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Posted at 01:15 PM ET, 08/30/2011

Wal-Mart’s cosmic voodoo


Actor Will Smith hosts the Wal-Mart Stores Inc's annual general meeting in Fayetteville, Arkansas June 3, 2011. (SARAH CONARD - REUTERS)

Wal-Mart is starting to turn heads in the tech world — and that may have important implications for the way we think about the future of the shopping experience. Once known for a soul-less retail store experience and a hyper-efficient supply chain that delivered “everyday low prices,” Wal-Mart has been fusing together innovations from the mobile and social networking worlds to create the foundation for a radically new type of hyper-personalized shopping experience.

The latest salvo from Wal-Mart is the creation of a @WalmartLabs group in the very heart of Silicon Valley — a move that might very well turn out to be the company’s most significant yet in an effort to become the undisputed leader of social commerce:

What companies like Wal-Mart are realizing is that the lines between online, offline and mobile have blurred to a point where every company must become a leader in each of these. While Wal-Mart’s prowess in traditional retail almost goes without saying, the company has lagged when it comes to e-commerce and mobile commerce. At a time when Amazon is pulling down $34 billion a year in e-commerce sales, Wal-Mart.com is only turning over $6 billion. While companies like Gilt Groupe have made headlines for experimenting with F-commerce (Facebook commerce), Wal-Mart hasn’t even been in the conversation.


Shopping carts are seen outside a new Wal-Mart Express store in Chicago. (JOHN GRESS - REUTERS)
So it makes sense that Wal-Mart has explored acquisitions as a way of catching up with competitors like Amazon. With deals for social media start-up Kosmix ($300 million) and video download platform Vudu ($100 million), Wal-Mart might just be the Biggest Start-up in Silicon Valley You've Never Heard Of. Not only is the company now becoming a leader in digital movie downloads with Vudu, the company is also pioneering the integration of social data into the e-commerce experience. This goes way beyond just grafting on Facebook “like” buttons to an e-commerce shopping cart. It means the full embrace of Big Data — something that Wal-Mart has lots of — as a way of learning about customers and making the shopping experience that much better. In short, Wal-Mart is using Kosmix (a.k.a @Wal-Mart Labs) to fundamentally change the shopping experience by taking what it knows about your digital and mobile behaviors, and transforming that into hyper-personalized offers, promotions and discounts.

For years, Wal-Mart has been stymied in its retail expansion plans by vocal opposition from local communities and the equivalent of a black eye to its PR handlers. But what if a Wal-Mart store turns into something very different — an environmentally sustainable place to buy cutting-edge tech gadgets and gizmos like the iPad 2, while getting offers and promotions that perfectly align to your likes and behaviors? What’s interesting is that the Kosmix founders, Venky Harinarayan and Anand Rajaraman, are Amazon veterans, having worked on the development of Amazon’s Mechanical Turk. That’s some great DNA to add to the social genome of a company that has not exactly been perceived as a hot young tech innovator.

If successful, Wal-Mart’s embrace of mobile and social as part of a comprehensive shopping experience could provide a model for other companies eager to be seen as innovation leaders. Last year, “design thinking” was all the rage, and before that, it was “sustainable innovation.” The next big idea might just be social commerce — the full integration of the retail store, the Web and mobile into one unified shopping experience. It would be tough to bet against Wal-Mart at this point, given how well the company has executed on other innovation initiatives. With the acquisitions of Kosmix and Vudu, Wal-Mart may have the right mix of cosmic voodoo to take on doubters in Silicon Valley.

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By  |  01:15 PM ET, 08/30/2011

Categories:  Business, Dominic Basulto, Technology, Video

 
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