April 18, 2011, 4:27 PM

Wal-Mart wants to become more social and mobile

The retailer buys Kosmix Corp., a social media technology company.

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Wal-Mart Stores Inc. announced today that it will buy Kosmix Corp., a Silicon Valley firm whose technology searches and analyzes online social data, such as Twitter posts, to personalize web content. Wal-Mart says the purchase will help the retailer develop its social and mobile commerce initiatives faster.

“We are expanding our capabilities in today’s rapidly growing social commerce environment,” says Eduardo Castro-Wright, Wal-Mart’s vice chairman and head of global e-commerce. “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 also announced today the formation of @WalmartLabs, a technology group tasked with advancing the integration of Wal-Mart’s stores and web and mobile channels. A Wal-Mart spokesman says @WalmartLabs will be based in Silicon Valley but was not sure if @WalmartLabs would be housed in existing Wal-Mart offices in Brisbane, CA, at Kosmix’s office in Mountain View, CA, or elsewhere. “Our intent with @WalmartLabs is to develop ways to integrate what we do in stores with what we do online in a way that is relevant to our customers,” the spokesman says.

Wal-Mart is the No. 1 retailer in the world by total sales and the No. 6 e-retailer in the United States, according to the Internet Retailer Top 500 Guide

Wal-Mart gave few details about its plans for Kosmix. But analysts say Wal-Mart is on the right track in making investments in technologies that increase interactions with consumers, online or inside stores. “There’s data from interactions with customers from all over the place that Wal-Mart can take and factor into marketing,” says Greg Sterling, founding principal at Sterling Market Intelligence, a research and consulting firm.  “The more progressive companies are thinking more about that.”

Lou Kerner, vice president of equity research at Wedbush Securities, says by picking up Kosmix, Wal-Mart is showing an increased commitment to engaging shoppers across sales channels. “They’re showing they want to integrate the social graph as deeply into the experience as possible,” he says. The social graph refers to the relationships between consumers on social networks.

Terms of the Kosmix deal were not disclosed. Wal-Mart says it expects to close on the deal by the end of June.

Kosmix formed in 2005 and is led by co-founders Anand Rajaraman and Venky Harinarayan. The pair previously founded Junglee, a database technology company that Amazon.com, the No. 1 e-retailer in the Top 500 Guide, acquired in a stock deal in 1998.

Rajaraman and Harinarayan went on to help Amazon establish its Marketplace business, and Amazon CEO Jeff Bezos was an early investor in Kosmix through his venture capital firm Bezos Expeditions. Kosmix raised $55 million in venture funding from 2005 to 2008. Other investors include Lightspeed Venture Partners and Ed Zander, former CEO of Motorola Inc.

Jeremy Liew, managing director of Lightspeed Venture Partners in the U.S. will speak at the Internet Retailer Conference and Exhibition in San Diego in June in a session called “The entrepreneur-financer tightrope: Keeping both sides happy when outside money comes in.”  


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