difficulty in a timely manner according to their own situation; refunds are available if users are not satisfied with the experience; these services can help dispel users' doubts, create a feeling of "having a way out and being able to regret", and allow users to place orders with greater confidence.

5.2.4 Online customer service to answer questions at any time

Yuanfudao provides online customer service consultation, answers questions at any time, explains, communicates and persuades parents who have doubts, which effectively solves parents' personalized confusion and also promotes parents' purchases and payments.

5.3 Increase Average Order Value

There are two main factors that influence the increase in average order value: single purchase amount and purchase frequency.

5.3.1 Single purchase amount

Yuanfudao charges different prices for different course subjects, and the course price system will vary, so the single purchase amount will affect the increase in Yuanfudao's average order value. For example, the activity of submitting the third subject in a 2-subject joint purchase effectively promotes users to purchase multiple courses at one time, thereby achieving the goal of increasing the average order value.

5.3.2 Purchase frequency

This means whether the user is willing to renew the order after the first payment. Here we can focus on an indicator called "renewal rate", which also directly affects the increase in average order value.

According to a report published by CCTV.com, Yuanfudao enrolled more than 1 million students in 2019, with a renewal rate of over 80%. This user loyalty to a certain extent proves the quality of its courses and other products. Yuanfudao’s course advancement system is very complete. Only high-quality courses and services can retain users. Next, let’s focus on analyzing what actions Yuanfudao has taken to ensure the quality of its courses and services?

As mentioned in 4.3, Yuanfudao ensures the quality of courses and services from 6 aspects:

1. Scientific curriculum system: We have an experienced teaching and research team, which designs courses systematically by grade and subject, closely following national education policies, ensuring that the courses are up-to-date and systematic.
2. Implementation of the dual-teacher model: We strictly select teachers with backgrounds from prestigious universities such as Peking University and Tsinghua University. The main teachers are experienced and are accompanied by tutors to track and answer questions throughout the course, ensuring the effectiveness of the course.
3. Make the course interesting: Design interesting classroom interactions based on the different educational stages of students to grab students’ attention and make the “dry goods” be absorbed as easily as possible.
4. Learning reports show growth: The tutor will promptly feedback the child’s learning process data and learning reports to the parents. Parents can clearly see the child’s growth changes, allowing for a better evaluation of the learning effect.
5. Learning tools improve efficiency: Xiaoyuan question search, Xiaoyuan oral calculation and other supporting learning tools allow parents to be more efficient in tutoring and grading their children's homework.
6. The price is really affordable: the average price of most courses at Yuanfudao is around 700-1000 yuan, and the company often designs many preferential policies and special offers to ensure that truly good educational services can benefit family users across the country without being restricted by geography, time and space, so that every student can enjoy equal and high-quality educational resources.

In summary, Yuanfudao's comprehensive, high-quality service design promotes children's learning transformation and meets parents' requirements for learning outcomes and time-saving and worry-free. These undoubtedly increase the stickiness between children and parents, allowing Yuanfudao to gain more loyal and renewing users.

6. Product Iteration Analysis

In order to explore the reasons behind Yuanfudao’s rapid development, let us analyze it from the perspective of product iteration and see how Yuanfudao’s product iteration path meets the requirements of its different development stages? The following is my summary of all the core functional version iterations since the launch of Yuanfudao product:

According to the cumulative download volume curve distribution of KuChuan and Yuanfudao, starting from version V6.42.0 (November 14, 2019), the user growth curve began to rise rapidly exponentially, belonging to a "J" type curve. Therefore, we can divide Yuanfudao into two stages for analysis:

6.1 Product cold start, mainly to verify and improve functions

Before Yuanfudao's products were officially launched in 2015, it has been committed to developing Yuantuku and XiaoyuanSuQu learning tool businesses since 2012. In March 2015, Yuanfudao raised US$60 million and the online tutoring platform was officially launched. It makes good use of the customer resources of Yuantuku and XiaoyuanSuQu and directly imports traffic into the online tutoring platform, which steadily increases the number of platform users.

V1.0.0-V6.42.0 version functions are mainly added and improved basic essential functions. The main purpose of this stage is to meet the core essential functions of the platform operation, and to continuously improve updates and improve user experience to ensure that students can complete learning tasks normally; such as improving the functions of the teacher evaluation system, supporting pre-class exercises to take photos and answer big questions, adding special classes, adding semester classes, adding offline playback, adding my orders and other functions.

In order to attract more users, the platform has also planned many discount activities and promotion functions to make the number of users appear to be on a steady upward trend.

For example, 1 million middle school students have free classes during the summer, 39 yuan new teachers are added, 1-to-1 tutoring is free for registration, and 99 yuan for autumn semester classes are added; and other great discount activities such as adding course introduction page sharing and teacher personal page sharing functions, these operational activities and sharing functions have promoted Yuanfudao's early brand promotion and user growth.

While the platform is operating stably, it continues to add and improve a large number of functions to enhance user experience and increase user stickiness; such as adding new functions such as the fastest correct answer rankings for classroom tests, primary school English role-playing and English foreign teacher animations, QQ wallet payment, SMS verification login, primary school English live broadcast, class SMS notification, online customer service and other functions, all of which enhance the fun and convenience of user learning.

6.2 Improve user experience and invest heavily in brand promotion

After V6.42.0, all the functions of Yuanfudao's product have been basically formed. Many functions of the product iteration are mainly to optimize product details and improve user experience, such as reading this lecture after class and supporting playback of lock screens and other functions.

These have given users a good user experience in detail, even exceeding users' expectations. The increasing number of users has allowed Yuanfudao products to pass good verification and have the strength to "comprehensive popularity".

In December 2018, Yuanfudao raised US$300 million. Since 2019, Yuanfudao began to gradually increase its investment in brand marketing, and has successively cooperated with TV programs such as "The Brain", "Chinese Poetry Conference", CCTV Spring Festival Gala; in March 2020, Yuanfudao raised US$1 billion again, with sufficient "ammunition", Yuanfudao continued to increase its promotion efforts. In July 2020, Yuanfudao became the exclusive naming partner of CCTV's "Speaking" and also became the official sponsor of the 2022 Winter Olympics and Paralympics in Beijing.

The strong investment in multi-channel advertising has indeed achieved the effect of "stimulating a thousand waves for a while". The number of Yuanfudao users has increased explosively since March 2020, and has doubled from 100 million users at the beginning of the year. It has now exceeded 200 million users. Such impressive results also show the market's acceptance and high recognition of Yuanfudao products.

Summary: Yuanfudao's entire product iteration has the characteristics of "long-term precipitation and verification, short-term amazing success".

First of all, it was based on traffic imports from Yuantuku and Xiaoyuansuite, and it has a certain user base in the early stage;

Secondly, it took a long time to continuously add and improve basic functions, create a mature course system and product matrix, and obtain good user verification, and the number of users is increasing steadily and continuously;

Finally, after the product functions were fully matured, with the support of capital, it invested heavily in resources for brand promotion, which in a very short time showed explosive growth in the number of users, becoming a unicorn enterprise in the K12 online education field.

——This is the product iteration development path that has made Yuanfudao "popular".

7. Product Structure Analysis

In the previous section, we saw the development of Yuanfudao's product iteration. In this section, we focus on how to specifically distribute the structural functions of Yuanfudao's products, what characteristics are there, and how to meet user needs? The following figure shows the product structure diagram function distribution of Yuanfudao APP version 7.20.0:

In order to be more intuitive and convenient, I will re-cluster the product structure diagram according to the structure of "user-scenario-demand-function", and then get the following table:

7.1 Overall Analysis

The main users of Yuanfudao’s products include parents and children. As the paying parties, parents have analytical and judgmental ability and judgment that are more comprehensive and objective than children, and children are more users. Therefore, in this link, I will analyze the needs of parents and students separately:

7.1.1 Parents’ needs and how are they met by the platform?

1) Before buying a class

Before buying classes, most parents have already learned what Yuanfudao’s business is about through advertising effects, word of mouth, etc., and they are basically potential users with actual needs, but they don’t understand the specific curriculum system and services of the platform. Parents can meet these needs through information such as “Yufudao video introduction, curriculum system and teacher information” on the homepage.

When parents have a preliminary understanding of the platform services, they will hope to further understand the quality of Yuanfudao’s courses, learning effects, etc. At this time, they can use the functions of “Excellent and low-priced experience courses, courses and teacher detailed introduction pages, price systems, and user reviews” to see if they meet their needs and expectations.

After parents have finished experiencing the course and understand the platform service and course quality, they can get discounted prices through the functions such as "coupon function, online customer service consultation for personalized questions" before placing an order, enjoy a good experience of value-for-money purchases, and can also completely solve their purchasing concerns through customer service consultation or telephone consultation.

2) After buying a class

As parents, they hope to understand their children's subsequent course arrangements in a timely manner and hope to master the knowledge of their children's learning in each course. Here, they can meet the functions such as "course calendar, after-school report viewing", and clearly see their children's subsequent learning plan and each learning report viewing. For the push of learning reports, Yuanfudao pushes them to parents through the WeChat public account, because WeChat is currently the mainstream social tool, and pushing through the official account will be more timely and convenient, and it is also convenient to achieve the purpose of word-of-mouth fission through social channels.

7.1.2 Students’ needs and how are they met by the platform?

1) Before class

As users, students will pay more attention to their learning plans before class to better manage their time and schedule. Secondly, they will be worried that they will miss the course because of other things. Learning plan management can be met through the "course calendar" to clearly see their own course arrangements every day. The "class notice" function will remind children on time to ensure that they are fully prepared for learning before class.

2) In class

During the course, students first hope that the course format will be more interesting and improve their sense of participation and interaction in class. Secondly, in order to better immersively learn, they do not want to be interrupted by other things and messages, which will affect the learning effect. Finally, long-term viewing of electronic screens may lead to vision problems. To meet these needs, Yuanfudao provides an immersive interactive learning mode, where teachers and students can interact in class instantly, and there is also "Apricoin incentive" for students with excellent answers, which improves students' participation. At the same time, Yuanfudao also has "eye protection mode" and "no disturbance function in class", which not only helps protect students' eyesight, but also avoids students being disturbed by external things in the course.

3) After class

Students will pay more attention to review and review after class. Each live learning may cause some knowledge points to be ununderstood. For this reason, Yuanfudao provides the "offline playback" function, which can support students to watch repeatedly after class, review difficulties, and achieve the purpose of improving grades. If you can't understand knowledge points that you can't understand when watching and replaying, students can also ask the teacher for advice and consultation at any time after class;

In addition, students are also very concerned about their classroom performance and teacher feedback. The "Learning Report" push function can make students discover their learning problems so that they can make changes; in order to improve children's classroom participation, Yuanfudao's "Gold Coin Mall" has effectively promoted students' classroom participation. In order to get the gifts or products they want, students will work harder to win the ape coins every time they learn. In this way, students can not only master the knowledge effectively, but also win the gifts they want, which is the best of both worlds.

summary:

Yuanfudao’s functional design before and after buying classes meets the different scenario needs of different users. It divides users into targeted on a limited page, with clear and organized structure and concise operations; similar functions are classified and arranged, and try not to allow users to operate back and forth repeatedly, which is very convenient and efficient; these good product structure designs prove the scientificity and rationality of Yuanfudao’s product structure.

8. Operation path analysis

People often say that "product operation is not divided". Products achieve user growth by improving user experience, and operations achieve user growth through activity operation. The two have common goals, so we can see that the relationship between the two is very close. So how did Yuanfudao achieve rapid growth in a short period of time through operations? Below I will analyze the main operational activities since the establishment of Yuanfudao and according to the AARRR model:

8.1 New recruitment (A)

In order to attract new things, Yuanfudao mainly uses the following four methods:

8.1.1 Promotional Activities Policy

• In June 2015, Yuanfudao Junior High School Edition was fully launched, with the lowest price being only 39 yuan per hour
• In June 2015, Yuanfudao launched a summer free course plan, which will provide 1 million free quotas for 1-to-1 courses. Anyone who downloads Yuanfudao before September can get it.
• In August 2015, Yuanfudao launched a special course with the lowest price of 0 yuan per class.
• In June 2020, Yuanfudao joined forces with Luo Yonghao’s Douyin live broadcast room to promote the newly created star course

8.1.2 Naming TV column

• In 2019, Yuanfudao's online course APP became the exclusive registration and selection channel for "The Brainiest"
• In January 2020, Yuanfudao announced a cooperation relationship with CCTV's "Chinese Poetry Conference" (Season 5)
• In July 2020, Yuanfudao announced that he became the exclusive sponsorship partner of CCTV's "Speaking"

8.1.3 Sponsoring international events

• On July 13, 2020, Yuanfudao Online Education became the official sponsor of the 2022 Winter Olympics and Paralympics in Beijing. This is the first time that the Olympics have joined hands with online education.

8.1.4 Social Welfare

• On January 25, 2020, Yuanfudao donated RMB 10 million to Wuhan to fight the new pneumonia epidemic
• On January 29, 2020, Yuanfudao provided free consolidation preview classes for primary and secondary school students across the country; at the same time, it integrated all the company's high-quality educational resources, opened up the core functions of its major products, and provided a series of support for students during the extended winter vacation.
• On April 1, 2020, in the face of the postponement of the college entrance examination, Yuanfudao provides free 90-day sprint preparation services to senior high school students across the country
• In order to alleviate the employment pressure of 2020 college graduates, Yuanfu guided the employment notice to more than 3,000 fresh graduates in Wuhan, "It is expected that more than 10,000 jobs will be provided to Wuhan by the end of 2020."

8.2 Activate Active User (A)

When a user downloads and registers an APP, he needs to activate the user to open the APP and improve daily active users and monthly active users. In order to improve user activity, Yuanfudao mainly uses push messages to:

• 3 Yuan Digital Language Experience Class
• 3 yuan 5-subject score course
• 1 yuan high school famous teacher group is coming

8.3 Improve retention (R)

After promoting user activity, it is also necessary to improve the user's retention rate so that the platform can continue to make profits. In order to improve retention rate, Yuanfudao did the following:

Reward ape gold coins for the tasks before, during and after the class, and you can redeem gifts in the gold coin mall.

8.4 Share Communication (R)

In order to guide users to spread spontaneously, Yuanfudao has used the launch of public welfare activities and APP sharing function design to promote brand word-of-mouth dissemination:

• On January 25, 2020, Yuanfudao donated RMB 10 million to Wuhan to fight the new pneumonia epidemic;
• In order to alleviate the employment pressure of 2020 college graduates, Yuanfudao issued employment notices to more than 3,000 fresh graduates in Wuhan, "It is expected that more than 10,000 jobs will be provided to Wuhan by the end of 2020."
• Yuanfudao APP’s course details page, teacher details page and other pages have sharing and forwarding functions, which are conducive to users’ sharing.

8.5 Increase revenue (R)

Regarding the methods of increasing income, please refer to the section "Business Value" analysis in the fifth part above, and will not be repeated here.

9. Summary

Through the overall analysis of the K12 online education market and Yuanfudao, we can draw the following conclusions:

1. The education industry is deeply influenced by the macro environment. The four macro factors in politics, economy, culture and technology have jointly promoted the rapid development of K12 online education, and it is expected that there is enough room for development in the next few years.
2. With the popularity of the K12 online education industry in recent years, many new education brands have emerged, such as Zuoyebang and Yuanfudao, started with learning tool products; Xueersi, New Oriental Online, etc., provide a user base for online transformation with offline user traffic; Tencent Penguin Tutoring, Tsinghua and Peking University Online Schools are standing on the shoulders of Internet giants to open up territory; their backgrounds and core resource advantages of their rise are different, which makes the battle for the K12 online education market particularly hot.
3. In the K12 education field, Yuanfudao's current valuation reaches US$15.5 billion, ranking first among the global education technology unicorn companies. Compared with brands such as Zuoyebang and Xueersi, it started late and developed rapidly. On the one hand, it was due to Yuanfudao's careful polishing of course products and services, and on the other hand, it also comes from its strong money-making ability and attaching importance to brand promotion, which has promoted Yuanfudao's rapid growth.
4. In the K12 online education market, there are three participants, namely parents, students and platforms. To achieve the rapid development of the platform, it is necessary to meet the needs of participants from all parties. Through systematic course products and tutoring services, Yuanfudao has achieved the goal of allowing parents to reassure and flexibly grasp the growth and changes of their children, and allows children to improve themselves in a fun-filled mechanism and atmosphere.
5. Yuanfudao’s current core business is the dual-teacher class business, namely the “learning lecturer live broadcast + class teacher tutoring” model. In order to increase the overall business revenue, Yuanfudao first acquired a large number of new users through promotional methods such as advertising effect and word of mouth effect; secondly, he promoted the conversion of new users by designing many low-priced experience courses and limited-time gold coupons and increased the conversion rate; finally, Yuanfudao brought customers a good user experience through high-quality course services and tutoring services, which continuously increased the order renewal rate, thereby increasing its own order price.
6. The iteration process of Yuanfudao’s product can be roughly 2 stages. In the first stage, Yuanfudao spent a long time to polish and verify product functions, with the core goal of improving user experience; after the product functions became increasingly mature, Yuanfudao began to vigorously promote its brand with the support of capital, making Yuanfudao “popular” in a very short period of time and became a shining star in the K12 online education field.
7. The target users of Yuanfudao mobile terminal are parents and students. All product functions are designed to meet the needs of both. The product functions designed around both needs are well met the scenario-based needs of parents and students in different needs situations, which proves the scientificity and rationality of Yuanfudao's product structure.
8. "Product operation is not divided" is because their common goal is to improve user growth. In addition to the powerful product, Yuanfudao has also made a lot of innovation and design through many aspects such as attracting new products, promoting activation, retention, and sharing and disseminating new products. These operational designs have accelerated the acceptance and recognition of Yuanfudao's products by the public.

To sum up, I systematically analyzed the reasons behind Yuanfudao's rapid development and rise from eight aspects, including industry external factors, industry competitive landscape, competitors, user value, commercial value, product iteration, product structure and operation, such as Yuanfudao's optimism and rapid development.

The above analysis is an analysis report made by me for the purpose of being familiar with the K12 online education industry. Because of my limited personal ability, it is inevitable that there will be inadequate analysis. Please give me some advice and corrections. Thank you.

10. Future development

Through the above analysis, we have already learned why Yuanfudao is so popular with capital and can quickly rise and grow into the highest valuation unicorn company. So where should Yuanfudao's future path go?

Next, I will use the SWOT model to analyze it, hoping to draw a conclusion with reference value:

10.1 Advantages (Strengths)

• Yuanfudao has a strong teaching and research team, and has the ability to develop high-quality curriculum systems and establish its own core competitiveness.
• Yuanfudao has a mature "dual-teacher teaching" model. High-quality teachers can ensure the quality of course delivery, and class teacher services can promote students' follow-up and implementation after-class, greatly improving students' learning results.
• Yuanfudao has a complete product matrix, including Yuantiku, Xiaoyuansoute, Xiaoyuan oral arithmetic, Zebra AI and other products. The products support each other. The rich products improve user experience, enhance user stickiness, and reduce customer acquisition costs.
• Yuanfudao has a good brand image. Through the introduction of "The Talk of the First", cooperation with CCTV Spring Festival Gala, sponsoring the Winter Olympics and other high-quality brand marketing strategies, and the initiation of a series of public welfare activities, it has increased its popularity and enhanced the public's favorability towards the brand.
• Yuanfudao has a large amount of financing and sufficient financial reserves, laying a solid foundation for future business expansion and strategic transformation, and having the ability to make more attempts.

10.2 Weaknesses

• The biggest drawback of online education is that classroom interactivity is limited. In particular, Yuanfudao currently adopts the "dual-teacher class" model. Although there are class teachers to promote after-class transformation, the online one-to-many teaching model is affected by factors such as the number of students, distance, communication, time, and energy. The time left by teachers to tutor and comment for each student is relatively limited. Therefore, this has a great test on students' self-discipline requirements and the quality of course delivery.
• Compared with traditional offline tutoring classes, many parents still do not recognize the online learning format because parents will value the strong interaction of offline courses; the tutoring teacher may also be the teacher of the child at school, and has a better understanding of the child's learning situation and progress, etc. Therefore, these factors also have certain resistance to the promotion of online learning business.
• The education policies and teaching systems in various regions across the country will be slightly different, which may lead to certain difficulties in developing courses. It is difficult to ensure the universality of standardized courses in different regions.

10.3 Opportunities

• The online education industry currently has huge development potential, and all levels such as economy, policy, social culture, and technology are positively supporting the development of the industry. Yuanfudao has good development prospects.
• The online education market coverage is currently mainly in first- and second-tier cities. People in third- and fourth-tier cities are affected by various factors such as traditional concepts and acceptance of new things. There are still a large number of parents who have not tried online learning, so further sinking the market has huge development potential.
• Under the epidemic, many offline education activities have been transferred to the online, which has a great promoting effect on the development of online learning business.

10.4 Threats

• The current K12 online education company's class live broadcast business model is almost the same, basically focusing on one-to-many delivery of the dual-teacher model. It is difficult to see differentiated competitive advantages, such as Xueersi, Zuoyebang, Yuanfudao, New Oriental Online and other companies, which will challenge Yuanfudao's future business breakthroughs and innovations.
• With the strong support of capital, online education giants are carrying out large-scale brand marketing and promotion, grabbing land and grabbing market and traffic, which directly pushes up the cost of customer acquisition. Therefore, even if Yuanfudao has revenue, its profit model still needs to be tackled and needs to be continuously explored.

Through the above analysis, if Yuanfudao wants to achieve long-term development, I think we can refer to the following three aspects in the future:

1. Explore differentiated competitive advantages and try new business models to avoid "homogeneous competition". For example, in order to meet users' expectations for learning effects and improve service efficiency, can we use technology in the future to enable AI "human-machine" real-time interaction and real-time feedback to allow every student to have a personalized learning experience. At the same time, we can also turn small classes into large classes to truly realize "large-scale teaching according to aptitude", and can serve more users at once, which not only increases revenue, but also enhances personalized learning experience. For example, whether you can try to maintain your main business and cooperate with high-quality lecturers from various regions to provide offline or online personalized consultation and counseling services for local students, which can not only integrate national educational teacher-student resources, but also use external teachers to build brand trust in users, and thus strengthen brand influence.
2. Use brand advantages to diversify and expand your product line and increase the coverage of target users. Although Yuanfudao already has a relatively complete product matrix, it is currently limited to the K12 field. In the future, can it be tried to cover the product line to other fields such as interest and specialty training, academic education, and vocational education for exploration? Only by constantly trying and innovating can you break the deadlock.
3. Implement the strategy of strengthening enterprises with talents, further improve the selection and training standards of lecturers and teaching and research personnel, and select the best from the best talents. Faced with the huge market potential of third- and fourth-tier cities, using absolutely high-quality brand reputation and teaching strength to accelerate the transformation of parents' concepts, we can accelerate the development of the sinking market from the perspective of imbalance in the allocation of educational resources in first- and second-tier and third- and fourth-tier cities.

All the above data comes from online data platforms such as iResearch and Coolchuan. If there is any infringement, please contact me to change it. Thank you!