India’s edtech battleground is heating up

The shopping philosophy of an online customer is hardly unique. There are two basic criteria: best deal and the best product. It doesn’t matter which site he or she is shopping from. Just like the e-commerce business, education technology, or the edtech space in India, is fast becoming a vast hunting ground for the best deals in online education courses as global giants and local players with deep pockets jostle to lure Indian parents, on whom the cost of education usually falls.

Recently when e-commerce major Amazon announced the launch of its online test-prep platform Amazon Academy in India to help students prepare for competitive examinations including the Joint Entrance Examination (JEE)—the entrance test for engineering colleges—many wondered the rationale behind such a move. Ankur Bisen, senior vice president, retail and consumer products, Technopak points out that Amazon had to make this move in order to get a higher share of the larger consumer spend. “Everyone is playing on price and some kind of a local connect. Edtech is a price sensitive market because a lot of students in the test prep industry are not from affordable and aspirational households. There are many from middle class and low income families,” Bisen says.

Amazon’s online preparation module will offer curated learning material for the JEE, live lectures, and comprehensive assessments in Math, Physics, and Chemistry. Besides JEE, the platform will also provide study material for a host of other competitive examinations, such as BITS Pilani’s Bitsat, VIT University’s Viteee, Manipal’s Met examinations, and others.

The test prep space in India has always been a lucrative market. The intensity of competition has heightened over the past year with players such as Bengaluru-based Byju’s—India’s largest edtech company—and its smaller crosstown rival Unacademy, along with several others went on a fund raising spree in 2020. Byju’s alone raised approximately $1.15 billion in equity funding last year despite the pandemic, according to data from analytics firm Tracxn, while Facebook-backed Unacademy raised $354 million. To ramp up its offline tutoring presence there are talks that Byju’s, could acquire Aakash Educational Services, one of the country’s major players in the brick and mortar test prep space, for a whopping $1 billion. At present, Aakash Institute has more than 200 offline coaching centers.

“The race for exams, ranks, and college seats is not going anywhere soon because in India the definition of success is getting a seat in a top college. Companies that have not been traditionally in education before, like Amazon, but already have a reach into the target market, will also enter the fray to grow their revenue from their existing user base,” says Saurabh Saxena, founder and CEO, Uable, an edtech platform for children, adding that Amazon’s entry will lead to more competition for existing players, more options for learners and parents, and possibly reduced cost and easier access from anywhere.

The beta version of Amazon Academy will be available free of cost on the web and the Google Play store, the company said in a statement, but did not specify the duration of the free service.

Edtech game plan

Edtech as a business need to have a customer connect, delivery, and customer satisfaction. “And all of it Amazon can provide. Amazon getting into the play versus Byju’s are two different animals as far as investors and funding are concerned,” argues Bisen, explaining that Amazon is not depended on investors. For the e-commerce giant there is no stipulated time-frame by when the business has to show profit. It has a long-term horizon to target a higher share of the consumer wallet. Much like it is already doing with the over-the-top (OTT) platform space with its offering, Amazon Prime, or in the grocery business with Amazon Pantry.

“I am cautiously optimistic about what Amazon is doing in edtech,” adds Bisen.

In the last few years edtech companies have ramped up their interactive online tutoring content targeting school students and candidates preparing for competitive examinations and government jobs across metros and tier 2 cities.

“Our primary focus has been on content quality, deep learning analytics and student experience,” said Amol Gurwara, director, education, Amazon India, in a statement.

According to a recent report jointly penned by the Indian Private Equity and Venture Capital Association and PGA Labs, Indian edtech startups received a total investment of $ 2.22 billion in 2020 as against $553 million in 2019.

In FY20, the education market in India is pegged at $117 billion with about 360 million learners, the report noted, adding that Indians spent $42 billion on supplementary education which primarily comprises private coaching and test preparation in the last fiscal.

The report further pointed out that the education market in India is expected to grow 2x to $225 billion by FY25. While the Coronavirus-induced lockdown last year increased the demand for edtech products exponentially in the country, many believe the demand to be “artificial.”

“It should not exist ideally. It just eats into the savings and personal consumption priorities of households. It is an additional expense in my mind. Therefore, I have been a little cynical about this industry overall,” says Bisen.

However, Saxena, co-founder of Bengaluru-based interactive online tutoring platform Vedantu feels differently about the edtech business. “Edtech space is set to keep rocketing ahead in 2021 and beyond. Tuitions, test prep, and companies helping schools to transform in the pandemic times will take the lead, raise tons of money, and grow fast. This will also lead to a more fundamental disruption in the way learning and education are seen through a conventional mindset,” says Saxena.

With funding available across various stages of growth, only time will tell if edtech companies can sustain this momentum. While the endgame is still not clear, there’s surely a lot to learn.