Consumer Products

Can Wal-Mart Drive More Sales With Kosmix Acquisition? (WMT, AMZN)

Jon C. Ogg

Wal-Mart Stores, Inc. (NYSE: WMT) is not exactly the first spot I think of when it comes to social networking.  This is one of those deals which you might even consider a “Who would have thought?” purchase… Wal-Mart announced today that it was acquiring Kosmix.  The move is to “underscore its commitment to social and mobile commerce.”  So what exactly does that mean?

Kosmix developed a technology platform that is meant to filter content and organize content in social networks, with the goal of connecting people with real-time information that matters to them.  There is an aspect of Amazon.com Inc. (NASDAQ: AMZN) that will come to mind here but more about that later.

Kosmix and its founders will operate as part of the newly formed @WalmartLabs unit and will create technologies and businesses around social and mobile commerce to support Walmart’s global multi-channel strategy.  The aim is to integrate the shopping experience between bricks-and- mortar stores and e-commerce.  Kosmix’s technology platform searches and analyzes connections in real-time data streams. The platform powers TweetBeat, a real-time social media filter for live events; Kosmix.com, to discover social content by topic; and RightHealth, a top-three health and medical information site by global reach.

The aim is to connect social media to real-world users with feeds, tweets or posts.  Kosmix was founded by Venky Harinarayan and Anand Rajaraman, who are called “early pioneers of online shopping” and whose first company, Junglee, was acquired by Amazon.com back in 1998.  Kosmix has search and browse topics on its website of Health, Science, Food, Fashion, Sports, Politics, Books, Games, Autos, Travel, and Finance.

Wal-Mart may only have an incremental win here or maybe it is just looking for a way to possibly protect its brick & Mortar operations from whatever online sales migration trends happen to be in five-years.  It acquired Vudu in 2010 for online movie distribution.

This is one of those deals that probably turned out great for the backers and owners of Kosmix.  As far as how this helps Wal-Mart, maybe it is just one avenue for shoppers to tell other shoppers what a great deal they got.  Maybe there is more to this story than we are able to see on the surface.  The question is fairly simple: Will this help?

JON C. OGG