Wal-Mart gets social

20 April 2011

LITTLE ROCK, Arkansas: Wal-Mart, the retailer, is enhancing its social commerce capabilities as it seeks to engage consumers in new ways.

The discounter has announced plans to purchase Kosmix, a Silicon Valley-based start-up specialising in the real-time categorisation and organisation of information from Web 2.0 platforms.

An example as to how this has been used in practice to date is Tweetbeat, gathering together Twitter posts on events and topics from interesting sources in one place, and wellbeing-focused site RightHealth.

Kosmix joins a new unit, @WalmartLabs, charged with developing integrated systems covering smartphones, the internet and bricks-and-mortar stores, that can be deployed around the world.

"We are expanding our capabilities in today's rapidly growing social commerce environment," Eduardo Castro-Wright, Wal-Mart's vice chairman, said in a statement.

"Social networking and mobile applications are increasingly becoming a part of our customers' day-to-day lives globally, influencing how they think about shopping, both online and in retail stores."

Wal-Mart currently runs internet hubs in nine of the 15 countries where it trades, and has put considerable emphasis on strengthening this aspect of its activity.

Anand Rajaraman, co-founder of Kosmix - which attracted 17.5m visitors last month - argued the advent of properties such as Facebook, Twitter and YouTube have resulted in an "inflection point".

"The first generation of ecommerce was about bringing the store to the web," he said.

"The next generation will be about building integrated experiences that leverage the store, the web, and mobile, with social identity being the glue that binds the experience."

Stephen Wyss, a retail partner at accountancy network BDO, predicted the insights Kosmix provides into shopper habits might prove essential in the long term.

"Social media is an innovative way of knowing your customer, knowing what they want, and getting an understanding of what trends are," he said.

Greg Sterling, founding principal at consultancy Sterling Market Intelligence, asserted these findings may be utilised to forge stronger bonds with buyers.

"There's data from interactions with customers from all over the place that Wal-Mart can take and factor into marketing," he said."The more progressive companies are thinking more about that."

Lou Kerner, vice president, equity research, at Wedbush Securities, similarly suggested this move could enable Wal-Mart to adopt a holistic approach to driving digital sales.

"They're showing they want to integrate the social graph as deeply into the experience as possible," he said.

Consultancy Booz & Co forecast in January that social commerce revenues would reach $5bn globally in 2011, with the US contributing 20% of the overall figure.

By 2015, Booz anticipates worldwide expenditure attributable to this area should hit $30bn, incorporating $14bn derived from the US.

"Trendsetting companies are focused on products and services that benefit from the unique characteristics of social media, including the opportunity to get quick feedback from multiple friends and family members," it said.

Business services specialist IBM has also unveiled a Smarter Commerce suite this month, and believes software helping firms deal with consumers and third parties in a cross-channel way will stand at $20bn in value by 2015.

"Customers use social networks, mobile devices, websites and influencers to make buying decisions today," said Craig Hayman, general manager, IBM Industry Solutions.

"These businesses must connect to these customers where and how they prefer to buy to be successful."

Data sourced from Wal-Mart, Internet Retailer, IBM; additional content by Warc staff