With annual revenue increased by a factor of four, children’s art education company Hualala Kids’ Arts has stated that it has managed to attract over 400,000 paid users.
Li Wei (李伟), Founder of the firm, broke the news at an internal executive meeting. Along with the increase in subscribers, he noted that the monthly GMV had exceeded CNY 60 million, with annual revenue increasing fourfold.
In the current children’s art education industry, there are two basic teaching modes: 1v1 and 1v6 small classes. The 1v1 mode is the mainstream teaching mode in the early stages of online education. In the beginning Hualala Kids’ Art also considered the 1V1 mode of teaching over the small class mod – however they later acted on the difference between art education and language education. Language education requires more engagement with teachers, whereas in art education students have a lot of time with themselves. Moreover, the 1V1 mode has some other disadvantages: on the one hand, it is difficult to guarantee the teaching effect, and it is difficult to motivate the child to learn –on the other hand, the cost cannot be covered, and the gross profit rate of a single course is low.
Realizing that with the 1V1 mode it would be difficult to turn a profit, Hualala took the lead in launching the 1V6 small class. Wei recounted that many people didn't understand this transformation at first, thinking that he was taking the firm in “the wrong direction.”
Looking at the company’s economic model, crafted under the premise of ensuring a good user experience, the structure of the input-output ratio of the small class is definitely better than 1V1. Take 50 lessons as an example. The fee for 1V1 is about CNY 6000, the fee for 1V6 is about CNY 4000, and six students are CNY 24,000.
As far as the cost model is concerned, full-time teachers will multiply the labor cost of the 1V1 platform multiple times, while part-time teachers will affect the continuity of teaching. In the 1V6 small class mode, using full-time teachers, the cost of one teacher will be shared by six students.
Revenue is one of the core indicators of business operations. Compared with 2018, the turnover of the firm in 2019 increased by four. As the basis of revenue growth is the growth of GMV, last year Hualala’s monthly GMV exceeded CNY 60 million and continued to show a steady growth.
According to the company, the 1V6 small class not only improves the economic benefits of the platform, but also promotes the teaching effect and customer satisfaction. More than 95% of parents reported that their children's drawing ability had improved significantly after the lesson, and the course renewal rate is stable.
The founder further explained that, after carrying out the deployment of 1V6 small class mode, the following points were the main advantages of the firm:
• Insist on full-time teachers to teach online; the scale of full-time teachers is now over 700.
• Continue to increase investment in teaching and research. The firm has a teaching and research team of more than 50 people, all experts in the fields of fine arts, children's education, educational psychology, and so on. It is currently referring to the K12 core art curriculum standards in the United States, and have created two IP images that are integrated into their course.
• Persist in word-of-mouth marketing with high-quality courses.
• Efficient use of private domain traffic pools.
At the end, Wei insisted that, standing at a new starting point in 2020, in the face of more intense competition, they would strengthen investment in teaching and research this year. On the one hand, the firm will continue to introduce high-quality teaching and research talents to “reinforce” the team, and on the other hand, it will cooperate with more professional art institutions.