Here’s How Amazon Can Benefit From Expanding Its Digital Education Footprint?

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Recently, Amazon  (NASDAQ:AMZN) announced the launch of “Amazon Inspire”, a free service for search, discovery and distribution of digital educational resources.  This platform is aimed at providing educators the ability to upload and share digital teaching resources as the company works towards a personalized learning environment for all students.  Currently in  beta stage, Amazon Inspire will give the company a strong hold in the growing digital education industry, despite being a free platform.  It will also give a boost to other products that are key the growth prospects of other Amazon businesses, such as Kindle, Whispercast and Amazon Web Services (AWS) for schools.  According to MarketsandMarkets, the smart education and learning market is forecast to generate revenues of $446 billion by 2020.  In addition, Amazon has an initiative to support the U.S. Department of Education’s Go Open initiative through this open learning platform.  This, too,  should enable the company to tap into this growing market.

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Digital Education Should Become A New Revenue Stream For Amazon

While Amazon’s presence in digital education was limited to selling hard-copy and e-books in the past, the company has recently become more serious about this growing opportunity. In March, it secured a three-year contract worth $30 million from the New York City public schools to provide e-books to 1.1 million students.  Through the launch of Amazon Inspire, the company is aiming to provide a free marketplace for worksheets, lessons, student plans and other resources for all classes, ranging from kindergarten to Grade 12. This initiative should give the company a strong foothold in the digital education segment, as it builds a user base for this platform. This initiative initially should boost the sales of Amazon’s existing educational products, including e-books and Kindle reader.  Over time, the digital education marketplace can become a significant new source of revenue of the company, in our view.

Familiarity And Better Features Can Provide Competitive Edge

While several platforms similar to Amazon Inspire already exist, Amazon is building its education site on the same lines as its e-commerce website, without the prices and payment options. This gives its platform a “familiar” feel which should attract users who are already comfortable using its e-commerce platform. The company believes that teachers will be able to use its education site with little training, given its accessibility.  And it will be able to differentiate the site from competitors by “offering compelling features”.  Apart from established digital education platforms such as London based tes.com, which has over eight million subscribers, Google is also a strong competitor for Amazon in this segment. Google already has several products education products such as Quizzes an online form that teachers can use for tests, which will automatically grade multiple choice questions. Its Google Docs platforma is used by a substantial number of schools already.  However, Amazon’s education market place will have the advantage of a familiar feel.  And with its deep pockets, the company can invest heavily in this platform and develop an edge over other similar platforms. Its platform already includes the “user review” feature similar to its e-commerce website, which can allow teachers to rate content and choose the best resources from the wide selection available.

We believe a stronger foothold in the digital education market will act as a catalyst to boost Amazon’s revenues. While this segment has a strong potential to become an independent revenue stream for the company, a free education market place with a look and feel similar to its e commerce segment can definitely provide a boost to Amazon’s existing products in the short term.

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